Tether, the leading stablecoin provider, has reported an astounding $4.52 billion profit for the first quarter of 2024, shattering its previous records.
This remarkable financial performance can be attributed to a combination of substantial gains in its U.S. Treasury holdings, Bitcoin reserves, and gold investments.
TLDR
- Tether reported a record-breaking $4.52 billion profit in the first quarter of 2024, primarily driven by gains in its U.S. Treasury holdings, Bitcoin, and gold reserves.
- The majority of the profit, approximately $1 billion, came from Tether’s U.S. Treasury holdings, which back its stablecoin, USDT.
- Tether’s Bitcoin holdings surged from $2.8 billion to $5.4 billion, while its gold position increased from $3.5 billion to $3.7 billion, contributing significantly to the company’s overall financial success.
- Tether’s excess reserves now total $6.3 billion, providing a buffer against potential drawdowns or risks, and its net equity reached $11.37 billion as of March 31, 2024.
- Despite its impressive financial performance, Tether’s market share on centralized exchanges (CEXs) has fallen to 69% year-to-date, facing increasing competition from other stablecoins like FDUSD, USDC, and yield-bearing alternatives like Ethena’s USDe.
According to Tether’s Q1 2024 attestation report, released on Wednesday, the company earned approximately $1 billion in net operating profits from its U.S. Treasury holdings.
These short-term Treasury bills make up the majority of Tether’s reserves, which back its $110 billion dollar-pegged stablecoin, USDT.
In the first quarter alone, more than 12 billion new USDT tokens were issued, reflecting the stablecoin’s growing popularity. However, the bulk of Tether’s record-breaking profit can be credited to the substantial appreciation of its Bitcoin and gold holdings.
Compared to the previous quarter, the size of Tether’s Bitcoin reserves surged from $2.8 billion to $5.4 billion, while its gold position rose from $3.5 billion to $3.7 billion. These mark-to-market gains have significantly contributed to the company’s overall financial success.
Tether’s CEO, Paolo Ardoino, took to Twitter to highlight the company’s commitment to transparency, openness, and conservative risk management. He noted that Tether maintains a large amount of excess reserves, providing disclosures for the Group.
The company’s excess reserves now total $6.3 billion, an increase of nearly $1 billion from the previous quarter. These reserves serve as a buffer against potential drawdowns or risks related to Tether’s core reserve composition and more than cover the $4.7 billion worth of secured loans on its balance sheet.
The attestation report revealed that Tether Group’s equity surged to $11.37 billion as of March 31, 2024, a notable increase from the $7.01 billion reported on December 31, 2023.
This robust financial position highlights the company’s ability to navigate the ever-evolving cryptocurrency landscape and its commitment to maintaining a strong reserve backing for its stablecoin offerings.
Despite its impressive financial performance, Tether has yet to undergo a formal audit by one of the “Big Four” accounting firms. Ardoino has claimed that this is due to the perceived reputational risk associated with the company.
However, he has stated that Tether is working to build relationships with these firms to secure an audit in the future. In the meantime, Tether’s quarterly “attestation” reports, as attested to by BDO, provide insight into the company’s financial standing.
My summary Tether's Q1/2024 attestation. Another great quarter!
As of 31st March 2024:
– $4.52 Billion Profit for Q1/2024. ~1 billion in net operating profits, primarily derived from US T-Bills. The remainder derived from mark-to-market gains in Bitcoin and Gold positions.
-… https://t.co/kCBYQw9JGx— Paolo Ardoino 🤖🍐 (@paoloardoino) May 1, 2024
While Tether’s financial success is undeniable, the company is facing increasing competition in the stablecoin market. According to data from Kaiko, Tether’s market share on centralized exchanges (CEXs) has dwindled to 69% year-to-date.
The stablecoin is encountering mounting competition from alternatives like FDUSD, which capitalized on Binance’s zero-fee promotions, and USDC, backed by Circle, which witnessed a surge in its market share to 11%.
Additionally, the emergence of innovative yield-bearing alternatives like Ethena’s USDe is impacting USDT’s dominance. Since its launch in February, USDe’s trading volume has experienced substantial growth, although it receded from April’s peak of over $800 million following Ethena’s ENA airdrop.
As Tether continues to expand its business beyond stablecoins, launching new initiatives in data, blockchain-based financial infrastructure, and mining and energy sectors, its record-breaking profits in the first quarter of 2024 demonstrate the company’s strong financial position.
However, the increasing competition in the stablecoin market highlights the need for Tether to maintain its commitment to transparency and responsible risk management in order to sustain its leading position in the industry.
