Tether’s Investment Portfolio: From Celsius to Volcano Energy

• Tether is often diversifying its investments with Celsius Network and Volcano Energy among the most pronounced.
• The firm escaped losses with Celsius bankruptcy by liquidating its Bitcoin collateral.

Tether, the crypto giant behind the USDT stablecoin has grown over the years, diversifying its investment portfolio to include Celsius Network and Volcano Energy. These investments, although positive in some aspects, have altered the makeup composition backing each token in the ecosystem.

Tether’s Investment in Celsius and Volcano Energy

Tether disclosed its investment in the now-defunct crypto lending Celsius platform in 2022, shortly before it filed for bankruptcy. As we highlighted earlier, Celsius filed for bankruptcy in July 2022, following a deficit in its balance sheet. The former CEO, Alex Mashinsky was later arrested for fraud and market manipulation, leaving investors uncertain.

As regards Tether’s involvement in Celsius, the firm said its investment represented a minimal part of its shareholder’s equity. The firm disclaimed the investment’s correlation with its reserves or stability.

Tether added that it gave an overcollateralized loan denominated in Bitcoin (BTC) to Celsius before its collapse. Tether said it has since liquidated the collateral to cover the loan as part of the original terms of the agreement between the two entities. Subsequently, Celsius’ position was liquidated with no losses to Tether.

To prevent losses, Tether highlighted that it has developed a set of risk metrics and risk measurement processes. According to the firm, these measures allow the investment and financial teams to evaluate the risk involved in the company’s financial interactions.

Besides Tether’s loan agreement with Celsius, the firm has also announced a $250 million investment in El Salvador’s Volcano Energy. In addition to the funds, Tether will contribute its domain expertise in energy, hardware, and communications to build the project.

Notably, Volcano Energy is an estimated $1 billion venture set to establish a Bitcoin mining farm powered by renewable energy. The project aims to integrate solar and wind systems in Metapán’s volcanic region to create a 241-megawatt renewable energy generation park. 

Tether’s decision to invest in El Salvador is not shocking, considering its relationship with President Nayib Bukele and the government. In a recent update, we covered that Tether subsidiaries in the country, Moon Gold and Moon Gold El Salvador are behind the development of the aUSDT, its gold-backed stablecoin.

Tether’s Bitcoin Mining Contributions

Meanwhile, Tether’s investment in El Salvador’s Volcano Energy follows its mission to invest in renewable energy sources to support and promote sustainable Bitcoin mining. In 2023, Tether partnered with a local licensed company in Uruguay to launch sustainable Bitcoin mining operations in the country. 

According to our earlier article, Paolo Ardoino, Tether’s CTO said the initiative is aimed at ensuring Bitcoin mined by the firm leaves a minimal ecological footprint.

Per business transactions, USDT has emerged among popular networks of deployment in emerging markets. USDT’s strong appeal is due to its low fees, instant settlement, and easy access to the USD.