Net loss of $46.0
million for the second quarter 2023
Ended the second quarter 2023 with a strong
liquidity position of $696
million
NEW
YORK, Aug. 8, 2023 /CNW/ - Galaxy Digital
Holdings Ltd. (TSX: GLXY) (the "Company" or "GDH Ltd.") today
released financial results for the three and six months ended
June 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.
"Galaxy's operating businesses performed well in the second
quarter against a backdrop of continued uncertainty and regulatory
pressure, as we continue to manage the Company to meet the evolving
needs of our clients," said Michael
Novogratz, Founder and CEO of Galaxy.
"The investments we've made in our business, prudent risk
management practices, and strong balance sheet are driving
long-term growth for Galaxy and our stakeholders. We continue to
operate the Company from a position of strength and are confident
in our ability to grow our Global Markets, Asset Management and
Digital Infrastructure Solutions operating businesses."
Select Financial Highlights for the Second Quarter
2023
- Net loss was $46.0
million for the second quarter, compared to net income of
$134.2 million for the quarter ended
March 31, 2023.
-
- Compared to the first quarter, the decrease was primarily
attributable to lower net realized gains on digital assets and net
unrealized losses on investments, partially offset by higher net
realized gains on investments.
- Operating expenses were $85.2 million in the second quarter, down 6%
quarter-over-quarter ("QoQ")1 and 34% year-over-year.
For the first half of 2023, total operating expenses were
$176.4 million, down 27% compared to
the first half of 2022.
-
- Operating expenses, excluding non-cash items, were $130.9 million in the first half of 2023, down
24% compared to the first half of 2022.2
- Partners' Capital ("Equity") was $1.5 billion at the end of the quarter, a 3%
decrease from $1.6 billion for the
quarter ended March 31, 2023. The
Company maintained a strong liquidity position of $696 million as of June
30, 2023.
-
- Liquidity included $302 million
in cash and $395 million in net
digital assets3, including $167
million of non-algorithmic stablecoins.
- Galaxy's liquidity position was $118
million lower from March 31,
2023, primarily due to a larger balance of fully secured
loans to our clients, partially offset by a moderate increase in
our net long digital assets, excluding stablecoins.
_____________________________________
|
1 As
compared to the quarter ended March 31, 2023.
|
2
Non-cash items include equity-based compensation, depreciation and
amortization, impairment and reversal of impairment charges, and
non-cash interest expense on Galaxy's Exchangeable
Notes.
|
3 Please see
page 12 of this release for a breakout of our net digital assets
position.
|
Operating Highlights for the Second Quarter 2023
Galaxy Global Markets ("GGM")
- Trading revenue was $59.5 million in the quarter, a
54% decrease QoQ, driven primarily by lower net realized gains on
digital assets and net derivatives gains.
-
- Cumulative counterparty-facing trading operational net
revenue4 in the quarter was $28.3
million, down more than 25% QoQ, impacted by lighter
volumes across derivatives and over-the-counter trading.
- Trading reported a net realized gain on investments of
$23.7 million in the quarter, which
was offset by a $23.7 million net
unrealized loss on investments, driven by the sale of our minority
stake in block.One.
- Trading ended the quarter with more than 290 active
counterparties.5 The business onboarded more than 30 new
counterparties in the quarter, bringing the total count of
onboarded counterparties to nearly 1,000.
- Counterparty trading volumes decreased by approximately 30%
QoQ, as our desk was impacted by the industry-wide slowdown in
digital asset trading activity.
- Counterparty loan book size was over $550 million,6 a 10%
increase QoQ, driven by an increasing number of clients
seeking to borrow cash and digital assets.
- Cumulative gross counterparty loan originations were
approximately $115 million in the
quarter. 7
- Investment Banking revenue was $45 thousand in the quarter, driven by a
deceleration in M&A and capital-raising activity.
-
- In the quarter, Galaxy advised an undisclosed seller on a
secondary sale of interest in bitcoin custodial
services provider and lender, Unchained Capital.
- Subsequent to quarter end, Galaxy advised Gamercraft, a
blockchain and AI-enabled competitive online gaming platform, on
its seed financing round.
- Galaxy continues to execute against an active pipeline of
mandates representing over $1 billion
in potential transaction value.
