Tether’s Bitcoin Strategy Pays Off Big: $1.1 Billion Profit Amid Price Surge

In a week that saw Bitcoin surging to an impressive $42,000, Tether, the company behind the world’s largest stablecoin, witnessed a substantial increase in the value of its BTC holdings, resulting in a staggering unrealized profit of over $1 billion.

Since May 2023, Tether has amassed 4,083 BTC.

Tether’s Bitcoin Holdings Soar

According to data compiled by crypto analyst EmberCN, Tether currently holds an impressive 57,576 BTC, equivalent to approximately $2.4 billion. The average purchase price per Bitcoin stands at $22,480, indicating an 85% increase in value. This essentially translated to a $1.1 billion unrealized profit since the acquisition of these assets.

The primary driver behind Tether’s substantial unrealized profit is the recent surge in Bitcoin’s price. The flagship asset briefly crossed the $42,000 mark this week before settling at its current price of $41,700, marking a notable 13.1% increase in the past seven days.

Tether’s Bitcoin holdings can be divided into two categories: firstly, 53,492 BTC were set aside before March of this year; secondly, a strategic move was made in May 2023, wherein Tether committed to allocating up to 15% of its net realized profits continually into Bitcoin.

Despite the volatility concerns of Bitcoin, Tether views it as a resilient, long-term investment. This decision aligns with the stablecoin’s overarching strategy to expand its portfolio beyond conventional assets such as cash and cash equivalents.

Tether had previously clarified that the aim is to keep the Bitcoin portfolio value well below the size of the company’s total excess reserves, which accounted for $2.48 billion at the end of the first quarter of 2023, while BTC holdings accounted for $1.5 billion.

Tether’s Paolo Ardoino then stated,

“The decision to invest in Bitcoin, the world’s first and largest cryptocurrency, is underpinned by its strength and potential as an investment asset. Bitcoin has continually proven its resilience and has emerged as a long-term store of value with substantial growth potential. Its limited supply, decentralized nature, and widespread adoption have positioned Bitcoin as a favored choice among institutional and retail investors alike.”

Tapping the Bitcoin Mining Sector

In addition to boosting its Bitcoin holdings, Tether also doubled down on plans to inject more funds into Bitcoin mining as part of its expansion plans.

Last month, the firm announced a cash surplus exceeding $3 billion in its attestation report with plans to dedicate $500 million to Bitcoin mining activities within the next six months.

This allocation will be directed toward establishing Tether’s Bitcoin mining facilities and investing in pre-existing BTC mining enterprises. This includes a recent provision of a $609 million debt financing facility to the European Bitcoin miner, Northern Data Group, as part of Tether’s strategic initiatives.