Galaxy Announces Third Quarter 2023 Financial Results and October Update

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Galaxy Announces Third Quarter 2023 Financial Results and October Update

Canada NewsWire

Equity capital was $1.5 billion at the end of the third quarter and $1.6 billion as of October 311

Net loss of $94 million in the third quarter and approximately $124 million of income before tax in October1

Assets Under Management increased to $3.9 billion in the third quarter, up $1.4 billion quarter-over-quarter2

NEW YORK, Nov. 9, 2023 /CNW/ - Galaxy Digital Holdings Ltd. (TSX: GLXY) (the "Company" or "GDH Ltd.") today released financial results for the three and nine months ended September 30, 2023, for both itself and Galaxy Digital Holdings LP (the "Partnership" or "GDH LP"). In this press release, a reference to "Galaxy", "we", "our" and similar words refer to GDH Ltd., its subsidiaries and affiliates including GDH LP, or any one of them, as the context requires.

Preliminary Financial Highlights, through October 31, 20231

Since the end of the third quarter, digital asset prices materially changed and our business has benefited from heightened market volatility and increased trading volumes. Galaxy's income before tax was approximately $124 million in the month of October, driven primarily by our market positioning and the appreciation of digital asset prices. Equity capital increased to approximately $1.6 billion over the same period.

Corporate Updates

US Listing and Reorganization: Galaxy continues to work on completing its proposed reorganization and domestication to become a Delaware-incorporated company and subsequently list on the Nasdaq, upon completion of ongoing SEC review and subject to stock exchange, shareholder and applicable regulatory approvals of such transactions.

Share Buyback Program: As announced on May 26, 2023, the Company commenced a new normal course issuer bid on May 31, 2023, and is eligible to purchase up to 10 million ordinary shares. For the period between July 1, 2023 and October 31, 2023, Galaxy repurchased approximately 1.2 million shares at an average price of CAD $4.69

Select Financial Metrics

Q3 2023

Q2 2023

% Change

Equity Capital

$1,466M

$1,542M

(5 %)

Liquidity

$749M

$696M

8 %

Cash & Net Stablecoins3

$395M

$468M

(16 %)

Net Digital Assets4

$354M

$228M

56 %

Net Income (loss)

($94M)

($46M)

(104 %)

Note: Throughout this document, totals may not sum due to rounding. Quarter-over-quarter percentage change calculations are based on actual results.
(1) This preliminary, unaudited quarter-to-date financial information is as of October 31, 2023. Financial results include impacts of non-cash equity based compensation but exclude completion of the full quarterly valuation process of our investment portfolio. This data is subject to change as management completes its quarterly close procedures.
(2) As compared to the quarter ended June 30, 2023.
(3) Includes Cash Equivalents. 
(4) Refer to page 15 of this release for a breakout of our net digital assets position.

Galaxy Global Markets

Galaxy Global Markets ("GGM") offers institutional-grade expertise and access to a broad range of digital asset products, including digital asset spot and derivatives trading, structured products, financing, as well as capital markets and M&A advisory services for corporate clients. GGM operates in two discrete business units – Trading and Investment Banking.

Trading

Trading reported counterparty trading revenue of $14 million, down $6 million quarter-over-quarter ("QoQ"). The decrease was primarily due to record low volatility and market positioning. Subsequent to quarter-end, our counterparty trading desk's market positioning benefited from the favorable asset price movements and significant uptick in volatility and has generated $24 million of revenue in October. Despite the decline in revenue QoQ, counterparty trading volumes increased 70% versus the second quarter and our average loan book size expanded to $553 million.

Key Performance Indicators

Q3 2023

Q2 2023

% Change

Loan Book Size (Average)

$553M

$507M

9 %

Counterparty Loan Originations

$117M

$115M

2 %

Counterparty Trading Volumes QoQ Change

70 %

(29 %)

N.M.

Total Trading Counterparties

1,028

999

3 %

Active Trading Counterparties

284

291

(2 %)

 

Investment Banking

Investment Banking successfully closed two deals in the quarter, serving as advisor to Gamercraft on its latest investment round and serving as the exclusive financial advisor to Securitize in its acquisition of Onramp Invest, both of which we expect to realize as revenue at a later date. Notably, the team was also selected to represent Prime Trust in Nevada Receivership as part of an ongoing restructuring mandate. Galaxy continues to execute against a pipeline of mandates representing $2.2 billion in potential deal value.

