Earnings call transcript: Galaxy Digital’s Q4 2024 results highlight strong revenue growth

Galaxy Digital Holdings Ltd (GLXY) reported robust financial performance in its Q4 2024 earnings call, showcasing significant revenue growth and strategic product innovations. Despite a volatile crypto market, the company’s achievements include launching new financial products and expanding its market presence. With a market capitalization of $4.2 billion and trading at an attractive P/E ratio of 5.75x, InvestingPro analysis suggests the stock is currently undervalued. The stock price saw a modest increase of 2.41%, reflecting investor confidence in the company’s future initiatives.

Key Takeaways

• Full year 2024 net income reached $365 million, or $1.02 per diluted share.
• Operating revenues for the year exceeded $400 million, surpassing the previous two years combined.
• Strategic partnerships and product launches, such as crypto ETFs and ETPs, marked significant milestones.
• Galaxy Digital expanded its trading capabilities and registered as a U.S. swap dealer.
• The company anticipates a pre-tax loss of $275-$325 million in Q1 2025.

Company Performance

Galaxy Digital demonstrated strong performance in 2024, with net income and operating revenues reflecting substantial growth. The company capitalized on product innovation and strategic partnerships, positioning itself as a leader in the digital asset space. Despite the challenges posed by a volatile crypto market, Galaxy Digital’s diverse offerings and global reach have bolstered its competitive edge.

Financial Highlights

• Full year net income: $365 million ($1.02 per diluted share)
• Excluding legal settlement, net income: $532 million ($1.49 per share)
• Q4 net income: $174 million
• Q4 operating revenues: $117 million
• Total assets: $7.2 billion
• Equity capital: $2.3 billion

Outlook & Guidance

Looking ahead, Galaxy Digital expects a pre-tax loss of $275-$325 million for Q1 2025. The company is focusing on stablecoin and tokenization opportunities while continuing to develop its data center infrastructure. With a beta of 3.39 and year-to-date returns of -30.21%, investors should note the stock’s high volatility characteristics. Additionally, potential strategic initiatives, such as a U.S. Bitcoin reserve acquisition, are under consideration. For detailed volatility analysis and expert insights, visit InvestingPro.

Executive Commentary

CEO Mike Novogratz emphasized the company’s transition from a balance sheet-focused entity to one with robust operating businesses. He noted, "We’re at the cusp of transitioning from a balance sheet company to a company with two great operating businesses." CFO Tony Puquette highlighted the transformative potential of the U.S. market, stating, "The U.S. is going to be a sea change in terms of customer size and adoption."

Risks and Challenges

• Crypto market volatility could impact financial performance and investor sentiment.
• Regulatory changes, particularly in stablecoins and market structure, could pose challenges.
• Interest rate fluctuations may affect the company’s financial outlook and investment strategies.
• The competitive landscape in the digital asset space continues to evolve, requiring ongoing innovation and adaptation.

Galaxy Digital remains focused on leveraging its strengths and addressing potential risks as it navigates the dynamic digital asset market. The company’s strategic initiatives and forward-looking approach position it well for future growth and success.

Full transcript - Galaxy Digital Holdings Ltd (GLXY) Q4 2024:

Conference Operator: Good morning, and welcome to the Galaxy Digital Fourth Quarter twenty twenty four Earnings Call. Today’s call is being recorded. Later, you have

Conference Moderator: the opportunity to ask questions. At this time, I would like to turn the conference over to Jonathan Godowsky, Head of Investor Relations. Please go ahead.

Jonathan Godowsky, Head of Investor Relations, Galaxy Digital: Good morning and welcome to Galaxy’s fourth quarter and full year twenty twenty four earnings call. Before we begin, please note that our remarks today may include forward looking statements. Actual results may differ materially from those indicated or implied by our forward looking statements as a result of various factors, including those identified in our filings with the Canadian Securities Regulatory Authority on SEDAR Plus and available on our website or in future filings we make with other securities regulators. Forward looking statements speak only as of today and will not be updated. In addition, none of the information on this call constitutes a recommendation, solicitation or offer by Galaxy or its affiliates to buy or sell any securities, including Galaxy securities.

With that, I’ll turn it over to Mike Novogratz, Founder and CEO of Galaxy.

Mike Novogratz, Founder and CEO, Galaxy Digital: Good morning. Listen, we’ve got a lot to unpack today. I’m going to dive right in, but not before I tell you it’s a beautiful day in New York City. I’m very pleased with our full year 2024 results. I certainly wish they were indented by our settlement with the Attorney General.

Our team thought long and hard about settling. But when we weighed being tied up for two to three years in a lawsuit with the New York AG versus the opportunity ahead of us, it was pretty clear that the right thing for Galaxy to do was to put this behind us and move on. What I’m most pleased with in 2024 is that our operating business had both positive EBITDA and over $400,000,000 of revenue. In 2018, when we started Galaxy, the idea was to build an institutional crypto business. And I really feel like 2024, we hit the first major milestone in accomplishing that.

With the Trump administration’s new really welcome approach to crypto, we’re seeing nothing but new opportunities with institutions getting in the space. So I couldn’t be more excited for the forward trajectory. Our balance sheet had a fine 2024, which should have been expected given crypto’s excellent performance. Unfortunately, 2025 has not been kind to many of the crypto assets we hold, and our balance sheet has suffered some. I point this out because up until now, Galaxy’s results really have been driven by balance sheet management and the balance sheet in general.

I firmly believe that we’re at the cusp of transitioning from a balance sheet company to a company with two great operating businesses, one in crypto and one in data centers. And over time, the balance sheet will have less impact on results. That probably doesn’t happen for at least one or two more years, but that’s certainly the direction we’re traveling in. The most exciting news of the day is certainly our announced deal with CoreWeave. This is a giant and great first step in what I believe we’ll be building out one of The U.

S. Largest AI data centers. I’m going to give most of the details of this to Chris Peraro, who has worked diligently and tirelessly to get this done with a great team. Finally, I want to leave you guys with some macro thoughts. We went into the year with risk assets mostly on the highs.

