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European prosecutors have opened a criminal investigation into Northern Data AG, a German computing company backed by stablecoin issuer Tether Holdings, over a massive purchase of high-performance chips.
Authorities are examining whether Northern Data improperly claimed tax breaks on about €500 million worth of GPUs by classifying them as artificial intelligence hardware, when investigators believe they were used for cryptocurrency mining. The case has already triggered raids in Germany and Sweden, the arrest of four people, and scrutiny of three Northern Data subsidiaries for tax fraud and money laundering.
From crypto roots to AI pivot
Northern Data originally marketed itself as a greener crypto mining operator, but shifted to AI cloud services as demand for computing surged. The company spent €400 million in 2023 on Nvidia H100 GPUs to expand its European AI business. The probe is now looking closely at purchases tied to its Swedish operations between 2021 and 2024.
Sweden scrapped tax breaks for crypto miners in 2023 but left them in place for data centers, sparking years of disputes over how companies report their GPU usage. Several miners have faced audits over claims they misclassified crypto hardware as AI infrastructure.
Tether connection
Tether, which owns a majority stake in Northern Data, said it was unaware of the investigation and stressed that the company is only a small part of its investment portfolio. Still, the probe comes at a sensitive moment, as Tether is reportedly seeking to raise as much as $20 billion to expand its global footprint.
Northern Data’s stock has dropped more than 60 percent this year. The company insists its GPUs are dedicated to cloud computing, not crypto mining, and blames the case on a misunderstanding of tax rules.
The outcome of the probe will determine whether Northern Data can continue positioning itself as an AI infrastructure leader, or whether its crypto past drags it deeper into legal risk.