Tether Executives Acquire Bitcoin Mining Arm from Tether-Backed Northern Data

Northern Data, a German AI and data center firm significantly backed by Tether, has sold its bitcoin mining subsidiary, Peak Mining, for up to $200 million. The buyers are a group of companies reportedly controlled by top executives from Tether, the stablecoin giant. This transaction raises questions about related-party dealings and occurs amidst broader regulatory scrutiny of Northern Data.

Key Takeaways

• Northern Data sold its bitcoin mining unit, Peak Mining, for up to $200 million.

• The buyers are companies linked to Tether's co-founder Giancarlo Devasini and CEO Paolo Ardoino.

• The sale was not initially disclosed as a related-party transaction.

• This follows a previous, failed attempt to sell Peak Mining to an entity also controlled by Devasini.

• Northern Data is currently facing regulatory investigations and a prior lawsuit alleging tax evasion.

The Transaction Details

Corporate filings reviewed by the Financial Times reveal that the purchasers of Peak Mining are Highland Group Mining Inc., Appalachian Energy LLC, and 2750418 Alberta ULC. These entities have direct ties to Tether's leadership. British Virgin Islands records indicate that Highland Group Mining is under the control of Giancarlo Devasini, Tether's co-founder and chairman, and CEO Paolo Ardoino. Devasini is also listed as the sole director of Alberta ULC. The ownership structure of Appalachian Energy LLC remains less clear, with no public director information available.

Northern Data had announced the divestment of Peak Mining in November but did not initially name the buyers. The company operates in a German market segment that requires certain disclosures but does not mandate reporting of related-party transactions, thus not obligating them to reveal Tether executives' involvement on both sides of the deal.

This is not the first time Northern Data has sought to sell Peak Mining to entities associated with Devasini. An earlier nonbinding agreement in August proposed selling the unit to Elektron Energy for $235 million, an entity also reportedly controlled by Devasini. However, that deal did not materialize, leading to the subsequent sale at a reduced price to the identified companies.

Broader Context and Regulatory Scrutiny

The timing of this sale is notable. Shortly after its announcement, Rumble, a conservative video platform in which Tether holds a substantial stake, agreed to acquire Northern Data for approximately $767 million. As part of this acquisition, Tether has committed to purchasing $150 million in GPU services from Rumble and entered into a separate $100 million advertising agreement. Tether also extended a significant €610 million loan to Northern Data, part of which will convert into Rumble stock upon closing.

Northern Data has been under increased regulatory scrutiny. In September, European authorities conducted raids on the company's offices in Germany and Sweden as part of an investigation into alleged large-scale VAT fraud, potentially exceeding €100 million. Northern Data has denied any wrongdoing, attributing the probe to a "misunderstanding of tax treatment."

These raids followed a dismissed lawsuit filed by former Northern Data U.S. executives who alleged the company was "borderline insolvent" and engaged in "knowingly committing tax evasion." The executives later voluntarily dismissed their claims, with statements indicating they had "misunderstood/misstated the facts."

Tether, which holds approximately 54% ownership in Northern Data, has been actively expanding its bitcoin mining operations, aiming to become the world's largest miner by the end of 2025. The stablecoin issuer itself has faced recent challenges, including a downgrade in its stability assessment by S&P Global Ratings due to its significant bitcoin exposure.

Sources

• Tether-backed Northern Data sold bitcoin mining arm to companies run by Tether's own executives: FT, The Block.

• Client Challenge, Financial Times.

• Tether-backed Northern Data sold bitcoin mining arm to companies run by Tether's own executives: FT, LinkedIn.

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