Equities were expensive and crypto had a great run. The Donald Trump presidency has certainly added volatility into the mix. And if you think about it, we are taking, let me forty to sixty years of what was a security apparatus built around NATO and a financial apparatus built around multilateral cooperation, trade agreements that existed since before the civil since after World War II and changing all of that. And I think that’s going to continue to provide a lot of volatility to the market. Overall,

Tony Puquette, Chief Financial Officer, Galaxy Digital: I

Mike Novogratz, Founder and CEO, Galaxy Digital: think it’s going to be a tough time for risk assets for a while. Equities probably don’t trade nearly as well as they did last year. The dollar probably is sold off and yield curves probably steepen. And so in that environment, some of that is bad for crypto and some of that is good for crypto. Crypto went into the year with this spectacular enthusiasm based on coming out of four years of purgatory and into this new regulatory environment that was very pro crypto.

We can’t really have a more pro crypto administration than the one we have right now. And so a lot of people are asking, well, why are the prices lower? Well, every once in a while in the markets lots of the good news get priced in and I think you saw probably a short term market top around the inauguration, right? There was plenty of euphoria. There was a crypto ball in D.

C. Where everyone wanted to go. Crypto CEOs were everywhere. And while that maybe marked a short term top, I think for the medium and longer term, it’s wildly bullish. What do I see for the rest of this year?

I think we’re going to have choppy to tough markets for the next quarter or so. But by the second half of the year, the Fed should be cutting interest rates. We already have China and Europe increasing money supply. So when you have all three major forces in the world increasing money supply, that’s usually good for Bitcoin and the rest of crypto assets. We also have a government that has pledged to make a lot of changes in crypto regulation.

That doesn’t happen really to the second half of the year. So you talk about it early and then you get it you put the sausage to the sausage machine, but we should end up by third quarter, fourth quarter at latest with stablecoin legislation, with market structure legislation and with potentially the federal government to figure out ways to buy crypto. And so when I look at that backdrop, while I’m cautious in the short run, I’m still very optimistic about crypto in the long run. Finally, I want to welcome Tony Puquette to Galaxy as our new Chief Financial Officer. Tony joins us from Point seventy two, where he was a CFO for the past four years, leading our global finance team and overseeing the implementation of their digital assets trading strategy.

He brings extensive experience in banking, fintech and asset management and a strategic vision and leadership will be instrumental in driving our business forward. Tony, now over to you.

Tony Puquette, Chief Financial Officer, Galaxy Digital: Thanks, Mike, and thank you everyone for joining the call today. I’ll start with a quick review of 2024, then talk about the details for Q4, and lastly, provide an update on Q1 twenty twenty five preliminary results and an update on our U. S. Listing process. First, twenty twenty four was a milestone year for Galaxy, as Mike mentioned, marked by record operating business performance and the decision to strategically expand into building and operating AI infrastructure.

Throughout the year, we developed and deepened partnerships with leading institutions globally, expanded our trading capabilities and investment offerings to meet the evolving needs of our clients and played a pivotal role in executing the largest bankruptcy mandate in the history of crypto, while ensuring maximum value recovery for creditors. In 2024, we delivered $365,000,000 in net income or $1.02 per diluted share, which includes the $166,000,000 charge from the legal settlement with the New York Attorney General, which is the discounted value of the $200,000,000 in total that will be paid out over three years. Excluding this settlement charge, in 2024, we generated five thirty two million dollars in net income or $1.49 per share on operating revenues of more than $400,000,000 surpassing the generated the total generated over the previous two years combined. And importantly, this marked the first year of our combined operating businesses achieving profitability as Mike mentioned. Turning to expenses, excluding the one time settlement charge, operating expenses totaled $782,000,000 in 2024.

Notably, this includes roughly $240,000,000 in staking costs and interest expenses within our global markets business, which are directly tied to increased operating activity and higher revenue throughout the year. Looking ahead, we expect certain operating expenses to decline in 2025, driven by the absence of one time items and a meaningful reduction in mining related expenses as we transition our Bitcoin mining operations over the coming quarters. We had over five twenty employees globally at year end with roughly 70% in The U. S. And 30% internationally.

We will continue to hire in 2025 in order to one, invest in the growth of our core business and two, advance key strategic initiatives including the build out of our data center. We ended 2024 with approximately $7,200,000,000 in total assets, dollars 2,300,000,000.0 in equity capital, over $1,000,000,000 in cash and net stablecoins and $10,000,000,000 in combined assets under management and assets under stake across the platform, which is a powerful testament to the trust we’ve earned from our clients. Additionally, we have roughly $8.00 $9,000,000 in non current investments on our balance sheet, consisting of primarily of fund, private equity and venture investments, which are marked at fair value as of the December 2024. Building and maintaining a strong balance sheet is a core principle for Galaxy and we will continue to invest in order to fuel growth in our operating businesses and position our balance sheet to capitalize on opportunities we see in the digital asset ecosystem. Now turning to our Q4 and full year operating business results.

In the fourth quarter, Galaxy delivered $174,000,000 in net income and operating revenues on operating revenues of $117,000,000 Excluding the settlement charge, net income was $341,000,000 in Q1. Within global markets, we observed a notable uptick in trading volumes in Q4 as the result of the U. S. Election drove anticipation for greater regulatory clarity and provided a strong tailwind for the digital asset space. Spot and derivatives trading saw sustained momentum with increased institutional participation and heightened demand for option strategies.

Additionally, crypto’s strong price action alongside with growing on chain activity continued contributed to a robust market conditions. Against this backdrop, our markets business generated counterparty trading and advisory revenues of $68,000,000 a 26% increase quarter over quarter. This growth was primarily fueled by strength in derivatives trading and lending activity, where we capitalized on rising institutional demand and expanding market depth. As discussed last quarter, we previously crossed the threshold for notional derivatives volume traded, which required us to register as a swap dealer in The U. S.

This registration unlocked a massive opportunity for Galaxy and in 2024 we traded over $20,000,000,000 in notional derivative volume, more than twice the total in the previous year. This strong fourth quarter performance capped off a record year for our markets business, which saw counterparty trading and advisory revenue of $215,000,000 a 107% increase from 2023. This growth underscores the strength of our platform and the unique ability to serve our over 1,300 institutional clients. This business continues to gain momentum and we feel we are well positioned to build on this success in 2025 and beyond. On the lending side, we delivered another quarter of meaningful growth with revenue net of funding costs up 19% quarter over quarter to $20,000,000 as we saw a notable increase in demand for a variety of capital solutions.

