Northern Data AG, a software company based in Frankfurt, Germany, is currently in discussions to sell its cryptocurrency mining operations, according to a recent report by Bloomberg. This strategic move comes as the company aims to take advantage of the recent surge in Bitcoin prices.
Elliot Jordan, the Chief Financial Officer of Northern Data, revealed during a presentation at the Deutsches Eigenkapitalforum that the company has engaged bankers, solicited bids from potential buyers, and is now evaluating proposals. Jordan described the process as ongoing, with multiple parties expressing interest in acquiring the mining operations.
In a bid to expand its artificial intelligence (AI) services business, Northern Data, which is supported by Tether Holdings Ltd., is seeking to raise funds through the sale of its mining assets. Following a significant drop in revenue for miners after a Bitcoin software update in April, many companies in the industry are exploring alternative revenue streams such as AI services.
While Northern Data has not disclosed a specific valuation for its mining business, pre-rally estimates ranged from $300 million to $500 million. Tim Wunderlich, an analyst at Hauck Aufhaeuser Lampe Privatbank AG, predicts that potential divestment proceeds could reach around $800 million in an optimal scenario, with peer companies willing to pay $100 million for each exahash of mining power.
The decision to divest from the cryptocurrency mining sector was made by Northern Data in October, with the company now focusing on expanding its AI solutions business. The shift towards AI services has become increasingly attractive to miners facing challenges such as reduced block rewards and lower hash rates.
In a related development, Tether’s CEO, Paolo Ardoino, has announced plans to grow the size of Tether Investment’s liquidity pool for financing raw materials transactions to between $3 billion and $5 billion by 2026. This initiative aims to provide liquidity to commodities brokers and generate interest on temporary financing, with a focus on transparency and speed in commodity trading using USDT.
Overall, Northern Data’s move to sell its mining operations and pivot towards AI services reflects a broader trend in the cryptocurrency industry towards diversification and strategic realignment. The company’s strategic decision aligns with market dynamics and positions them for long-term growth and sustainability in the evolving digital landscape.