Northern Data Group and Chainlink have recently announced significant strategic shifts aimed at enhancing their focus on artificial intelligence and blockchain technology. On Oct. 21, Northern Data revealed plans to explore divesting its cryptocurrency mining business, Peak Mining, to prioritize growth in AI and high-performance computing, while Chainlink introduced a pilot program utilizing AI and decentralized oracles to improve real-time data accessibility for corporate actions.
Chainlink Pilots Onchain Database of Corporate Actions Using AI and Decentralized Oracles
Chainlink, a leading provider of decentralized oracle networks, has taken a significant step towards modernizing financial data management by piloting an onchain database for corporate actions. Announced on Oct. 21, the initiative aims to leverage artificial intelligence (AI) and blockchain technology to address the long-standing challenges associated with unstructured data in the financial sector.
Corporate actions, such as mergers, dividends, stock splits, and other events affecting a company’s securities, represent some of the most complex and unstructured data challenges in finance. Typically, this information is presented in formats like PDFs, press releases, and other human-readable documents. The lack of standardized, real-time data results in a fragmented ecosystem where brokers, custodians, and investors often contend with duplicative sources, inconsistent timelines, and labor-intensive data cleaning processes.
According to Chainlink, these inefficiencies cost financial market participants approximately $3 million to $5 million annually. The company’s pilot project seeks to mitigate these issues by combining the strengths of AI, oracles, and blockchain technology to deliver digital data in near real-time.
In a detailed report, Chainlink highlighted the innovative approach: “By using data oracles paired with multiple [large language AI models], we were able to source unverifiable, unstructured, and often unreachable off-chain data and convert it autonomously into digital data that is available in near real-time.” This fusion of technologies aims to streamline the data pipeline, making it more efficient and reliable for financial market participants.
Chainlink’s pilot program involved key players in both traditional finance and blockchain. Among the financial institutions participating in the project were Franklin Templeton, Swift, and UBS. The collaboration extended to blockchain networks as well, including Avalanche and ZKSync.
Mark Garabedian, Director of Digital Assets and Tokenization Strategy at Wellington Management, expressed optimism about the potential impact of the pilot: “By leveraging AI and Chainlink oracles, […] we can dramatically reduce the manual processes required, enabling significant potential operational efficiency and cost reduction.”
Chainlink’s oracles play a crucial role in bridging the gap between blockchain networks and external data sources. By providing secure and reliable data feeds, Chainlink enables smart contracts to interact with off-chain data, such as financial market information, in a trustless manner. This capability is essential for the pilot’s goal of transforming unstructured corporate action data into a standardized, digital format.
The pilot project signals a growing trend of utilizing decentralized oracles and AI to solve some of the most pressing data-related challenges in institutional finance. If successful, this initiative could pave the way for widespread adoption of blockchain technology in traditional financial markets, particularly for applications where data integrity, transparency, and real-time access are critical.
The benefits extend beyond cost savings. By automating data extraction and standardization processes, companies could reduce operational risks associated with manual data handling, improve compliance, and facilitate faster decision-making. This advancement aligns with a broader movement toward the digitization of financial assets, which is rapidly gaining traction among institutional investors.
The onchain database pilot is part of a series of initiatives by Chainlink to deepen its engagement with institutional finance. Earlier this month, the company partnered with Taurus, a digital asset infrastructure provider, to facilitate the tokenization of assets for institutional markets. The partnership aims to promote the adoption of tokenized financial instruments by focusing on improving data transparency, cross-chain interoperability, and security.
The concept of tokenization involves converting physical or traditional financial assets, such as real estate or bonds, into digital tokens on a blockchain. This approach is gaining popularity among institutions due to its potential to increase liquidity, reduce settlement times, and enable fractional ownership.
Chainlink’s recent initiatives have also included integrating its proof of reserve technology into various financial products. For instance, on Sept. 23, 21.co, the parent company of cryptocurrency asset manager 21Shares, announced the use of Chainlink’s proof of reserve for its 21 Bitcoin product to enhance transparency and alleviate concerns regarding the wrapper’s backing. This addition aims to ensure that wrapped assets on a blockchain are consistently backed by corresponding reserves, thereby improving investor confidence.
Decentralized Oracles: Bridging Traditional and Digital Finance
The use of decentralized oracles, such as those provided by Chainlink, is becoming a cornerstone for integrating blockchain technology into traditional financial systems. Oracles act as intermediaries that fetch, verify, and transmit external data to blockchain networks. This functionality is crucial for executing smart contracts that rely on real-world information, such as asset prices, interest rates, or, in this case, corporate actions.
Chainlink’s efforts to enhance data accessibility and standardization through the combination of AI and decentralized oracle technology could lead to significant transformations in how financial data is handled. These advancements not only benefit blockchain networks but also have far-reaching implications for the broader financial industry, particularly in terms of automating and streamlining data workflows.
As Chainlink continues to pilot and refine its onchain database initiative, the company is well-positioned to influence the adoption of blockchain and AI technologies in financial markets. By demonstrating the practical benefits of using decentralized oracles for data management, the project could encourage other financial institutions to explore similar technological integrations.