We continue to originate loans to both new and existing clients and our average loan book grew to over $860,000,000 in the fourth quarter, a 29% increase from Q3. For the full year 2024, the lending business delivered $60,000,000 of net revenue or 72% year over year growth. As a reminder, we take a conservative approach to underwriting risk in the lending space with average over collateralization of more than 130% across the entire portfolio and a focus on underlying asset liquidity. We will continue to dedicate capital to the lending business in order to capitalize on growth and maturation in this overall market. On the advisory side, M and A picked up in 2024 as capital markets began to reopen throughout the year.

In Q4, our investment banking team successfully closed three deals. And while this business is still relatively nascent, we’ve seen a renewed appetite for strategic transactions. So far in 2025, we’ve seen a modest uptick in activity as traditional finance institutions and crypto native firms are identifying strategic synergies and both are looking for opportunities to scale and expand. Lastly, on the topic of stablecoins, we’re very excited about the upcoming launch of All Unity, the fully collateralized euro denominated stablecoin that we’re backing in conjunction with DWS and Flowtraders. This initiative is pending regulatory approval from the Boffin, which we expect to receive in mid-twenty twenty five and has already attracted strong interest from traditional financial institutions and corporates.

Longer term, we are very optimistic about this initiative and the broader stablecoin space as adoption has clearly taken hold for this increasingly important financial product. Now turning to the asset management business. In 2024, we made significant progress in expanding and enhancing our investment platform offering a comprehensive suite of solutions to meet the rising demand for digital assets and emerging technologies. A few highlights. One, we successfully launched two crypto ETFs with Invesco in The U.

S. And two ETPs with DWS in Europe. 2, we forged a strategic partnership with State Street Global Advisors and launched three active equity ETFs expanding our investment program into emerging technologies beyond digital assets. And three, we began fundraising for our new crypto venture fund, which has raised nearly $150,000,000 so far, garnering strong interest from the institutional LP community. We ended the year with $5,700,000,000 in assets under management and generated a record $49,000,000 in operating revenue throughout 2024.

In addition, we launched the Galaxy Absolute Return Fund in January 2025, a fundamentally driven multi asset hedge fund designed to provide investors with thematic exposure to digital assets while maintaining an equity like volatility profile. In parallel to scaling the alternative segment of our platform, our team has been actively engaged in liquidity provisioning deals, deploying capital to new networks and applications in need of liquidity for their protocols. With a strong balance sheet, deep market expertise and extensive relationships across the ecosystem, Galaxy is well positioned to capitalize on these emerging investment opportunities. We’re excited for the road ahead and look forward to sharing further updates as we scale our AM business throughout 2025. Now turning to our digital infrastructure business.

Let’s start with staking. In Q4, we generated $87,000,000 in gross blockchain rewards and distributed $61,000,000 resulting in net blockchain rewards of $26,000,000 a 147% increase quarter over quarter. For the full year, the staking business generated $58,000,000 in net rewards underscoring our rapid growth and expanding market presence. At the start of 2024, Galaxy had approximately two forty million dollars in assets under stake, a figure that grew by nearly 20 times to $4,200,000,000 at year end. Over the past few years, we’ve built a globally distributed multi cloud staking infrastructure supported by a growing team of dedicated professionals.

We established and maintained our position as one of the largest validators on Solana and expanded our capabilities to support an additional eight unique protocols. We have integrated with multiple custodians who collectively have more than $100,000,000,000 in assets across their platforms and whose clients can now access our staking services directly through their custodial accounts. We expect these integrations to drive meaningful organic growth for our staking business. For 2025, we are focused on developing new integrations and partnerships to help broaden the reach of Galaxy staking services and we are very excited about the opportunities to build, grow and innovate in this space. Now turning to mining.

Our mining business reported revenue of approximately $22,000,000 in the fourth quarter for a total of $95,000,000 in 2024. In Q4, we maintained a competitive average marginal cost to mine of less than $38,000 per Bitcoin flat quarter over quarter and reported a marginal cost to mine of approximately $26,000 for the full year. As discussed in our Q3 earnings call and as Mike mentioned earlier, we’ve made progress on the strategic shift of transforming the Bitcoin mining operation at our Helios campus into an AI HPC data center business, which Chris will talk about in more detail shortly. As a result, we plan to discontinue mining activity at Helios in the second quarter and expect our remaining Bitcoin mining activity to be materially smaller going forward. Before I turn it over to Chris, I want to touch on our Q1 twenty twenty five preliminary performance and provide an update on The U.

S. Listing process and some future enhancements to our financial reporting. As of March 27, we expect to generate a pre tax loss of between $275,000,000 and $325,000,000 in Q1. We expect our operating business net income, excluding balance sheet holdings, to be down modestly in Q1 and we anticipate ending the quarter with total equity capital of between $1,900,000,000 and $2,000,000,000 As outlined on Page five of our earnings release, we came into 2025 with approximately $1,300,000,000 in net digital asset exposure across Bitcoin, Ether and Solana, which together compromised the majority of our net digital assets held on our balance sheet. Crypto market volatility has increased in Q1 as Mike mentioned with Bitcoin down 7% and Ether down 40% year to date, which has led to a slowdown in client activity, lower assets under management and assets under stake and a reduced value of the net digital assets held on our balance sheet.

Importantly, Galaxy has a strong track record of successfully navigating challenging market environments and leveraging volatile periods as opportunities to expand client relationships and grow market share. On the process for our U. S. Listing, earlier today, we filed an amendment to our S-four registration statement with the SEC responding to the ninth round of comments. While we can’t provide specific timeline for redomiciling and listing Galaxy publicly in The U.

S, we are very encouraged by the progress we have made to date and we are hopeful for a quick turnaround from the SEC on our latest submission. And lastly, on financial reporting, in order to improve alignment of our disclosures with the changing nature of our business, we will be reviewing our financial reporting in the coming quarters and plan to update the operating business segment breakout and other financial disclosures in order to improve transparency and understanding of our company and operating performance. We look forward to sharing more with you on this in the coming quarters. With that, let me turn it over to Chris. Thanks, Tony.