Key Performance Indicators

Q3 2023

Q2 2023

% Change

Deals Closed

2

1

100 %

Pipeline

24

23

4 %

Deal Value of Pipeline

$2.2B

$1.0B

120 %

_____

KEY TERMS

Counterparty Trading Revenue: revenue from counterparty-facing activities from our Derivatives, Credit, Over-the-Counter Trading, and Quantitative Trading businesses, net of associated funding charges.

Loan Book Size (Average): average market value of all open loans, un-funded arrangements to finance delayed trading/settlement (for example over weekends), and uncommitted credit facilities in the quarter.

Counterparty Loan Originations: market values of all loans, credit facility draws, and credit facilities originated to external counterparties in the quarter. Does not include rolled loans as a new origination; rolled loans can be generally defined as loans where the maturity was extended but no other material terms were changed.

Active Trading Counterparties: counterparties with whom we have traded within the past 12 months and who are still onboarded with Galaxy's trading business.

Pipeline: the number of open engagements and transactions the Investment Banking team is in market with.

Deal Value of Pipeline: the theoretical aggregate deal value associated with the Investment Banking pipeline.

Galaxy Asset Management 

Galaxy Asset Management ("GAM") provides investors access to the digital asset ecosystem via a diverse suite of institutional-grade investment vehicles that span passive, active, and venture strategies. 

GAM management and performance fees were $4.7 million in the quarter, representing an 11% increase QoQ. GAM reported preliminary assets under management of approximately $3.9 billion as of September 30, 2023, a 58% increase QoQ. The increase in AUM was primarily driven by net inflows from new actively managed client mandates that came in at the end of the quarter. AUM consisted of $768 million in passive strategies, $1,704 million in active strategies and $1,456 million in venture strategies.

Key Performance Indicators

Q3 2023

Q2 2023

% Change

Management and Performance Fees

$4.7M

$4.2M

11 %

Total AUM

$3,927M

$2,489M

58 %

     Passive AUM

$768M

$958M

(20 %)

     Active AUM

$1,704M

$103M

1,548 %

     Venture AUM

$1,456M

$1,428M

2 %

Number of Portfolio Company Investments1

223

217

3 %

(1) Includes investments held directly on the Partnerships' balance sheet and indirectly through the Galaxy sponsored funds.

_____

KEY TERMS

Assets Under Management: all figures are unaudited.  AUM is inclusive of sub-advised funds, committed capital closed-end vehicles, seed investments by affiliates, affiliated and unaffiliated separately managed accounts, and fund of fund products. Changes in AUM are generally the result of performance, contributions, withdrawals, and acquisitions.

  • Preliminary AUM associated with GVH Multi-Strategy FOF LP is based on management's most recent estimate.
  • AUM for committed capital closed-end vehicles that have completed their investment period is reported as NAV (Net Asset Value) plus unfunded commitment.
  • AUM for quarterly close vehicles is reported as of the most recent quarter available for the applicable period.
  • AUM for affiliated separately managed accounts is reported as NAV as of the most recently available estimate for the applicable period.

Passive Strategies: single- and multi-asset private funds, as well as a suite of regulated spot digital asset exchange-traded funds offered through partnerships with asset managers globally.

Active Strategies: Galaxy's Liquid Alpha strategy and the management of certain bespoke mandates

Venture Strategies: organized around two investment themes: Interactive Ventures and Crypto Ventures. Galaxy Interactive is GAM's sector-focused venture arm, managing client capital across three funds. GAM's Crypto Ventures sleeve invests client capital across two global, multi-manager venture funds and manages a subset of Galaxy's balance sheet venture investments.

Galaxy Digital Infrastructure Solutions

Galaxy Digital Infrastructure Solutions ("GDIS") consists of proprietary and hosted bitcoin mining services, GK8 self-custody technology solutions, and validator services.

