Tether invests in startup that's building a bitcoin mine in El Salvador

Quick Take

  • Tether has backed Max Keiser’s startup Volcano Energy, which is building a bitcoin mining farm in El Salvador.
  • Tether has invested in Volcano Energy’s first round worth $250 million, Paolo Ardoino told The Block.

Stablecoin issuer Tether has backed a startup called Volcano Energy that aims to build a bitcoin mining farm in El Salvador.

Tether has invested in Volcano Energy's first round of funding, it announced Monday. The first round is worth $250 million and Tether backed only a part of this round, Tether CTO Paolo Ardoino told The Block. 

It is unclear whether the full $250 million in funding has been raised. Volcano Energy did not immediately respond to The Block's request for comment. The goal is to raise $1 billion to fund the mining operation.

"Tether is one of the investors and the current size of our investment in Volcano Energy is quite contained, being well within our own excess reserves, so it's not taken from the reserves backing the tokens," Ardoino told The Block. Tether's excess reserves are its profits, on top of the 100% minimum reserves the company holds to back all issued tokens. Its excess reserves stood at around $2.5 billion at the end of the first quarter of this year.

Volcano Energy is co-led by Josue Lopez, a 23-year-old bitcoin advocate from El Salvador who serves as the CEO, and Max Keiser, who serves as chairman and is an advisor to El Salvador President Nayib Bukele. 

The size of the planned bitcoin mining farm is 241 megawatts (MW) — to be divided between 169 MW of photovoltaic solar energy and 72 MW of wind energy — in Metapan, a municipality in El Salvador, located in the Santa Ana department. This output is expected to generate a computing power of over 1.3 EH/s (exahashes per second). One EH/s is equivalent to one quintillion hashes per second.

"We are excited to be among the initial pioneers of renewable energy in El Salvador as an equity investor and advisor," said Ardoino. "This investment continues Tether's journey in diversifying its strategic ecosystem."

The news comes a week after Tether said it will produce energy and mine bitcoin in Uruguay.

Last month, the company said it will invest up to 15% of its profits in bitcoin on a regular basis to strengthen its reserves. Besides mining, Tether recently invested in CityPay.io, a payment processor based in Georgia.

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