All right, let’s talk data centers. Across our data center footprint, our mission has always been very clear to monetize our electrical capacity and infrastructure in the most profitable way possible for shareholders. At the heart of this strategy is Helios, Galaxy’s flagship data center campus in the Panhandle region of West Texas, where we have spent the past two years developing and operating industrial scale Bitcoin mining infrastructure and providing turnkey co location services to other Bitcoin mining companies. Today, I’m excited to share the next phase of our digital infrastructure evolution, a strategic expansion into AI and high performance computing to meet the increasing demand for highly reliable power and data center infrastructure to support accelerated AI growth within The United States. Galaxy has entered into a transformative fifteen year lease agreement with CoreWeave to power the next wave of artificial intelligence innovation.

As part of this agreement, Galaxy will initially deliver 133 megawatts of critical IT capacity to host CoreWeave’s AI and high performance computing infrastructure at our Helios campus. Under peak design day conditions, we expect the facility to operate with a PUE of 1.5, utilizing roughly 200 megawatts of gross power capacity at our private substation. Upon energization of the full 133 megawatts of critical IT, we expect to generate approximately $240,000,000 in revenue in the first twelve months. Over the fifteen year initial term of the agreement, taking into account annual escalators, we expect to generate approximately $4,500,000,000 of total revenue or $300,000,000 of average annual revenue. Note, this all excludes two five year extension options that exist in the lease.

Operating expenses, apart from expenses associated with Galaxy on-site personnel, will be passed completely through to our tenant. We therefore expect EBITDA margins for the duration of the contract to meet or exceed 90%. We expect go forward cash costs inclusive of various financing fees and capitalized fees during the construction period to total between $11,000,000 and $13,000,000 per megawatt of critical IT load. Projected CapEx is based on infrastructure design requirements to satisfy high density direct liquid cooling infrastructure in a true Tier three and plus one redundant environment. As discussed in our last earnings call, Galaxy is responsible for financing this transition from Bitcoin mining to AI and HPC infrastructure.

We are actively pursuing project level debt financing and anticipate finalizing agreements within the next one to two months. Additionally, in November, we raised approximately $400,000,000 through an exchangeable note offering and we expect to allocate a significant portion of these proceeds to fund the equity component of this construction, which is already underway. We have already commenced the selective demolition of our 126,000 square foot data center shell and will begin unplugging our mining machines in the second quarter of this year, while we continue to explore creative structures to monetize our remaining A6 fleet. The retrofit of Helios will be completed in phases with the first full 133 megawatts of critical IT load expected to be delivered throughout the first half of twenty twenty six. Beyond the capacity that we currently have contracted with Corweave, today we have ERCOT approval for an additional 600 megawatts of gross power capacity at our campus.

Given the immense power demand and low data center vacancy rates across The U. S, we have very high conviction in contracting this additional capacity for AIHPC. And in addition to the 800 megawatts of gross power capacity we’re already approved for, we have an additional 1.7 gigawatts under various stages of load study at Helios, which we anticipate some portion to be approved of in the next several months. CoreWeave is a key player in developing scalable and efficient computing solutions for AI and other HPC computing applications. Their tenants include major investment grade hyperscalers who are deeply committed to leading in AI innovation, investing hundreds of billions of dollars in infrastructure research and strategic partnerships to drive the future of artificial intelligence and cloud based computing.

Or we’ve selected Galaxy as a partner due to Helios’ unique attributes, as well as Galaxy’s proven ability to develop, own and operate digital infrastructure at scale. Our ability to serve CoreWeave underscores Galaxy’s evolution into a trusted provider for one of the world’s fastest growing AI cloud service providers. Now back to the operator for questions. Thank you.

Conference Moderator: We’ll go first to Patrick Moly with Piper Sandler. Please go ahead. Your line is open.

Patrick Moly, Analyst, Piper Sandler: And congrats on the deal announcement. So on the last call, you said that the hyperscaler, the term sheet that you signed, which we now know is with Core, we’ve included the option to develop all 800 megawatts of the approved powered Helios. So just wondering how we should think about the remaining 600 megawatts. Is that still exclusive to CoreWeave or can you kind of shop that to other folks? And how confident are you or what are your thoughts on that additional $600,000,000 being added to your agreement with CoreWeave over time, which is somewhat similar to the deal I think they struck with Core Scientific?

Thanks.

Tony Puquette, Chief Financial Officer, Galaxy Digital: Yes. And good morning, Patrick. Appreciate it, you joining in the question. Yes, in the term sheet and currently, the remaining capacity at Helios remains under option with CoreWeave with a couple of different tranches over various time frames. And so we are between CoreWeave’s expansion plans, which we know are very significant given the demand that they see on the client side, as well as continuing conversations with other market participants, which we are allowed to have and continue to have.

We are we’re highly confident that that space as it gets delivered is going to be contracted.

Patrick Moly, Analyst, Piper Sandler: Okay, great. And then just looking at the deal specs of the deal announced today, like how would you expect, I mean, those specs to kind of change in terms of revenue EBITDA margins on that additional 600 megawatts if CoreWeave does in fact exercise the option to add that to their contract?

Tony Puquette, Chief Financial Officer, Galaxy Digital: Yes. So, I think a couple of things, right? The actual development CapEx side, let’s start there. The at our site, Phase one, which was the first contract at least with CoreWeave was a retrofit of our existing shell for Bitcoin mining. And so there whereas the rest of the campus development is a greenfield development.

So there’s some extra civil work and structural work and design planning that has to go in at a baseline for the rest of the campus, all very doable, all not significant in the grand scheme of things, but would add to a development budget for the rest of the phases. The other thing that is at play is as technology develops, the design specs for what future data halls for various customers would be is likely to change, higher rack density, etcetera. And so, that part is still unknown. The thing I would point to though is the arrangement that we have with CoreWeave in Phase one as well as for under the options provides for Galaxy to earn a fixed deal based on CapEx costs. And so, it’s really a collaborative partnership with these potential large customers, quarterly most significantly, to spec out what they ultimately need from a design requires perspective and then whatever that resulting cost is creates a function of like of what Galaxy is going to earn from a yield perspective.

Patrick Moly, Analyst, Piper Sandler: Okay, great. That’s it for me. Thanks guys.