Mining

Mining revenue was $14.3 million in the quarter relative to power purchase agreement and external hosting expenses, net of curtailment credits, of ($2.2 million). We reached 3.9 exahash per second of hashrate under management across our proprietary and hosted footprint, as we continued to scale our Helios facility in West Texas. Our effective power management strategy led to a negative average marginal cost to mine in the quarter. We expect our average marginal cost to mine to increase in the fourth quarter relative to the third and second quarters in anticipation of fewer opportunities to economically curtail our mining operations and a higher network hashrate.

Key Performance Indicators

Q3 2023

Q2 2023

% Change

Mining Revenue

$14.3M

$15.4M

(7 %)

Proprietary Mining Revenue

$8.8M

$8.6M

3 %

Hosted and Other Mining Revenue1

$5.5M

$6.8M

(19 %)

Total Hashrate Under Management

3.9 EH/s

3.7 EH/s

7 %

Proprietary Mining Hashrate

1.8 EH/s

1.7 EH/s

10 %

Hosted Mining Hashrate

2.1 EH/s

2.0 EH/s

4 %

Number of Proprietary BTC Mined

309

307

1 %

Average Marginal Cost to Mine

< $0

$9K -$10K

N.M.

(1) Includes revenue from hosting clients, leasing agreements and other mining related activities.

 

Self-Custody and Validator Solutions

Self-Custody and Validator Solutions are focus areas in our continued commitment to the future of decentralized networks. This includes supporting the integrity of protocols and ecosystem projects by operating validator nodes to secure blockchains, and by offering self-custody technology solutions to institutions through GK8.

Key Performance Indicators

Q3 2023

Q2 2023

% Change

GK8 Total Client Count

16

15

7 %

_____

KEY TERMS

Hashrate Under Management: the total combined hashrate of active proprietary and hosted mining capacity managed by Galaxy.

Proprietary Mining Hashrate: the hashrate attributed to Galaxy owned and operated mining rigs.

Hosted Mining Hashrate: the hashrate attributed to third-party machines operated by Galaxy for a client.

Number of Proprietary BTC Mined: the total amount of bitcoin mined from proprietary mining operations.

Average Marginal Cost to Mine: the marginal cost of production for each bitcoin generated during the period. The calculation excludes depreciation, mark-to-market on power contracts, and corporate overhead.

GK8 Total Client Count: the total number of clients contracted to use GK8's technology solutions.

GDH Ltd.'s Financial Highlights

As the only significant asset of GDH Ltd. is its minority interest in GDH LP, its results are driven by the results of GDH LP. GDH Ltd. accounts for its investment in this associate (GDH LP) using the equity method. The investment, initially recorded at cost, is increased or decreased to recognize GDH Ltd.'s share of the earnings and losses of GDH LP. During the three months ended September 30, 2023, an impairment assessment was required under International Financial Reporting Standards and GDH Ltd.'s minority interest in GDH LP was marked down based on the TSX quarter-end closing share price. An impairment expense of $44.9 million was recognized during the three months ended September 30, 2023. During the first and second quarters of 2023, the Company had recognized reversal of impairment of $128.1 million resulting in net impairment reversal of $83.2 million for the nine months ended September 30, 2023.

The net comprehensive income (loss) of GDH Ltd. was ($68.8 million) and $83.2 million for the three and nine months ended September 30, 2023, respectively.

Earnings Conference Call

An investor conference call will be held today, November 9, 2023, at 8:30 AM Eastern Time. A live webcast with the ability to ask questions will be available at: https://investor.galaxy.com/. The conference call can also be accessed by investors in the United States or Canada by dialing 1-844-746-0741, or 1-412-317-5107 (outside the U.S. and Canada). A replay of the webcast will be available and can be accessed in the same manner as the live webcast on the Company's Investor Relations website. Through December 9, 2023, the recording will also be available by dialing 1-844-512-2921, or 1-412-317-6671 (outside the U.S. and Canada) and using the passcode: 10183468. 

