Leading stablecoin issuer Tether has seen its Bitcoin (BTC) investment strategy start to pay off as the company’s BTC holdings are now valued at $2.4 billion after rising more than 85% from the company’s average purchase price, leading to an unrealized gain exceeding $1 billion.
According to popular researcher EmberCN, since May 2023 Tether has acquired 4,083 BTC to bring its total stash to 57,576 BTC, purchased at an average price of $22,480. Bitcoin’s recent price surge that saw it surpass the $40,000 mark for the first time since May 2022 has seen the firm sit on substantial unrealized gains.
Bitcoin is, at the time of writing, trading at $44,000, helping Tether’s BTC stash become even more profitable. The firm revealed back in May that it was set to use 15% of its realized net operating profits to invest in the flagship cryptocurrency.
Tether currently earns income by managing USDT’s $87 billion reserve, which consists of US Treasury bills, gold, and other assets. As of September 30, the firm had accumulated around $3.2 billion in surplus cash, and has invested $800 million of its profits in various fields related to industry research.
Paolo Ardoino, the CEO of Tether, has said that the company’s commitment to maintaining additional reserves is a testament to their dedication to ensuring the strength and reliability of their stablecoin.
In contrast to conventional banks that function on a fractional reserve basis, Tether’s USDT is primarily backed by cash and short-term U.S. Treasury bills. As of the current writing, the yield on 1-month U.S. Treasurys is approximately 5.38%.
As CryptoGlobe reported, in May a popular blockchain researcher noted that data seemed to suggested Tether could be the owner of the 11th largest Bitcoin address which held over 55,022 BTC in it at the time – the value of Tether’s presumed holdings then.~
Tether is not just increasing its Bitcoin holdings but also venturing into Bitcoin mining. Last month, the firm reported a cash surplus of over $3 billion and plans to allocate $500 million to a Bitcoin mining expansion.
The $500 million are set to be spent over the next six months as the firm plans to set up Bitcoin mining sites in Uruguay, Paraguay, and El Salvador.
Featured image via Unsplash.