Conference Moderator: Thank you. And we’ll take our next question from Brett Knoblauch with Cantor Fitzgerald. Please go ahead.

Tony Puquette, Chief Financial Officer, Galaxy Digital: Hi guys. This is Thomas Shinske on for Brett Knoblauch. Thank you for taking my question and congrats on the quarter and deal announcement. I guess maybe to start on the 90% EBITDA margins. I know you highlighted that a lot of the operational and maintenance expenses will be passed through there.

Is there any additional expenses to highlight maybe being passed through there, maybe power costs? I know that’s something that’s been brought up in deals across the space. And then how confident you are in reaching those 90% EBITDA margins on a go forward basis? Yes, good morning. Thank you, Thomas.

Thanks for joining. So the vast majority of all expenses are passed through to the tenant, this case, Corweave. So that includes electricity, power costs, it includes other utility costs, it includes operations and maintenance. The only costs in addition to the CapEx, which we are funding and financing, and the ensuing ongoing carry costs of that financing, the only costs that Galaxy incurs are Galaxy personnel, who are going to remain on-site. And so that given that, we have pretty high visibility and pretty high confidence in the operating model and therefore the ability to achieve 90 plus EBITDA margins.

It’s I hesitate to call it a full triple net lease, but it’s triple net ish in structure. Perfect. Very helpful color. Thank you. And then on the additional 600 megawatt options, I guess, I know you highlighted Correv has some options there.

Are those on a ROFR basis or is the shopping pretty free for other potential hyperscaler tenants? So I would say that we only have so much time in a team that’s so large. And so we are spending a lot of our focus and time working with the great team at CoreWeave. Those agreements are not on a ROFR basis. However, we are not restricted from talking to folks in the market and understanding what their forward needs are going to be, particularly as we think about expansion beyond just our existing approved 800 megawatts.

And so when you look at our expectation for our actual full campus availability is going to be, you start talking about power delivery not just in 2026 and 2027, but ’28, ’20 ’9, ’30 and beyond through the whole additional 1.7 gigawatts. And that those conversations many people in the marketplace with very large aspirations and very large balance sheets are very interested in thinking about their forward planning for those out years. And so our business now in addition to executing on near term power and data center delivery is also about business development and building a smart pipeline with great customers for like that very long term build for the entire campus. Perfect. Thank you.

And then if I can just sneak in one more. On the $11,000,000 to $13,000,000 per megawatt CapEx guide, are there any upfront investments that will need to be repeated for future deals, potentially lowering the per megawatt CapEx for the remaining 600 megawatts? Yes. So there’s going to a good mix and balance there. Like for example, the fiber investment we’re making is a long haul fiber investment to deliver data streams back and forth to Dallas at ten milliseconds sub.

That for example is a project that is going to serve the entire site, not just the first quarter that we have contracted today that we’re building. The other element that’s going to be at play in the CapEx on the go forward is also speed to delivery, right? And so Phase one, what we committed to in concert with CorWeave was a pretty aggressive delivery schedule to meet their demand needs in 2026 for capacity. And so with that includes expediting equipment acquisition, which comes at a price. And so as we plan out forward late twenty six, ’20 ’7, ’20 ’20 ’8, delivery of data center halls, we have a lot more flexibility in terms of capital equipment acquisition from a price negotiating perspective, offset by the fact that like I said, there’s going to be technical design requirements that I think are going to change in terms of data center design for rack density as technology involves.

So there’s a lot that goes into there, but yes, there are components of what we’re building here that are leverageable across the whole site. Awesome. Thank you a lot and congrats again.

Martin Toner, Analyst, ATB Capital Markets: Thank you.

Conference Moderator: Thank you. We’ll go next to the line of Mark Palmer with The Benchmark Company. Please go ahead.

Mark Palmer, Analyst, The Benchmark Company: Yes. Thank you. And I’ll add my congratulations on the deal. Can you talk a bit about the process that led to the signing of the term sheet? How many other counterparties beyond CoreWeave were involved?

Are those counterparties potentially in the mix for the remaining 600 megawatts that would represent the next phase in the deal?

Tony Puquette, Chief Financial Officer, Galaxy Digital: Sure. So the process prior to and we signed the term sheet with CoreEVE God, I don’t even recall back when in October of twenty twenty four now. The process leading up to that, I think was pretty robust. We hired an advisor, Newmark Financial, who not only worked on us on the term sheet in the lease, but also helped us tap the market and talk to all the market participants. It was a pretty robust process, All things considered given that the large buyer base for scale power infrastructure when you’re talking hundreds of megawatts is not in the hundreds of potential buyers just in terms of actual size.

All of those players we are currently in contact with. And again, like I said before, we’re very focused short and medium term on working with CoreWeave because we think they’re awesome. We think they have a they’re very smart about this. They’re fast moving. They’re very diligent and they have a pretty big pipeline of demand.

And but as I said, sort of as we think about unlocking the incremental capacity for the Helios campus that could make us a 2.5 gigawatt mega data center campus over the long run, the conversations with folks who would take up that size of power over longer term periods ’28, ’20 ’9, ’30, ’30 ’1, those are the conversations that we are also having today.

Mark Palmer, Analyst, The Benchmark Company: And just one more, if you could shed some light on what the timeframes are for CoreWeave’s options with regard to the remaining 600 megawatts? I think you said that that would be in different chunks. Thank you.

Tony Puquette, Chief Financial Officer, Galaxy Digital: Yes. So that’s not something we’re going to disclose right now, but I would say that demand for locking up our capacity is pretty high. And the it’s important to us to have clarity on the timelines that we’re going to develop the sites because we have a lot of work on our end, not just planning and building, but raising financing and staging out our own balance sheet appropriately so that we can responsibly develop the site. And so the we’re very like there’s not long term options past 2025 to have the capacity locked up. Like we’ll be pursuing it diligently and working with Correv and if not other people in the marketplace to know that we have what the forward plan is for these existing capacity.

Joe Flynn, Analyst, Compass Point Research: Thank you.

Conference Moderator: Thank you. And we will go next to the line of Joseph Vafi with Canaccord. Please go ahead.