Galaxy Asset Management ("GAM")
- Asset Management revenue was $33.8 million in the quarter, a 619% increase
QoQ, driven primarily by higher net realized gains on investments
from our venture platform.
-
- GAM management and performance fees were $4.2 million in the quarter.
- GAM reported a net realized gain on investments of $24.6 million in the quarter, which was offset by
a $45.5 million net unrealized loss
on investments,8 driven by the strategic sale of a
portion of our minority stake in Fireblocks.
- GAM reported preliminary assets under management
("AUM")9 of approximately $2.5
billion, a 2% increase QoQ. The increase was primarily
driven by market appreciation and net inflows into our passive
strategies. AUM consisted of over $958
million in passive strategies, approximately $103 million in active strategies and
approximately $1.4 billion in venture
strategies.
- GAM holds investments in 217 portfolio companies across our
venture platform.10
Galaxy Digital Infrastructure Solutions ("GDIS")
- Mining revenue was $15.4 million in the quarter, a 51% increase
QoQ, driven by higher income from proprietary mining
activities.
-
- Galaxy ended the quarter with approximately 3.7 exahash
per second ("EH/s") in Hashrate Under Management
("HUM")11, representing an over 20% increase QoQ.
Approximately 45% of the 3.7 EH/s of HUM came from self-mining
operations. Galaxy remains on track to surpass 4.0 EH/s of HUM by
the end of 2023.
- Galaxy maintained an average marginal cost to mine12
between $9,000 - $10,000 in the quarter.
- Galaxy's power purchase costs and external hosting expenses,
net of curtailment credits, were $5.5
million in the quarter, representing a 64% direct mining
margin.
- Self-Custody and Validator Solutions are focus
areas in our continued commitment to the future of
decentralized networks. Since the completion of the
Partnership's acquisition of GK8 on February
21, 2023, GK8 has won 7 net new clients to reach 14 total
clients. GK8 continues to see a significant increase in its
pipeline of potential enterprise clients since the close of the
acquisition.
_____________________________________________
|
4 Trading
Operational Net Revenue is a metric that includes revenue from
counterparty-facing activities from our Derivatives, Credit,
Over-the-Counter Trading, and Quantitative Trading businesses, net
of funding charges.
|
5 Active
counterparties represent counterparties with whom we have traded
within the past 12 months and are still onboarded with Galaxy's
trading business.
|
6 Includes
un-funded arrangements to finance delayed trading/settlement (for
example over weekends), as well as uncommitted credit
facilities.
|
7 This
quarter reflects a new methodology for calculating loan
originations. Counterparty loan originations does not include
rolled loans as a new origination, as it did in prior quarters.
Rolled loans can be generally defined as loans where the maturity
was extended but no other material terms were changed.
|
8 Reflects
the adjustment of the full position to the sale price.
|
9 AUM is an
internal estimate inclusive of sub-advised funds, committed capital
closed-end vehicles, seed investments by affiliates, balance sheet
venture investments, and fund of fund products. Changes in AUM are
generally the result of performance, contributions, withdrawals,
and acquisitions. AUM for committed capital closed-end vehicles
that have completed their investment period is reported as NAV (Net
Asset Value). Quarterly AUM for close-end vehicles is reported as
of the most recent quarter available for the applicable
period.
|
10 Includes
investments held directly on the Partnership's balance sheet and
indirectly through the Galaxy sponsored funds.
|
11 Hashrate
Under Management is defined as the total combined hashrate of
active proprietary and hosted mining capacity managed by
Galaxy.
|
12 Marginal
cost to mine refers to the marginal cost of production for each BTC
generated during the period. The calculation excludes depreciation
and corporate overhead.
|
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 Repurchase Program: As announced on
May 26, 2023, the Company commenced a
new normal course issuer bid (the "NCIB") on May 31, 2023, and is eligible to purchase up to
10,056,193 ordinary shares. To date, the Company has not made any
share repurchases under the NCIB.