About Galaxy Digital Holdings Ltd. (TSX: GLXY) ("GDH Ltd.") and Galaxy Digital Holdings LP ("GDH LP")

Galaxy (TSX: GLXY) is a digital asset and blockchain leader providing access to the growing digital economy. We serve a diversified client base, including institutions, startups, and qualified individuals. Since 2018, Galaxy has been building a holistic financial platform spanning three complementary operating businesses: Global Markets, Asset Management, and Digital Infrastructure Solutions. Our offerings include, amongst others, trading, lending, strategic advisory services, institutional-grade investment solutions, proprietary bitcoin mining and hosting services, network validator services, and the development of enterprise custodial technology. The company is headquartered in New York City, with global offices across North America, Europe, and Asia. Additional information about Galaxy's businesses and products is available on www.galaxy.com.

This press release should be read in conjunction with (i) GDH LP's Management Discussion and Analysis and Consolidated Financial Statements for the three and nine months ended September 30, 2023 and (ii) GDH Ltd.'s Management Discussion and Analysis and Consolidated Financial Statements for the three and nine months ended September  30, 2023 (together, the "Consolidated Financial Statements" and "MD&As"), which have been filed on SEDAR at www.sedarplus.ca.

Disclaimers and Additional Information

The TSX has not approved or disapproved of the information contained herein. The Ontario Securities Commission has not passed upon the merits of the disclosure record of Galaxy.

This press release contains certain pre-released fourth quarter 2023 financial information (the "pre-released financial information"). The pre-released financial information contained in this press release is preliminary and represents the most current information available to management. The Partnership's actual consolidated financial statements for such period may result in material changes to the pre-released financial information summarized in this press release (including by any one financial metric, or all of the financial metrics) as a result of the completion of normal quarter and year end accounting procedures and adjustments and annual independent audit or due to other risks contained in the Annual Information Form for the year ended December 31, 2022. Although the Company believes the expectations reflected in this press release are based upon reasonable assumptions, the Company can give no assurance that actual results will not differ materially from these expectations.

No Offer or Solicitation 

As previously announced, the Company intends to complete its proposed reorganization and domestication to become a Delaware-based company, and subsequently list on the Nasdaq, upon completion of the SEC's ongoing review and subject to stock exchange approval of such listing. The proposed reorganization and domestication is subject to approval by shareholders the Company and applicable regulatory authorities, including the Toronto Stock Exchange. In connection with the proposed reorganization and domestication, the Company has filed a registration statement, including a management information circular/prospectus, with the SEC, which has not yet become effective. SHAREHOLDERS ARE ADVISED TO READ THE FINAL VERSIONS OF SUCH DOCUMENTS, WHEN AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Shareholders may obtain a free copy of the registration statement (including the management information circular/prospectus) and any other relevant documents from the SEC's website at http://www.sec.gov. Copies of the final versions of such documents can also be obtained, when available, without charge, via Galaxy's investor relations website: https://investor.galaxy.com/ The Company anticipates holding a shareholder meeting to seek approval following the effectiveness of the registration statement, and further details will be included in the management information circular to be mailed to shareholders and posted on the Company's SEDAR profile at www.sedarplus.ca.

This document shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the domestication or any of the other proposed reorganization transactions. This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

