Tether-backed Northern Data sold bitcoin mining arm to companies run by Tether's own executives: FT

Northern Data, the German AI and data center company majority-owned by Tether, sold its bitcoin mining subsidiary Peak Mining for up to $200 million to a group of companies controlled by the stablecoin giant's top executives, the Financial Times first reported Friday.

Corporate filings show that the buyers of Peak Mining—Highland Group Mining Inc., Appalachian Energy LLC, and 2750418 Alberta ULC—are tied directly to Tether's leadership. British Virgin Islands records indicate that Highland Group Mining is controlled by Giancarlo Devasini, Tether's co-founder and chairman, and Paolo Ardoino, the company's CEO. Canadian documents list Devasini as the sole director of Alberta ULC. The ownership of Delaware-registered Appalachian Energy LLC remains opaque, with no directors publicly listed.

Northern Data announced the Peak Mining divestment in November but did not initially identify the buyers. The company is listed on a regulated but unofficial German market segment that requires certain corporate disclosures but does not mandate reporting of related-party transactions, meaning there was no obligation to reveal that Tether executives were on both sides of the deal.

The sale marks the second attempt to offload Peak Mining to entities linked to Devasini. In August, Northern Data announced a nonbinding agreement to sell the mining unit to Elektron Energy for $235 million. Elektron is also controlled by Devasini, according to British Virgin Islands filings. That deal never closed, and Peak Mining was instead sold at a lower price to the trio of companies identified in the recent filings.

The timing adds further complexity. Just days after the Peak Mining sale was announced, Rumble, the conservative video platform in which Tether holds a 48% stake, signed a business combination agreement to acquire Northern Data for approximately $767 million. Under that deal, Tether has committed to purchase $150 million in GPU services from Rumble and signed a separate $100 million advertising agreement.

Tether also extended a €610 million loan to Northern Data. Per the Rumble acquisition terms, half of that loan will convert into Rumble stock upon closing, with the remainder becoming a new loan from Tether to Rumble secured by Northern Data's assets. Tether, Northern Data, and Rumble did not immediately respond to a request for comment from The Block. 

Regulators have scrutinized Northern Data

The transaction comes amid broader regulatory scrutiny of Northern Data. In September, European authorities raided the company's offices in Germany and Sweden as part of an investigation into alleged large-scale VAT fraud potentially exceeding €100 million. Northern Data denied wrongdoing, attributing the probe to a "misunderstanding of tax treatment" related to its GPU cloud services and legacy crypto mining operations.

The raids followed the dismissal of a lawsuit that had leveled similar allegations. In April 2024, former Northern Data U.S. executives Joshua Porter and Gulsen Kama sued the company, alleging it was "borderline insolvent" and "knowingly committing tax evasion to the tune of potentially tens of millions of dollars." Porter, the former North America CEO, claimed in the complaint that he discovered the company had a $30 million German tax liability and only $17 million in cash with a monthly burn rate of $3-4 million. Kama, the former group deputy CFO, alleged that CEO Aroosh Thillainathan pressured her to find auditors who would work "with no questions asked" after KPMG raised going-concern questions about liquidity.

Northern Data called the suit "a textbook example of bad faith litigation." In October 2024, Porter and Kama voluntarily dismissed all claims. Declarations provided through a communications firm associated with Northern Data stated both had "misunderstood/misstated the facts" and were not fired for whistleblowing. No details of any settlement were disclosed, and neither plaintiff has commented publicly on what led them to withdraw allegations they had previously made under oath.

Tether, Northern Data's majority shareholder with approximately 54% ownership, has been aggressively expanding its bitcoin mining footprint. CEO Ardoino declared earlier this year that Tether aims to become the largest bitcoin miner globally by the end of 2025, citing the need to secure its more than $10 billion in bitcoin holdings. The company has invested over $2 billion in mining and energy infrastructure across 15 sites in Uruguay, Paraguay, and El Salvador, according to prior statements.

The stablecoin issuer has faced its own headwinds. S&P Global Ratings recently downgraded its stability assessment of Tether's USDT to 5, the weakest level on its scale, warning that the stablecoin's bitcoin exposure now exceeds its reserve buffer and could leave USDT undercollateralized in a market downturn.