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. As of June 30, 2023, a reversal of a previously
recognized impairment assessment was required under International
Financial Reporting Standards and GDH Ltd.'s minority interest in
GDH LP was marked up based on the TSX quarter-end closing share
price. An impairment expense reversal of $75.5 million and $128.1
million was recognized during the three and six months ended
June 30, 2023, respectively. The net
comprehensive income of GDH Ltd. was $60.4
million and $152.0 million for
the three and six months ended June 30,
2023, respectively.
Earnings Conference Call
An investor conference call will be held today, August 8, 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
September 8, 2023, the recording will
also be available by dialing 1-844-512-2921, or 1-412-317-6671
(outside the U.S. and Canada)
passcode: 10181069.
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 six months ended June 30, 2023 and (ii) GDH Ltd.'s Management
Discussion and Analysis and Consolidated Financial Statements for
the three and six months ended June 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.
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, (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 August 8,
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)
|
June 30,
2023
|
|
December 31,
2022
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
301,625
|
|
$
542,101
|
Digital
assets
|
1,113,777
|
|
566,690
|
Receivable for digital
asset trades
|
15,464
|
|
9,063
|
Digital asset loans
receivable, net of allowance
|
47,099
|
|
49,971
|
Digital assets
receivables
|
9,620
|
|
12,423
|
Assets posted as
collateral
|
8,783
|
|
25,138
|
Receivables
|
41,768
|
|
10,887
|
Derivative
assets
|
69,083
|
|
17,719
|
Prepaid expenses and
other assets
|
32,037
|
|
32,818
|
Loans
receivable
|
316,647
|
|
62,611
|
Due from related
party
|
9,053
|
|
13,857
|
Total current
assets
|
1,964,956
|
|
1,343,278
|
|
|
|
|
Digital assets
receivables
|
4,378
|
|
5,154
|
Investments (includes
$343.2 and $235.4 million of equity method
investments, respectively)
|
607,756
|
|
595,122
|
Loans receivable,
non-current
|
18,698
|
|
100,977
|
Property and
equipment
|
235,739
|
|
208,538
|
Other non-current
assets
|
101,371
|
|
68,429
|
Goodwill
|
44,257
|
|
24,645
|
Total non-current
assets
|
1,012,199
|
|
1,002,865
|
Total
assets
|
$
2,977,155
|
|
$
2,346,143
|
|
|
|
|
Liabilities and
equity
|
|
|
|
Current
liabilities
|
|
|
|
Investments sold
short
|
—
|
|
91
|
Derivative
liabilities
|
47,371
|
|
16,568
|
Accounts payable and
accrued liabilities
|
36,710
|
|
67,081
|
Payables to
customers
|
11,905
|
|
9,591
|
Taxes
payable
|
22,369
|
|
22,717
|
Payable for digital
asset trades
|
14,822
|
|
2,557
|
Digital asset loans
payable
|
355,092
|
|
170,566
|
Loans
payable
|
1,546
|
|
—
|
Collateral
payable
|
440,184
|
|
131,506
|
Due to related
party
|
66,938
|
|
53,984
|
Lease
liability
|
3,257
|
|
4,467
|
Total current
liabilities
|
1,000,194
|
|
479,128
|
|
|
|
|
Notes
payable
|
393,465
|
|
384,515
|
Deferred tax
liability
|
31,086
|
|
31,302
|
Lease
liability
|
10,798
|
|
12,406