CAUTION ABOUT FORWARD-LOOKING STATEMENTS 

The information in this document may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and "forward-looking information" under Canadian securities laws (collectively, "forward-looking statements"). Our forward-looking statements include, but are not limited to, statements regarding our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future. Statements that are not historical facts, including statements about Galaxy's business pipelines for banking and Gk8, mining goals, plans for share repurchases, focus on self custody and validator solutions and our commitment to the future of decentralized networks and the pending domestication and the related transactions (the "transactions"), and the parties, perspectives and expectations, are forward-looking statements. In addition, any statements that refer to estimates, projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "intend," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this document are based on our current expectations and beliefs concerning future developments and their potential effects on us taking into account information currently available to us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks include, but are not limited to: (1) the inability to complete the proposed domestication and reorganization transactions, due to the failure to obtain shareholder and stock exchange approvals, or otherwise; (2) changes to the proposed structure of the transactions that may be required or appropriate as a result of applicable laws or regulations or as a condition to obtaining shareholder or stock exchange approval of the transactions; (3) the ability to meet and maintain listing standards following the consummation of the transactions; (4) the risk that the transactions disrupt current plans and operations; (5) costs related to the transactions, operations and strategy; (6) changes in applicable laws or regulations; (7) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; (8) changes or events that impact the cryptocurrency industry, including potential regulation, that are out of our control; (9) the risk that our business will not grow in line with our expectations or continue on its current trajectory; (10) the possibility that our addressable market is smaller than we have anticipated and/or that we may not gain share of it; and (11) the possibility that there is a disruption in mining impacting our ability to achieve expected results or change in power dynamics impacting our results, (12) any delay or failure to consummate the business mandates or achieve its pipeline goals in banking and Gk8, (13) price and trading volume volatility with respect to the Company's shares and its impact on share repurchases and the cost of such repurchases, (14) regulatory concerns, technological challenges, cyber incidents or exploits on decentralized networks (15) those other risks contained in the Annual Information Form for the year ended December 31, 2022 available on the Company's profile at www.sedarplus.ca and its Management's Discussion and Analysis, filed on November 9, 2023. Factors that could cause actual results to differ materially from those described in such forward-looking statements include, but are not limited to, a decline in the digital asset market or general economic conditions; the possibility that our addressable market is smaller than we have anticipated and/or that we may not gain share of the stated addressable market; the failure or delay in the adoption of digital assets and the blockchain ecosystem; a delay or failure in developing infrastructure for our business or our businesses achieving our banking and Gk8 mandates; delays or other challenges in the mining business related to hosting, power or our mining infrastructure;  any challenges faced with respect to decentralized networks, considerations with respect to liquidity and capital planning and its impact on share repurchases and changes in applicable law or regulation and adverse regulatory developments. Should one or more of these risks or uncertainties materialize, they could cause our actual results to differ materially from the forward-looking statements. We are not undertaking any obligation to update or revise any forward looking statements whether as a result of new information, future events or otherwise. You should not take any statement regarding past trends or activities as a representation that the trends or activities will continue in the future. Accordingly, you should not put undue reliance on these statements.

©Copyright Galaxy Digital 2023. All rights reserved.

Galaxy Digital Holdings LP's Consolidated Statements of Financial Position (unaudited)

(in thousands)

September 30,
2023


December 31,
2022

Assets




Current assets




Cash and cash equivalents

$                       295,001


$                      542,101

Digital assets

983,711


566,690

Receivable for digital asset trades

15,184


9,063

Digital asset loans receivable, net of allowance

80,442


49,971

Digital assets receivables

7,528


12,423

Assets posted as collateral

123,499


25,138

Receivables

34,565


10,887

Derivative assets

45,442


17,719

Prepaid expenses and other assets

51,566


32,818

Loans receivable

247,276


62,611

Due from related party

6,101


13,857

Total current assets

1,890,315


1,343,278





Digital assets receivables

3,537


5,154

Investments (includes $338.2 and $343.2 million of equity method investments, respectively)

586,513


595,122

Loans receivable, non-current

113,792


100,977

Property and equipment

238,984


208,538

Other non-current assets

106,464


68,429

Goodwill

44,257


24,645

Total non-current assets

1,093,547


1,002,865

Total assets

$                    2,983,862


$                   2,346,143





Liabilities and equity




Current liabilities




Investments sold short

37,881


91

Derivative liabilities

39,737


16,568

Accounts payable and accrued liabilities

46,791


67,081

Payables to customers

3,446


9,591

Taxes payable

19,370


22,717

Payable for digital asset trades

18,283


2,557

Digital asset loans payable

272,239


170,566

Loans payable

51,565


Collateral payable

520,618


131,506

Due to related party

68,136


53,984

Lease liability

1,763


4,467

Total current liabilities

1,079,829


479,128





Notes payable

395,896


384,515

Deferred tax liability

30,889


31,302

Lease liability

11,209


12,406

Total non-current liabilities

437,994


428,223

Total liabilities

1,517,823


907,351





Equity




Partners' capital

1,466,039


1,438,792

Total equity

1,466,039


1,438,792





Total liabilities and equity

$                    2,983,862


$                   2,346,143

 

Galaxy Digital Holdings LP's Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (unaudited)


