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Tether's Strategic Shift: Investing 15% of Profits into Bitcoin

Tether, the issuer of the world's most significant stablecoin, is set to start regularly buying Bitcoin using a portion of its profits. The firm has outlined plans to channel up to 15% of its profits into BTC, marking a shift in its reserve strategy from U.S. government debt towards cryptocurrency.

Tether logo
Tether logo

Bitcoin Holdings and Reserve Diversification

As part of this new strategic direction, Tether intends to handle the custody of all its Bitcoin assets. As of the end of Q1, the company already had $1.5 billion worth of Bitcoin, representing about 2% of its total reserves. Most of its reserves, about 85%, were held in cash, cash equivalents, and other short-term deposit instruments, primarily Treasury bills.

Profit-Driven Bitcoin Accumulation Plan

This development follows Tether's recent announcement of its first-quarter net profit amounting to $1.5 billion. The company plans to increase its Bitcoin holdings by consistently buying more cryptocurrency. Tether anticipates that the existing and future Bitcoin in its reserves will not surpass the Shareholder Capital Cushion, further diversifying and strengthening its reserves.

Bitcoin as a Long-Term Value Store

Tether views Bitcoin as a stellar investment choice, citing its impressive returns over the last ten years. As the world's largest cryptocurrency, Bitcoin's value has skyrocketed by roughly 22,000% in the past decade. Currently, Bitcoin is trading at around $26,750, about 60% lower than its peak in 2021.

Tether CTO on Bitcoin's Investment Potential

According to Tether's CTO, Paolo Ardoino, the decision to invest in Bitcoin is based on its strength and potential as an investment asset. Arduino believes that Bitcoin has consistently demonstrated its resilience and has proven to be a long-term value store with considerable growth potential. Its limited supply, decentralized nature, and widespread adoption make Bitcoin appealing to institutional and retail investors.

Aligning with Transformative Technology

Arduino further emphasized that their Bitcoin investment is not only a strategy to enhance their portfolio's performance but it also represents a commitment to a transformative technology that has the potential to reshape business and everyday life.

Tether's Market Dominance

Tether's USDT remains the largest stablecoin on the market, with more than 83 billion tokens in supply, as per The Block's Data Dashboard data.