|
Total non-current
liabilities
|
435,349
|
|
428,223
|
Total
liabilities
|
1,435,543
|
|
907,351
|
|
|
|
|
Equity
|
|
|
|
Partners'
capital
|
1,541,612
|
|
1,438,792
|
Total
equity
|
1,541,612
|
|
1,438,792
|
|
|
|
|
Total liabilities
and equity
|
$
2,977,155
|
|
$
2,346,143
|
Galaxy Digital Holdings LP's Consolidated Statements of
Income (Loss) and Comprehensive Income (Loss) (unaudited)
(in
thousands)
|
Three months
ended
June 30, 2023
|
Three months
ended
June 30, 2022
|
Six months
ended
June 30, 2023
|
Six months
ended
June 30, 2022
|
Income
|
|
|
|
|
Fee income
|
$
11,097
|
$
8,254
|
$
25,526
|
$
21,976
|
Net realized gain
(loss) on digital assets
|
20,179
|
(231,137)
|
86,298
|
123,844
|
Net realized gain
(loss) on investments
|
48,334
|
3,491
|
46,356
|
72,929
|
Lending and staking
income
|
10,809
|
10,055
|
21,318
|
24,690
|
Net derivative
gain
|
9,641
|
80,019
|
64,725
|
161,996
|
Income from
proprietary mining
|
8,563
|
10,369
|
10,980
|
17,105
|
Other income
(loss)
|
43
|
(294)
|
206
|
1,777
|
|
108,666
|
(119,243)
|
255,409
|
424,317
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
Compensation and
compensation related
|
34,632
|
34,652
|
65,252
|
75,200
|
Equity based
compensation
|
15,655
|
31,134
|
38,925
|
53,896
|
General and
administrative
|
15,050
|
34,160
|
30,186
|
52,108
|
Professional
fees
|
8,785
|
9,940
|
18,603
|
19,531
|
Interest
|
4,334
|
12,067
|
9,873
|
24,874
|
Notes interest
expense
|
6,790
|
7,336
|
13,521
|
14,610
|
|
(85,246)
|
(129,289)
|
(176,360)
|
(240,219)
|
|
|
|
|
|
Other
|
|
|
|
|
Net unrealized gain
(loss) on digital assets
|
(4,774)
|
(233,372)
|
(1,745)
|
(733,643)
|
Net unrealized gain
(loss) on investments
|
(65,850)
|
(258,891)
|
16,863
|
(333,019)
|
Net gain (loss) on
notes payable -
derivative
|
(799)
|
51,104
|
(2,104)
|
57,597
|
Net gain on warrant
liability
|
—
|
17,177
|
—
|
19,698
|
Foreign currency gain
(loss)
|
63
|
(1,302)
|
(75)
|
715
|
Loss attributable to
non-controlling interests
liability
|
—
|
100,606
|
—
|
114,017
|
|
(71,360)
|
(324,678)
|
12,939
|
(874,635)
|
|
|
|
|
|
Income (loss) before
income taxes
|
(47,940)
|
(573,210)
|
91,988
|
(690,537)
|
Income taxes expense
(benefit)
|
(1,900)
|
(18,509)
|
3,826
|
(24,628)
|
Net income
(loss)
|
$
(46,040)
|
$
(554,701)
|
$
88,162
|
$
(665,909)
|
|
|
|
|
|
Other comprehensive
income (loss)
|
|
|
|
|
Foreign currency
translation adjustment
|
$
39
|
$
(19)
|
$
(416)
|
$
(487)
|
|
|
|
|
|
Net comprehensive
income (loss)
|
$
(46,001)
|
$
(554,720)
|
$
87,746
|
$
(666,396)
|
|
Three months
ended
June 30, 2023
|
Three months
ended
June 30, 2022
|
Six months
ended
June 30, 2023
|
Six months
ended
June 30, 2022
|
GDH LP Net income
(loss) per unit:
|
|
|
|
|
Basic
|
$
(0.14)
|
$
(1.69)
|
$
0.28
|
$
(2.03)
|
Diluted
|
(0.14)
|
(1.74)
|
0.27
|
(2.08)
|
Weighted average
units:
|
|
|
|
|
Basic
|
321,392,562
|
328,899,160
|
320,391,466
|
328,316,833
|
Diluted
|
321,392,562
|
329,139,528
|
327,417,371
|
328,947,139
|
Reportable segments (unaudited)
Income and expenses by each reportable segment of GDH LP for the
three months ended June 30, 2023 are
as follows:
(in
thousands)
|
Global
Markets