Three months ended


Nine months ended

(in thousands)

September 30, 2023

September 30, 2022


September 30, 2023

September 30, 2022

Income






Fee revenue

$                 9,525

$                 5,919


$              34,207

$              27,895

Net realized gain (loss) on digital assets

(67,617)

4,715


18,681

128,558

Net realized gain (loss) on investments

22,355

(8,776)


68,711

64,153

Lending and staking revenue

14,005

6,395


35,323

31,086

Net derivative gain

15,737

17,825


80,462

179,821

Revenue from proprietary mining

8,848

4,224


20,672

21,330

Other income (loss)

127

2,374


333

4,152


2,980

32,676


258,389

456,995







Operating expenses






Compensation and compensation related

30,995

37,247


96,247

112,447

Equity based compensation

18,769

27,738


57,694

81,634

General and administrative

30,748

49,281


60,934

101,389

Professional fees

7,911

(4,260)


26,514

15,271

Interest

5,797

8,543


15,670

33,417

Notes interest expense

6,851

7,504


20,372

22,113


(101,071)

(126,053)


(277,431)

(366,271)







Other






Net unrealized gain (loss) on digital assets

26,196

69,437


24,451

(664,206)

Net unrealized gain (loss) on investments

(25,380)

(39,299)


(8,517)

(372,318)

Net gain (loss) on notes payable - derivative

1,082

(1,041)


(1,022)

56,556

Net gain on warrant liability

307


20,005

Foreign currency gain (loss)

(768)

2,579


(843)

3,293

Loss attributable to non-controlling interests liability

(8,857)


105,160


1,130

23,126


14,069

(851,510)







Loss before income taxes

(96,961)

(70,251)


(4,973)

(760,786)

Income taxes expense (benefit)

(3,240)

(2,357)


586

(26,984)

Net loss

$             (93,721)

$             (67,894)


$               (5,559)

$          (733,802)







Other comprehensive income (loss)






Foreign currency translation adjustment

$                    419

$                  (222)


$                        3

$                  (710)







Net comprehensive loss

$             (93,302)

$             (68,116)


$               (5,556)

$          (734,512)

 


Three months ended


Nine months ended


September 30, 2023

September 30, 2022


September 30, 2023

September 30, 2022

GDH LP Net loss per unit:






Basic

$                         (0.29)

$                         (0.21)


$                         (0.02)

$                         (2.24)

Diluted

(0.29)

(0.21)


(0.02)

(2.29)

Weighted average units:






Basic

322,656,584

326,187,757


321,154,802

327,599,342

Diluted

322,656,584

386,187,757


323,154,802

342,921,483

 

Reportable segments (unaudited)

Income and expenses by each reportable segment of GDH LP for the three months ended September 30, 2023 are as follows:

(in thousands)

Global
Markets

Asset
Management

Digital
Infrastructure
Solutions

Corporate

 and Other

Totals

Income (loss)






Fee revenue(1)

$                  51

$             4,686

$               5,589

$              (801)

$            9,525

Net realized loss on digital assets

(67,232)

(385)

(67,617)

Net realized gain on investments

22,001

354

22,355

Lending and staking revenue

13,821

184

14,005

Net derivative gain

15,667

70

15,737

Revenue from proprietary mining

8,848

8,848

Other income (loss)

75

32

199

(179)

127


(15,617)

4,871

14,706

(980)

2,980







Operating expenses(2)

43,510

12,131

21,933

23,497

101,071







Net unrealized gain (loss) on digital assets

26,919

(723)

26,196

Net unrealized loss on investments

(4,052)

(20,949)

(379)

(25,380)

Net gain on notes payable - derivative

1,082

1,082

Foreign currency loss

(768)

(768)


22,099

(21,672)

(379)

1,082

1,130







Loss before income taxes

$         (37,028)

$         (28,932)

$             (7,606)

$         (23,395)

$        (96,961)

Income tax benefit

(3,240)

(3,240)

Net loss

$         (37,028)

$         (28,932)

$             (7,606)

$         (20,155)

$        (93,721)

Foreign currency translation adjustment

419

419

Net comprehensive loss

$         (37,028)

$         (28,932)

$             (7,606)

$         (19,736)

$        (93,302)

(1)

 Asset Management Fee revenue includes management fees generated off the Partnership's balance sheet venture investments which are eliminated in the Corporate & Other segment.