Joseph Vafi, Analyst, Canaccord: Hey guys, good morning and nice to see the Helios announcement and strong performance across the business. Just maybe one for Mike real quick. Spot prices are down a little bit, but the medium term outlook is looking pretty bright, I think, given maybe a better regulatory backdrop and other things. Just wondering how you’re looking at the M and A market now for Galaxy? Is this an interesting time to be looking at things?

And is there any are there any areas of the business that you think that would benefit from some additions? And then I’ll have a quick follow-up.

Mike Novogratz, Founder and CEO, Galaxy Digital: Yes, listen, it’s a great question. I would tell you that for us, what has stopped us from M and A in the past is that our stock always felt very undervalued to us. I’m still of that belief when I do a some of the parts balance sheet plus what I think the value of our crypto company is plus the value of what our data center company is becoming, I just think our stock is too cheap to use it at this point to buy crypto companies. I’m hoping that once we get public in The United States and once this data center build out has more clarity to the market, we trade at a value that will allow us to gobble up some really talented groups of people out there. I would tell you a lot of private crypto companies probably want to sell because they see trade by companies coming in with big balance sheets.

And most crypto businesses fortunately or unfortunately are tied to the overall index of crypto prices. And so if you’re a staking company, when the price of Solon and Ethereum goes down, your revenue goes down. And so I think there’s probably a lot of sellers in the private company space. We’re not a buyer at this point of anything significant because of the level of our currency, I, our equity. But that doesn’t mean we’re not looking and turning over a lot of stones and coming up with plans for when our currency gets to a level that we think it’s worth trading.

Joseph Vafi, Analyst, Canaccord: Sure. Thanks for that, Mike. And then, maybe just kind of drill down a little bit on funding the CapEx for Helios. It sounds like it’s coming along pretty nicely, but any other details there kind of what the cost of capital might be and are those kind of baked up financing arrangements yet or you’re still shopping it? Thanks a lot.

Tony Puquette, Chief Financial Officer, Galaxy Digital: Yes. So, we’ve had the benefit and luxury of a pretty robust financing market in particular focused on this space, which is great. We have spent a lot of time running a pretty robust process with dozens of lending groups who we know very well from past lives and current. We are already past the phase of sorting through them. We’ve selected a very strong lending group who were have great reputations, who were highly confident in they understand the asset, they understand us, and we’re moving forward together on finalizing the financing.

I think we’ve talked about this a little bit in the past. The financing market for these assets is pretty well known and pretty straightforward on the project side. We’ll see where it lands, but you should think about it as like eightytwenty debt to equity financing roughly. And the cost of capital for project financing is sort of 10% to 11% yield. The now that’s really for the construction phase, which for us in Phase one really, really is a twelve month expected process or less.

And so the way we think about how Galaxy is going to finance this asset on a go forward basis is think about it eightytwenty debt to equity and it is what we’ve currently circled for the project financing part. And then once we reach COD, commercial operating date, and rent starts flowing, then there’s a whole new market open to companies like us that have stabilized assets that are paying rent, which our expectation is going to allow us to refinance the project debt for lower cost likely higher quantum debt, which should unlock a lot of equity for Galaxy to then reinvest in building the campus. And so matching up timing and having capital markets be open and vibrant for all that to happen is what we’re looking at and like what we do really well and what we’re focused on nailing. But that’s how I would think about the evolution over time of Phase one, Phase two, Phase three and sort of debt equity mixes and how we’re going to finance it. Is that helpful?

Joseph Vafi, Analyst, Canaccord: Yes, that’s great. Thanks a lot, Chris.

Conference Moderator: Thank you. And we will take our next question from Mike Colones with H. C. Wainwright. Please go ahead.

Conference Moderator0: Good morning, guys. Congrats on the quarterly deal today and thanks for taking the questions. As we look across the crypto ecosystem and regulatory tailwinds that are expected to come from legislation in The U. S. This year based on Mike’s comments, What major themes do you see playing out as we progress through the rest of this crypto cycle?

And where will Galaxy be focusing its resources in 2025 to best capitalize on some of these things?

Mike Novogratz, Founder and CEO, Galaxy Digital: Yes, it’s a great question. I think the first obvious answer is stablecoins, right, both here and abroad. Stablecoins for payments, stablecoins for Internet of Things, stablecoins for cross border transactions and remittances are only going to accelerate. And so there is a lot of activity in DC right now on this stablecoin bill that is being worked on. On our venture side, we’re investing and Chris could go into some of the companies in plenty of businesses that operate in and around that area.

The second kind of obvious one is and what everyone’s kind of waiting for, Stablecoin is really the first real world asset that’s been tokenized if you want to think about RWA. But the tokenization of other stuff, if it’s mortgages or collectibles, equities is coming. And I keep saying it’s going to be like bankruptcy, it happens real slow then real fast. It hasn’t happened fast yet, but every single TradeFi participant is gearing up for that. And I think the crypto world is working on that.

And so what’s interesting, it’s really an infrastructure play. And one of the early promises of crypto was it was going to make things more efficient, more equitable and more transparent. And a lot of that was held back by the lack of regulatory clarity that we had for the last four years certainly, but really eight years. And as that’s changing, I think you’re going to see the acceleration there. Like we are close with our euro stablecoin called All Unity, which we’re doing with DWS, the Deutsche Bank subsidiary and Flow Traders, which is going to be bought and approved and regulated.

And so that will be our first actual stablecoin play. But in every other stablecoin, we are market making in them, we are promoting. And so we’re very much from our trading business in the heart of the stablecoin ecosystem.

Tony Puquette, Chief Financial Officer, Galaxy Digital: Yes. The only thing the thing I’ll add to that for a little bit of color is the I agree with Mike wholly on the focus for twenty twenty five in The U. S. From a regulatory perspective on stablecoins and other tokenized assets and market structure. Rather than us just being an investor market participant as a trader, maybe an issuer, rather than just do that, I’ll highlight the GK investment we made back in late twenty twenty two, it was actually early twenty twenty three when it closed, was a way for us to not just be a participant, but actually be a infrastructure technology provider underneath what we thought was going to be this wave coming.

Now it’s been a couple of years since it actually come here to The U. S. Luckily that business has been able to make real inroads. I think we have 30 clients now in the book, mostly internationally. But The U.