|
Asset
Management
|
Digital
Infrastructure
Solutions
|
Corporate
and
Other
|
Totals
|
Income
(loss)
|
|
|
|
|
|
Fee
income(1)
|
$
57
|
$
4,216
|
$
7,586
|
$
(762)
|
$
11,097
|
Net realized gain on
digital assets
|
17,601
|
2,578
|
—
|
—
|
20,179
|
Net realized gain on
investments
|
23,725
|
24,609
|
—
|
—
|
48,334
|
Lending and staking
income
|
9,284
|
1,525
|
—
|
—
|
10,809
|
Net derivative gain
(loss)
|
8,769
|
1,008
|
(136)
|
—
|
9,641
|
Income from proprietary
mining
|
—
|
—
|
8,563
|
—
|
8,563
|
Other income
(expense)
|
96
|
(96)
|
11
|
32
|
43
|
|
59,532
|
33,840
|
16,024
|
(730)
|
108,666
|
|
|
|
|
|
|
Operating
expenses
|
40,894
|
13,790
|
7,748
|
22,814
|
85,246
|
|
|
|
|
|
|
Net unrealized loss on
digital assets
|
(1,067)
|
(3,707)
|
—
|
—
|
(4,774)
|
Net unrealized gain
(loss) on investments
|
(23,726)
|
(45,532)
|
3,408
|
—
|
(65,850)
|
Net loss on notes
payable - derivative
|
—
|
—
|
—
|
(799)
|
(799)
|
Foreign currency
loss
|
63
|
—
|
—
|
—
|
63
|
|
(24,730)
|
(49,239)
|
3,408
|
(799)
|
(71,360)
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
$
(6,092)
|
$
(29,189)
|
$
11,684
|
$
(24,343)
|
$
(47,940)
|
Income tax
expense
|
—
|
—
|
—
|
(1,900)
|
(1,900)
|
Net income
(loss)
|
$
(6,092)
|
$
(29,189)
|
$
11,684
|
$
(22,443)
|
$
(46,040)
|
Foreign currency
translation adjustment
|
—
|
—
|
—
|
39
|
39
|
Comprehensive income
(loss)
|
$
(6,092)
|
$
(29,189)
|
$
11,684
|
$
(22,404)
|
$
(46,001)
|
(1) Asset Management Fee income
includes management fees generated off the Partnership's principal
investments which are eliminated in the Corporate & Other
segment.
|
Income and expenses by each reportable segment of GDH LP for the
three months ended June 30, 2022 are
as follows:
(in
thousands)
|
Global
Markets
|
Asset
Management
|
Digital
Infrastructure
Solutions
|
Corporate
and
Other
|
Totals
|
Income
(loss)
|
|
|
|
|
|
Fee income
|
$
2,321
|
$
3,908
|
$
2,025
|
$
—
|
$
8,254
|
Net realized loss on
digital assets
|
(210,481)
|
(20,656)
|
—
|
—
|
(231,137)
|
Net realized gain on
investments
|
748
|
2,743
|
—
|
—
|
3,491
|
Lending and staking
income
|
9,849
|
206
|
—
|
—
|
10,055
|
Net derivative
gain
|
80,019
|
—
|
—
|
—
|
80,019
|
Income from proprietary
mining
|
—
|
—
|
10,369
|
—
|
10,369
|
Other income
(loss)
|
450
|
412
|
(1,176)
|
20
|
(294)
|
|
(117,094)
|
(13,387)
|
11,218
|
20
|
(119,243)
|
|
|
|
|
|
|
Operating
expenses
|
50,033
|
17,140
|
9,405
|
52,711
|
129,289
|
|
|
|
|
|
|
Net unrealized loss on
digital assets
|
(11,523)
|
(221,849)
|
—
|
—
|
(233,372)
|
Net unrealized loss on
investments
|
(105,011)
|
(130,834)
|
(23,046)
|
—
|
(258,891)
|
Net gain on notes
payable - derivative
|
—
|
—
|
—
|
51,104
|
51,104
|
Net gain on warrant
liability
|
—
|
—
|
—
|
17,177
|
17,177
|
Foreign currency
loss
|
(1,302)
|
—
|
—
|
—
|
(1,302)
|
Loss attributable to
non-controlling interests
liability
|
—
|
100,606
|
—
|
—
|
100,606
|
|
(117,836)
|
(252,077)
|
(23,046)
|
68,281
|
(324,678)
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
$
(284,963)
|
$
(282,604)
|
$
(21,233)
|
$
15,590
|
$
(573,210)
|
Income tax
benefit
|
—
|
—
|
—
|
(18,509)
|
(18,509)
|
Net income
(loss)
|
$
(284,963)