(2)

Within Digital Infrastructure Solutions, mining expenses include a $6 million reduction in the fair value of our Power Purchase Agreement ("PPA").

 

Income and expenses by each reportable segment of GDH LP for the nine months ended September 30, 2023 are as follows:

(in thousands)

Global
Markets

Asset
Management

Digital
Infrastructure
Solutions

Corporate

 and Other

Totals

Income (loss)






Fee revenue(1)

$             2,262

$           13,833

$             20,323

$           (2,211)

$         34,207

Net realized gain on digital assets

14,261

4,420

18,681

Net realized gain on investments

46,100

22,611

68,711

Lending and staking revenue

33,853

1,470

35,323

Net derivative gain (loss)

78,985

1,542

(65)

80,462

Revenue from proprietary mining

20,672

20,672

Other income (loss)

210

(131)

254

333


175,671

43,745

41,184

(2,211)

258,389







Operating expenses(2)

126,613

42,109

38,995

69,714

277,431







Net unrealized gain (loss) on digital assets

25,476

(1,025)

24,451

Net unrealized gain (loss) on investments

13,079

(27,868)

6,272

(8,517)

Net loss on notes payable - derivative

(1,022)

(1,022)

Foreign currency loss

(843)

(843)


37,712

(28,893)

6,272

(1,022)

14,069







Income (loss) before income taxes

$           86,770

$         (27,257)

$               8,461

$         (72,947)

$          (4,973)

Income tax expense

586

586

Net income (loss)

$           86,770

$         (27,257)

$               8,461

$         (73,533)

$          (5,559)

Foreign currency translation adjustment

3

3

Net comprehensive income (loss)

$           86,770

$         (27,257)

$               8,461

$         (73,530)

$          (5,556)

(1)

 Asset Management Fee revenue includes management fees generated off the Partnership's balance sheet venture investments which are eliminated in the Corporate & Other segment.

(2)

Within Digital Infrastructure Solutions, mining expenses include a $6 million reduction in the fair value of our PPA in the third quarter whereas a $5.6 million unrealized gain on the PPA was recorded in the second quarter. In the first and second quarters, we also realized a non-recurring impairment reversal on mining equipment, which lowered non-cash operating expenses by $12.5 million.

 

Income and expenses by each reportable segment of GDH LP for the three months ended September 30, 2022 are as follows:

(in thousands)

Global
Markets

Asset
Management

Digital
Infrastructure
Solutions

Corporate

 and Other

Totals

Income (loss)






Fee revenue

$             1,234

$             3,374

$               1,311

$                   —

$            5,919

Net realized gain (loss) on digital assets

27,164

(22,449)

4,715

Net realized loss on investments

(8,230)

(546)

(8,776)

Lending and staking revenue

6,104

291

6,395

Net derivative gain

17,825

17,825

Revenue from proprietary mining

4,224

4,224

Other income (loss)

(384)

895

1,863

2,374


43,713

(18,435)

5,535

1,863

32,676







Operating expenses

39,608

14,657

40,517

31,271

126,053







Net unrealized gain on digital assets

10,504

58,933

69,437

Net unrealized gain (loss) on investments

5,485

(44,169)

(615)

(39,299)

Net loss on notes payable - derivative

(1,041)

(1,041)

Net gain on warrant liability

307

307

Foreign currency gain

2,579

2,579

Gain attributable to non-controlling interests liability

(8,857)

(8,857)


18,568

5,907

(615)

(734)

23,126







Income (loss) before income taxes

$           22,673

$         (27,185)

$           (35,597)

$         (30,142)

$        (70,251)

Income tax benefit

(2,357)

(2,357)

Net income (loss)

$           22,673

$         (27,185)

$           (35,597)

$         (27,785)

$        (67,894)

Foreign currency translation adjustment

(222)

(222)

Net comprehensive income (loss)

$           22,673

$         (27,185)

$           (35,597)