S. Is a sheet is going to be a C shift change in terms of customer size and adoption for the technologies both on the custody side as well as the tokenization side, that we’ve been able to build and enhance since we bought GK8 here. So I think the while it’s taken a while for it to really catch on, I wouldn’t underplay how excited we are about the opportunity set for our actual infrastructure technology to be a real part of the financial infrastructure as it changes here in The U. S. Going forward.

So we’re pretty excited about that.

Conference Moderator0: Really, really interesting color. Thanks for that. And just curious to get you guys views on U. S. Strategic Bitcoin reserve, what’s really the probability you see in The U.

S. To start to actively acquire more Bitcoin this year and what the implications could be if that were to happen with other nation states adopting similar strategies?

Mike Novogratz, Founder and CEO, Galaxy Digital: Yes. Listen, I think it’s higher than you might think solely based on the spectacular enthusiasm of many people around that Trump cabinet, right. Howard Letnick, who is one of the major voices in that cabinet, has been a vocal proponent of both stablecoins and Bitcoin. And he already has the ability given the executive order within his perch to a revenue neutral basis buy more Bitcoin. And so I think there’s a shot higher than like I would have thought six months ago that the government actually ends up buying some Bitcoin.

And that’s a really significant statement if it happens because it certainly will force other governments to think, hey, we should do that too. I mean, I think I said this on the last earnings call. I had direct conversations with one of the larger sovereign wealth funds who said, now that The U. S. Is buying, we’re buying.

And I think you’re going to continue to see some of that. I don’t think that happens until the third quarter if it happens because just getting the plumbing set up and the buy in. But I’d say there’s a lot of people in D. C. Focused on it.

And so it’s quite frankly why even in a world where crypto assets are heavy, it’s dangerous to be short. And this gap between crypto price action and all the exciting things we’re seeing is somewhat explainable and that a lot of the exciting things are around infrastructure. And connecting that infrastructure back to building on blockchains and using those blockchains so they start getting more activity and then hence and more support from the market is just going to take time. And so we’re in this gap between the promise of what could happen and people’s enthusiasm and a risk off environment for Ethereum or any of the other L1 or L2 blockchains. In time, they will be used a lot more than they’re being used today.

And so that’s just the gap and figuring out fair valuation versus future use is going to be the calculus and the science. Maybe it’s art, maybe it’s science to getting the markets right.

Conference Moderator: Thank you. And we’ll go next to the line of Joe Flynn with Compass Point Research.

Joe Flynn, Analyst, Compass Point Research: Hi, thanks for the question. I was wondering in relation to the construction CapEx and timelines it was expected to roll out in stages in 2026. Can you maybe walk us through what that ultimately looks like? And then from the you mentioned the fixed cost on CapEx, is that more a function of the initial deal or should we is that kind of the level, call it 15%, seventy % that we should expect on a go forward basis for the additional capacity? Thanks.

Tony Puquette, Chief Financial Officer, Galaxy Digital: Hey, Joe. Good morning. Yes, so let me hit timeline first. So we’re already underway a number of different sub projects in the development and spending CapEx and building. Right now the anticipated delivery date for the individual data halls for Phase one begins in early twenty twenty six and should be completed into Q2 twenty twenty six.

And so think of 2025 as develop construction development and very quickly in 2026 delivering operating data halls and then flowing rent for the next fifteen to twenty five years depending on options. That’s that and from an actual use of proceeds and CapEx perspective, it’s fairly straight lined over the year. Like if you think about equipment procurement, they tend to be 10% to 20% down deposits and then delivery over a number of weeks and then final payments schedules and once you take delivery and then installation, same thing with the EPC contractor. And so that’s really timing for Phase one. Phase two and Phase three, just to be specific about that, electrification of Phase two is expected late this summer.

So that means Phase two will be able to flow power late this summer. But when we think about development time for the actual data center that will be Phase two, you should think about that sort of layering in towards the later stage of Phase one project. And then for 2026, basically having like rolling delivery of data halls all the way up through basically 600 megawatts of gross capacity as currently planned. And then phase three, which is the final 200 megawatts of gross capacity currently approved today, that’s an early twenty seven electronification of the substation. And so you should think about a similarly overlaid project timeline from a CapEx and delivery standpoint, knowing that you can’t actually fill power until early twenty twenty seven anyway for the last phase.

Your second question, can you just clarify what you meant on the CapEx side, so I can answer appropriately? I might have lost you, Joe. I’m not sure what the second question was on CapEx. I’m happy to hit it if you if you want to clarify

Joe Flynn, Analyst, Compass Point Research: it. Sorry. Yes, sorry. It was more so related to the lease. So it was the percentage yield on CapEx structure.

Is that something we should expect going forward? Is that more of a function of the first deal? And like what that would like is there any escalator or anything over time? Or is it you expect it to be largely fixed?

Tony Puquette, Chief Financial Officer, Galaxy Digital: Yes. So, yes, I think these deals historically in data center world have gotten done in two different ways, either sort of an open book percentage yield on CapEx, where you’re working in concert with an end tenant to purpose build a data center design spec with a CapEx that kind of falls out of it and then you have an agreed upon gross yield based on that. That’s the construct that we’ve used largely here with CorWeave. I would expect given that these end use cases are relatively new, that to be the construct going forward for our business because these really have these aren’t these have not been replicated multiple times before such that a developer like ourselves would or probably should on spec say, we’ll agree to a rent number with an unknown CapEx budget and unknown design spec. And so where the market is today for developing these new data centers, they really need to be a collaborative design process with a resulting sort of agreed economic yield as a result.

So I would expect that to be very similar, at least for the foreseeable future as we develop the site.

Joe Flynn, Analyst, Compass Point Research: Thanks. That’s good color. And then just real quick, maybe digging in a little bit on that. I guess going back to the initial term sheet and then ultimately designing, were Corweave’s end customers involved in the overall design of the project? Was it something that they had to sign off on?

And ultimately kind of how the deal came about? Or is there like a bit of separation between your guys’ agreements with CoreWeave and I’ll tell whatever they sign?