|
$
(282,604)
|
$
(21,233)
|
$
34,099
|
$
(554,701)
|
Foreign currency
translation adjustment
|
—
|
—
|
—
|
(19)
|
(19)
|
Comprehensive income
(loss)
|
$
(284,963)
|
$
(282,604)
|
$
(21,233)
|
$
34,080
|
$
(554,720)
|
Assets and liabilities by reportable segment of GDH LP as of
June 30, 2023 are as follows:
(in
thousands)
|
Global
Markets
|
Asset
Management
|
Digital
Infrastructure
Solutions
|
Corporate and
Other
|
Totals
|
Total
assets
|
$
1,854,570
|
$
552,660
|
$
370,287
|
$
199,638
|
$
2,977,155
|
|
|
|
|
|
|
Total
liabilities
|
$
873,705
|
$
994
|
$
2,667
|
$
558,177
|
$
1,435,543
|
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
|
Select statement of financial position information
The fair value of select assets by reporting segment of GDH LP
as of June 30, 2023 is as
follows:
(in
thousands)
|
Global
Markets
|
Asset
Management
|
Digital
Infrastructure
Solutions
|
Corporate and
Other
|
Totals
|
Digital
assets
|
$
1,112,580
|
$
1,197
|
$
—
|
$
—
|
$
1,113,777
|
Digital assets
receivables
|
8,848
|
5,150
|
—
|
—
|
13,998
|
Digital assets posted
as collateral
|
5,298
|
|
—
|
—
|
5,298
|
Investments:
|
|
|
|
|
|
Convertible
Notes
|
266
|
14,607
|
5,903
|
—
|
20,776
|
Preferred
Stock
|
39,040
|
196,863
|
7,175
|
—
|
243,078
|
Common Stock
|
35,422
|
11,895
|
—
|
—
|
47,317
|
LP/LLC
Interests
|
49,709
|
242,725
|
—
|
—
|
292,434
|
Warrants
|
4,151
|
—
|
—
|
—
|
4,151
|
Total
|
$
1,255,314
|
$
472,437
|
$
13,078
|
$
—
|
$
1,740,829
|
The fair value of each asset class by reporting segment of GDH
LP as of December 31, 2022 is as
follows:
(in
thousands)
|
Global
Markets
|
Asset
Management
|
Digital
Infrastructure
Solutions
|
Corporate and
Other
|
Totals
|
Digital
assets
|
$
566,690
|
$
—
|
$
—
|
$
—
|
$
566,690
|
Digital assets
receivables
|
10,713
|
6,864
|
—
|
—
|
17,577
|
Digital assets posted
as collateral
|
25,138
|
—
|
—
|
—
|
25,138
|
Investments:
|
|
|
|
|
|
Convertible
Notes
|
259
|
10,064
|
2,326
|
—
|
12,649
|
Preferred
Stock
|
46,338
|
208,021
|
4,102
|
—
|
258,461
|
Common Stock
|
45,047
|
16,601
|
—
|
—
|
61,648
|
LP/LLC
Interests
|
33,024
|
222,775
|
—
|
—
|
255,799
|
Warrants
|
—
|
6,565
|
—
|
—
|
6,565
|
Total
|
$
727,209
|
$
470,890
|
$
6,428
|
$
—
|
$
1,204,527
|
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, less non-controlling interests
liabilities, and is included in the Company's liquidity measure.
Net digital assets as of June 30,
2023 is as follows:
(in
thousands)
|
As
of
June 30,
2023
|
As of
December 31,
2022
|
Assets
|
|
|
Digital
assets
|
$
1,113,777
|
$
566,690
|
Digital asset loans
receivable, net of allowance
|
47,099
|
49,971
|
Digital assets
receivable, current
|
9,620
|
12,423
|
Digital assets
receivable, non-current
|
4,378
|
5,154
|
Assets posted as
collateral (1)
|
5,298
|
25,138
|
|
1,180,172
|
659,376
|
Liabilities
|
|
|
Digital asset loans
payable
|
355,092
|
170,566
|
Collateral payable
(1)
|
430,569
|
73,458
|
|
785,661
|
244,024
|
Digital assets,
net
|
$
394,511
|
$
415,352
|
Stablecoins,
net
|
$
166,747
|
$
281,048
|
Digital assets, net
excl. stablecoins
|
$
227,764
|
$
134,304
|
(1) 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.