Northern Data Group Eyes AI Expansion with Potential Sale of Peak Mining
In related news, Northern Data Group, a Germany-based technology company with interests in cryptocurrency mining and high-performance computing, is contemplating a strategic shift away from its cryptocurrency mining operations to bolster its artificial intelligence (AI) and high-performance computing (HPC) units. The company announced on Oct. 21 that it is initiating negotiations for the potential sale of its cryptocurrency mining subsidiary, Peak Mining, with the proceeds earmarked for advancing its AI and HPC ambitions.
In its Oct. 21 announcement, Northern Data disclosed that it had "resolved today to begin negotiations with interested parties" regarding the divestiture of Peak Mining. However, the company did not name any potential buyers, citing ongoing market volatility as a key factor that could influence the success of the divestment. The company made it clear that the sale is not guaranteed, as it would be contingent upon favorable conditions in the cryptocurrency market, among other variables.
The sale of Peak Mining would mark a significant shift for Northern Data, which has long been associated with the cryptocurrency mining industry. If the divestiture proceeds, Northern Data will concentrate its resources on its remaining business segments, including Taiga, a cloud computing platform, and Ardent, its data center operations.
A second statement released by the company later on Oct. 21 detailed how the funds from the potential sale would be allocated. According to the statement, the proceeds would be used to enhance Northern Data's AI product platform, expand data center infrastructure, and purchase additional AI-focused graphics processing units (GPUs). The shift in focus aligns with the company's broader strategic goal to capitalize on the growing demand for AI capabilities.
The company's Chief Operating Officer, Rosanne Kincaid-Smith, emphasized Northern Data's commitment to positioning itself at the forefront of the AI revolution. “As AI reshapes industries, Northern Data is focused on leading the charge at the forefront of the AI revolution,” Kincaid-Smith said.
This move comes on the heels of a promising financial performance in the third quarter of 2024, during which Northern Data generated 59 million euros ($64 million) in revenue, with 52 million euros coming from its AI and HPC divisions.
Northern Data's founder and CEO, Aroosh Thillainathan, highlighted this shift during the company's earnings report on Oct. 17, noting, "We’ve doubled down on our AI and HPC ambition." The pivot towards AI is consistent with the company's vision of leveraging cutting-edge technology to meet the evolving needs of various industries, including finance, healthcare, and cloud computing.
The potential divestment of Peak Mining also shines a spotlight on Tether's significant role as Northern Data's main shareholder. Tether, a prominent stablecoin issuer, owns approximately 46% of Northern Data's stock, according to Bloomberg. Tether's relationship with Northern Data began in September 2023, when it made its initial investment, followed by a substantial $610 million debt financing arrangement in November 2023. Tether continued to maintain its ownership stake in the company through additional investments, including a $233 million share issuance in July 2024.
Tether's financial backing has played a crucial role in supporting Northern Data's growth initiatives, especially its expansion into AI and HPC. The stablecoin issuer's interest in diversifying beyond its traditional cryptocurrency activities is evident in its investment strategy, which includes backing Northern Data’s AI pursuits. In March 2024, Tether expressed its ambition to explore AI-related opportunities, signaling a broader shift in its investment focus.
In addition to potentially divesting Peak Mining, Northern Data has been exploring other strategic moves to enhance its market position. In July 2024, the company indicated that it was considering an initial public offering (IPO) for the first half of 2025. The IPO would involve listing its Taiga cloud computing and Ardent data center businesses on the Nasdaq exchange in the United States, aiming to tap into the lucrative American capital markets.
Northern Data is already publicly listed on the Xetra, Munich, and Tradegate exchanges in Germany. An IPO on Nasdaq would not only provide the company with greater exposure to US investors but also increase its access to capital, which could be used to fund further growth in AI and HPC.
Tether's Mining and AI Ventures
While Northern Data may be considering a move away from cryptocurrency mining, Tether remains active in the sector. In November 2023, Tether’s CEO Paolo Ardoino announced plans to build mining facilities in Uruguay, Paraguay, and El Salvador, signaling a significant investment in the industry. In May 2024, Tether also invested in Bitdeer, a Bitcoin mining company.
Tether's continued investments in mining indicate that while Northern Data may be divesting its mining subsidiary, Tether’s broader strategy still includes a focus on cryptocurrency infrastructure.
The timing of Northern Data's potential divestment is particularly noteworthy given the volatility in the cryptocurrency market. Cryptocurrency mining has faced several headwinds in recent years, including regulatory challenges, fluctuating energy costs, and market price instability. These factors have prompted many companies to reassess their involvement in mining operations.
For Northern Data, shifting away from mining to focus on AI and HPC could represent a more stable and lucrative path forward. The AI market is experiencing rapid growth, driven by advances in machine learning, natural language processing, and other AI technologies. High-performance computing, which supports AI applications, is also in high demand as businesses seek faster and more powerful computational capabilities.