Tony Puquette, Chief Financial Officer, Galaxy Digital: Yes. So our client is CoreWeave. CoreWeave is our main partner in all things economic, developing the site, specs, etcetera. Obviously, like on the other end of side of that, one of CoreWeave’s expertise is knowing who their clients are and what their clients want today and what their clients want tomorrow. And so the design spec that we ultimately land on for Phase one, Phase two, Phase three is a direct collaboration with us and CoreWeave, but it is definitely the result of demands both from Coreweave to the extent that they’re running their own proprietary cloud as well as what they know evolving spec needs are for other large hyperscalers in the world.

Joe Flynn, Analyst, Compass Point Research: Great. Thanks.

Conference Moderator: Thank you. And we’ll go next to the line of Bill Papanad Sarasosi with KBW.

Conference Moderator1: Good morning, gentlemen, and congrats on a strong quarter to close off the year. For my first question, with the repeal of SAB 121 following the election, can you provide an update on how the team is progressing with the GKA custody software licensing? What’s the reception been? It seems like that’s a bit of a low hanging fruit given the tech. Curious how you guys are looking at this?

Thanks.

Tony Puquette, Chief Financial Officer, Galaxy Digital: Yes. Hi, Bill. Very excited about the opportunities that are in front of us on that front. I would characterize SAB one hundred and twenty one repeal rescission as a major step, but not the only step necessary to allow TradFi institutions to custody and touch crypto. So, SAB 121 was a surprising and hurdle that was put in place that has now come down.

But there are other things being worked through on the market structure side on capital charges with a number of other government organizations that the biggest financial institutions in the world are actively working today in Washington to sort out and figure out, but need to get sorted out first. So there’s more work that has to get done throughout 2025 on market structure and on stablecoins from a regulatory perspective than just Sab 1 hundred and 30 1. But that is a major hurdle that came down. So, the timeline is still elongated in terms of figuring out when these institutions are coming in and how and what they’re going to offer, but all of that is fair game for GK. Outside The U.

S, I’ll keep pointing back to as we think about getting approval this year, which we’re very confident in given our partner in Deutsche Bank and DWS, Buffon approval for the first regulated euro stablecoin, that company, even though we’re a minority owner, ran a pretty robust process and ultimately selected GK from a technology perspective to be the technology backbone for issuing and maintaining smart contracts around stablecoin issuance, Mintburn, etcetera. And so, that’s a thing I would point to as a tangible example of once the regulatory window gets clear and there’s opportunity like GK provides a technological infrastructure solution that is a clear product market fit. So there’s still a little work to be done in The U. S.

Conference Moderator1: Appreciate that color. And then curious, was there any revenue prepayment attached to the announced lease agreement? And in addition to that, how quickly do you think it would take Core Reef to execute on the remaining 600 megawatt option? Thanks.

Tony Puquette, Chief Financial Officer, Galaxy Digital: So for Phase one, there was no prepayment for Phase one. I’ll say that much. And if I know the CoreWeave team, which I think we do really well at this point, they have a very large pipeline and are growing very fast. And one of the key choke points for them is ensuring that they have the adequate forward data center capacity to fulfill the demand that they have on the other side. And so my expectation is that we are going to continue to move pretty quickly at figuring out forward partnership and development of the campus.

Conference Moderator1: Thanks. And just one last question, if I may. How would you benchmark the latency specs between the Helios site in West Texas to the municipality of Dallas?

Tony Puquette, Chief Financial Officer, Galaxy Digital: So, I would say we purposefully expect the fiber project to ensure that we had between ten and fifteen milliseconds travel path back to Dallas. And we have two redundant paths that to maintain N plus one connectivity. And that benchmarking was meant to be speed that can service both not just training, but also inference loads. And so, the idea there was to ensure that even though Helios is in a relatively remote area that it actually can service and is a good fit for what we think the forward on actually AI load use cases are going to be so that it’s in play for many years to come.

Conference Moderator: Thank you. And we’ll go next to the line of Martin Toner. Please go ahead with ATB Capital Markets.

Martin Toner, Analyst, ATB Capital Markets: Good morning. Thanks for taking my call and congrats on this deal. How much CapEx like what type of redundant power will you use at site and how did that figure into the CapEx number if you can give us some detail there?

Tony Puquette, Chief Financial Officer, Galaxy Digital: Yes. So I think the short answer is, we’re building Phase one and future phases to a true Tier three and plus one redundancy across really all systems. And so that is a big component of why the CapEx estimate is between $11,000,000 and $13,000,000 per critical IT megawatt. It’s because every system from cooling to key critical IT, even down to the substation and fiber has redundancy. And so that this is the big difference from going from Bitcoin mining to two or three AI data center capacity.

So yes, that is the major driver.

Martin Toner, Analyst, ATB Capital Markets: Great. Thank you. And I think at the beginning of the call, you mentioned that the 1.5 PUE was like a peak PUE. Just wondering if you kind of talk us through any dynamics there and hopefully I didn’t mishear that.

Tony Puquette, Chief Financial Officer, Galaxy Digital: Yes. So no, no, you didn’t mishear that. I think the idea is just that we need to ensure that there is enough gross power available at peak times. And so whether that’s at extremely hot days in the peak of the summer in Texas or not that we have and depending on expected workloads of the underlying critical IT, which is a function of an expectation of CoreWeaver’s usage and their ultimate end client’s usage, the design takes all that work into consideration to ensure that we can effectively power 133 megawatts of critical IT with N plus one redundancy without having any downtime. And so that’s the net output is we expect to have up to 200 megawatts of gross power effectively ring fenced and dedicated to power the 133 at peak workload, peak time of day, etcetera.

Martin Toner, Analyst, ATB Capital Markets: Excellent. Thanks very much. That’s it for me.

Conference Moderator: And we would like to turn the call back over to Mike Novogratz. Please go ahead for closing remarks.

Mike Novogratz, Founder and CEO, Galaxy Digital: Guys, thanks for all the questions. As you can see, we’re very excited about the opportunities both in the data center world and in the crypto world. We’re happy to have the AG thing put behind us. Listen, I think the next couple of earnings calls, you’re going to start seeing a company that feels more mature with two strong business lines and we look forward to it. That’s all I got.

Have a great day.

Conference Moderator: We would like to thank everybody for their participation on today’s conference. Please feel free to disconnect your line at any time and have a wonderful day.

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