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Tether Announces Record $2.9 Billion Profit in Q4 2023, Excess Reserves Hit $5.4 Billion

Stablecoin issuer Tether has reported a record-breaking net profit of $2.9 billion in its Q4 2023 attestation report. Accompanying this impressive profit figure is the news of an all-time high in excess reserves, which now total $5.4 billion.

This notable increase in reserves provides substantial backing for Tether’s tokens in circulation. The report, audited by the global firm BDO, marks a period of robust financial performance for Tether, reinforcing its position as a major player in the stablecoin market.

Tether’s Financial Breakdown: Profits and Investments in Q4

Tether’s net operating profit in Q4 2023 hit approximately $1 billion, largely attributed to its holdings in U.S. Treasuries. Additionally, a significant portion of this profit came from the appreciation in the value of Tether’s bitcoin and gold reserves during the quarter.

This boost in profit led to an increase of $2.2 billion in Tether’s excess reserves, bringing the total to $5.4 billion. The company allocated the remaining profits to fund various projects, including mining, AI infrastructure, and P2P communications. These investments are classified separately and not included in Tether’s reserve calculations.

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The auditing firm BDO verified that Tether’s $4.8 billion in outstanding unsecured loans at the end of the year were fully backed by these excess reserves. Tether has expressed pride in eliminating the risk associated with secured loans from its token reserves, signaling a strategic move towards financial stability and risk mitigation.

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Tether’s Strategic Financial Maneuvers and Annual Performance

In response to community concerns, Tether has made a significant move by accumulating enough excess reserves to completely cover all its secured loan exposures.

The company emphasizes that while these loans were heavily overcollateralized, addressing community feedback has been a priority, leading to this proactive financial strategy.

The core operation of Tether, managing the USDT stablecoin, has been highly profitable. For the year, this activity has culminated in a substantial net profit of $6.2 billion, underscoring the success of their stablecoin management in the digital currency market.

Bitcoin Acquisition and Reserve Growth

Tether Expands Bitcoin Portfolio: In the fourth quarter, Tether made a notable addition to its cryptocurrency portfolio by acquiring an extra 8,888 bitcoins.

This purchase has increased its total Bitcoin holdings to approximately 66,465 BTC, valued around $2.8 billion. This strategic investment reflects the company’s confidence in Bitcoin as a valuable asset in its reserve mix.

As of December 31, Tether’s consolidated reserves have reached an impressive total of at least $97 billion. This includes assets such as $80.3 billion in U.S. Treasuries and $3.5 billion in gold.

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The firm’s liabilities related to issued digital tokens stand at $91.6 billion, with 90% of this amount being backed by cash or cash equivalents, showcasing a strong liquidity position.

Tether CEO Paolo Ardoino highlighted the company’s dedication to openness and sound financial practices. The Q4 attestation report, as per Ardoino’s statement, is a testament to Tether’s ongoing efforts to maintain transparency, stability, and responsible management in its operations.

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Donald Haymatter

Donald Haymatter is an expert broker with 15+ years of experience. He stays up-to-date with the latest financial news and trends to help clients make informed investment decisions. Donald is known for his analytical approach and personalized investment advice. Outside of work, he enjoys reading and mentoring young professionals.

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