$         (28,007)

$        (68,116)

 

Income and expenses by each reportable segment of GDH LP for the nine months ended September 30, 2022 are as follows:

(in thousands)

Global
Markets

Asset
Management

Digital
Infrastructure
Solutions

Corporate

 and Other

Totals

Income (loss)






Fee revenue

$           11,567

$           11,143

$               5,185

$                   —

$          27,895

Net realized gain (loss) on digital assets

(64,941)

193,499

128,558

Net realized gain (loss) on investments

(11,408)

75,561

64,153

Lending and staking revenue

30,570

516

31,086

Net derivative gain

179,821

179,821

Revenue from proprietary mining

21,330

21,330

Other income

235

2,034

1,883

4,152


145,844

282,753

26,515

1,883

456,995







Operating expenses

133,893

47,878

55,200

129,300

366,271







Net unrealized loss on digital assets

(182,121)

(482,085)

(664,206)

Net unrealized loss on investments

(102,527)

(244,116)

(25,675)

(372,318)

Net gain on notes payable - derivative

56,556

56,556

Net gain on warrant liability

20,005

20,005

Foreign currency gain

3,293

3,293

Loss attributable to non-controlling interests liability

105,160

105,160


(281,355)

(621,041)

(25,675)

76,561

(851,510)







Loss before income taxes

$       (269,404)

$       (386,166)

$           (54,360)

$         (50,856)

$      (760,786)

Income tax benefit

(26,984)

(26,984)

Net loss

$       (269,404)

$       (386,166)

$           (54,360)

$         (23,872)

$      (733,802)

Foreign currency translation adjustment

(710)

(710)

Net comprehensive loss

$       (269,404)

$       (386,166)

$           (54,360)

$         (24,582)

$      (734,512)

 

Assets and liabilities by reportable segment of GDH LP as of September 30, 2023 are as follows:

(in thousands)

Global
Markets

Asset
Management

Digital
Infrastructure
Solutions

Corporate
and Other

Totals

Total assets

$         2,093,543

$            521,198

$            328,760

$              40,361

$         2,983,862







Total liabilities

$            946,545

$                    153

$                 2,247

$            568,878

$         1,517,823

 

Assets and liabilities by reportable segment of GDH LP as of December 31, 2022 are as follows:

(in thousands)

Global
Markets

Asset
Management

Digital
Infrastructure
Solutions

Corporate
and Other

Totals

Total assets

$         1,476,489

$            536,061

$            251,624

$              81,969

$         2,346,143







Total liabilities

$            338,336

$                 1,084

$              10,519

$            557,412

$            907,351

 

Net Digital Assets Position

Net digital assets includes all digital assets categorized as assets, less all digital assets categorized as liabilities on the statement of financial position and is included in the Company's liquidity measure. Net digital assets as of September 30, 2023 and December 31, 2022 are as follows:

(in thousands)

As of

September 30, 2023


As of December 31,
2022

Assets




Digital assets

$                       983,711


$                       566,690

Bitcoin(1)

472,431


222,229

Ether(1)

227,396


54,219

USDC

131,228


199,479

USDT

111,216


62,267

All other

41,440


28,496

Digital asset loans receivable, net of allowance

80,442


49,971

Digital assets receivable, current

7,528


12,423

Digital assets receivable, non-current

3,537


5,154

Assets posted as collateral (2)

120,696


25,138


1,195,914


659,376

Liabilities




Digital asset loans payable

272,239


170,566

Collateral payable (2)

469,234


73,458


741,473


244,024

Digital assets, net

$                       454,441


$                       415,352

Stablecoins, net

$                          99,968


$                       281,048

Digital assets, net excl. stablecoins

$                       354,473


$                       134,304

(1)

September 30, 2023 balances include associated tokens such as wBTC, wETH and stETH.

(2)

Excludes cash portion of consolidated balance on the Partnership's balance sheet.

 

All figures are in U.S. Dollars unless otherwise noted.

SOURCE Galaxy Digital Holdings Ltd.

Cision View original content to download multimedia: http://www.newswire.ca/en/releases/archive/November2023/09/c4533.html

Copyright CNW Group 2023

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