Northern Data AG, a software company based in Frankfurt, Germany, is on the verge of finalizing a deal to sell its cryptocurrency mining operations, according to a recent report by Bloomberg. The decision to divest from mining comes as the company aims to take advantage of the recent surge in Bitcoin prices during November.
During a presentation at the Deutsches Eigenkapitalforum, Northern Data’s Chief Financial Officer, Elliot Jordan, revealed that the company has engaged bankers, solicited bids from potential buyers, and is currently evaluating offers from various parties. “It’s an ongoing process with offers coming in from multiple interested parties,” Jordan stated.
Northern Data, which is backed by Tether Holdings Ltd., is looking to raise capital to expand its artificial intelligence (AI) services business. With the halving of Bitcoin rewards earlier this year impacting mining profitability, many companies in the industry are exploring opportunities in AI as an alternative revenue stream.
While Northern Data has not disclosed a specific valuation for its mining business, previous estimates ranged from $300 million to $500 million prior to the recent Bitcoin price rally. Jordan emphasized the favorable market conditions for selling the mining operations, highlighting the potential for significant proceeds from the divestment.
Analysts predict that the sale of the mining arm could generate around $800 million in proceeds, considering the current market dynamics where peer companies are willing to pay up to $100 million per exahash operations per second. Northern Data’s partnership with Penguin Infrastructure Holding earlier this year aimed to increase its mining capacity to enhance its hash rate, which currently accounts for nearly 1% of the total Bitcoin mining network.
In a strategic move announced in October, Northern Data decided to shift its focus from cryptocurrency mining to AI solutions, aligning with the broader industry trend of miners transitioning towards AI platforms to leverage their computing power effectively. The transition to AI has proven beneficial for certain miners, with JPMorgan highlighting the positive impact on financial performance seen in companies like Core Scientific.
In a related development, Tether Investments, a subsidiary of Tether, has revealed plans to expand its commodities liquidity pool to between $3 billion and $5 billion by 2026. This initiative aims to provide financing for raw material transactions and offer capital to commodities brokers, while also generating interest on the temporary financing provided. Tether Investments has already engaged with major commodities traders who see the potential of using USDT for commodity trading due to its transparency and efficiency.
As Northern Data moves forward with the sale of its mining operations and expansion into AI services, the company is poised to capitalize on the evolving landscape of the cryptocurrency and AI industries. The strategic realignment reflects a proactive approach to adapt to market dynamics and explore new growth opportunities in the rapidly evolving digital economy.