Tether, the company behind stable coin $USDT announce they will start buying Bitcoin with 15% of the profits
On May 17, 2023, Tether International Limited, the company behind the first and most widely used stablecoin, USDT, announced a significant shift in its investment strategy. The company decided to allocate up to 15% of its net realized operating profits towards purchasing Bitcoin (BTC), starting from that month.
This decision was driven by the aim to further strengthen and diversify Tether’s reserves portfolio. As per Tether’s Q1 2023 Assurance Report, the company already held approximately $1.5 billion in BTC in its reserves by the end of March 2023. Unlike many institutional investors who opt for third-party custody of their Bitcoin, Tether adopted the philosophy “Not your keys, not your bitcoin” and took possession of the private keys associated with all of its Bitcoin holdings.
Tether’s new approach focused exclusively on utilizing realized profits from its investment strategy, disregarding unrealized capital gains generated by price increases. This meant that Tether considered only the tangible gains from its operations, which consist of the difference between the purchase price and net proceeds from the sale or, in case of a maturing investment, between the purchase price and the reimbursed amount.
The decision to invest in Bitcoin was part of Tether’s conservative and prudent approach to investment decisions, aimed at strengthening, increasing, and diversifying its reserves. By implementing this framework, Tether aimed to enhance transparency and provide a clearer view of the company’s performance and capital allocation strategy.
Paolo Ardoino, CTO of Tether, expressed his belief in Bitcoin’s strength and potential as an investment asset. He highlighted Bitcoin’s resilience, its emergence as a long-term store of value with substantial growth potential, and its position as a favored choice among institutional and retail investors alike.
"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. Our investment in Bitcoin is not only a way to enhance the performance of our portfolio, but it is also a method of aligning ourselves with a transformative technology that has the potential to reshape the way we conduct business and live our lives.”
Tether’s decision to incorporate Bitcoin into its investment strategy aimed to capitalize on the digital asset’s potential growth, while leveraging its position as a trusted and reliable financial infrastructure provider. This move highlighted the company’s confidence in the Bitcoin and its commitment to supporting the broader ecosystem.
In addition to Bitcoin, Tether Group also focused on building communication through peer-to-peer technologies like Holepunch, energy, and bitcoin mining infrastructure.
