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Tether, the world’s biggest stablecoin company, has held talks about investing in gold mining, seeking to deploy its vast crypto profits into bullion.
The company has held discussions with mining and investment groups about investing in the entire gold supply chain, from mining and refining to trading and royalty companies, according to four people familiar with the recent talks.
While gold has been a physical store of value for thousands of years and bitcoin has only existed as a digital instrument since 2009, there is a growing affinity between some industry executives.
Tether chief executive Paolo Ardoino has likened gold to “natural bitcoin”. “I know people think that bitcoin is ‘digital gold’,” he said in a speech in May. “I prefer to think in bitcoin terms — I think gold is our source of nature.”
However, within the conservative gold mining sector, Tether’s interest has been greeted with surprise — and questions about whether the unconventional newcomer will succeed. “They like gold. I don’t think they have a strategy,” said one mining executive.
Others are sceptical. “It is the weirdest company I have ever dealt with,” said one commodity industry executive.
One of the world’s most profitable crypto companies, Tether runs the USDT token, which is pegged to the US dollar and has a market capitalisation of $168bn, and generated profits of $5.7bn in the first half of this year. Tether is also one of the biggest holders of US Treasuries, making its money from the interest it earns on the bills it holds to back the token — the world’s most traded cryptocurrency.
Ardoino is a big advocate of gold and has previously said the metal should be a safer asset than any sovereign currency, and can be a complement to bitcoin.
Tether has already amassed a significant position in bullion — with $8.7bn of gold bars in a Zurich vault, according to financial statements, which it uses as collateral for its stablecoin.
In June Tether Investments, which is in charge of investing the company’s profits, paid $105mn for a minority stake in a gold royalty company, Toronto-listed Elemental Altus.
Several people familiar with Tether’s thinking said it has held discussions with multiple gold royalty companies, which invest in mines in return for a percentage of future revenues. It is considering further royalty deals, including further investments into Elemental Altus, these people said.
Tether separately held talks with Terranova Resources, a gold mining investment vehicle based in the British Virgin Islands, though these did not result in a deal, the people said.
It also runs XAUt, a crypto token backed by physical gold, although the token has small uptake compared to its main stablecoin, with a market capitalisation of $880mn.
Tether has also built a significant position in commodity trade finance, providing short-term finance for cargoes of raw materials, with a trading book that has grown into the billions, according to industry insiders.
Tether did not respond to requests for comment.
Other companies are also starting to try to bridge the gap between digital currencies and gold.
Blue Gold, a Nasdaq-listed company with a Ghanaian mine whose licence is contested, is planning to launch digital tokens for its future output, said chief executive Andrew Cavaghan.
“I believe a gold-backed token could really take off globally as a form of currency, because people can really feel how real it is — because they can convert it into stuff, or they can convert it into gold,” he said.
