Stablecoin issuer Tether Holdings has acquired a significant stake in Bitdeer Technologies Group, a US-listed bitcoin mining company owned by Chinese billionaire Jihan Wu. This acquisition includes an investment of US$100 million, with an option to purchase additional shares worth US$50 million over the next year.
Investment facilitates the expansion of mining
According to BitAdir's statement today (Friday), the agreement includes a private offering of 18.6 million Class A common shares, generating gross proceeds of $100 million. In addition, there is a provision providing for a warrant to purchase up to five million additional shares at a price of $10 per share. The private placement closed on Thursday, facilitated by Cantor Fitzgerald as underwriter.
The primary objective of this deal is to support Bitdeer's expansion plans, including developing ASIC-based cryptocurrency mining equipment, expanding data center operations, and meeting the company's overall needs. However, the exact percentage of Bitdeer that Tether now holds under this agreement remains undisclosed, as Tether has not yet responded to requests for comment.
For Tether, this represents a step towards its ambition to establish a presence in the Bitcoin mining space. The company began construction of its own mining facilities in Uruguay, Paraguay and El Salvador last year, and intends to invest half a billion US dollars within six months in this endeavour.
Just in‼️ – Bitdeer, Jihan Wu's cryptocurrency mining company, is raising new capital from Tether. Tether has agreed to buy up to $150 million in Bitdeer shares in a private placement. pic.twitter.com/6dpV1CZZ3n
– Swan (@swan) May 31, 2024
Market value is fixed
Bitdeer, which is headquartered in Singapore, is among the largest public cryptocurrency miners listed in the US, with a market capitalization of about US$670 million. Although the value of its shares has fallen more than 40% this year, Bitdeer shares saw a 6.5% increase to $6.20 after the announcement.
Previously, BitDeer was reportedly in discussions with private credit companies to secure financing worth about US$100 million, Bloomberg News reported in March. It remains uncertain whether these discussions will continue after Tether is injected into the company.
Bitcoin mining involves running power-intensive computers to secure the blockchain network, and earning new tokens as a reward. In April, these rewards were halved as part of a programmed upgrade to the Bitcoin network, reducing the profitability of Bitcoin mining by almost half.
This article was written by Tariq Sikdar at www.financemagnates.com.