Galaxy Digital posts $177 Million net loss in Q2 amid market turbulence

Galaxy Digital reported a net loss of $177 million for the second quarter, compared to a net profit of $1.6 million during the same period last year.

Meanwhile, the firms net revenue for the second quarter stood at $53.7 million, down from $108.7 million in the same quarter last year.

The firm largely attributed the loss to downturns in the crypto market during the period. It faced significant challenges with net losses on digital assets and investments, marking a sharp contrast to its previous financial performance.

Despite the overall net loss, Galaxy managed to generate revenue across its various business segments, including Global Markets, Asset Management, and Digital Infrastructure Solutions. The company continues to focus on strategic initiatives to drive future growth and stabilize its financial performance amid market volatility.

Q2 results

Galaxy Digitals equity capital stood at $2.1 billion as of June 30, reflecting a 3% decrease from the previous quarter. The companys liquidity position also weakened, dropping 11% to $1.33 billion.

Despite these declines, Galaxy managed to boost its cash and net stablecoins by 150% to $409 million, demonstrating a robust cash management strategy amid market volatility.

The firm recorded a dramatic increase in assets under stake (AUS), which surged to $3.3 billion by July 18 up from $486 million at the end of March. The growth was driven primarily by the acquisition of CryptoManufaktur, a blockchain node operator.

Galaxy Global Markets experienced a significant drop in counterparty trading revenue, which fell to $24 million in Q2 2024, a 64% decline from the previous quarter. The decrease was mainly due to lower trading volumes and adverse asset price movements.

Despite the decline, the trading business managed to generate approximately $90 million in revenue year-to-date through June, representing a nearly 80% increase compared to the first half of 2023.

Galaxy Asset Management (GAM) reported a decrease in assets under management (AUM), which dropped by 42% to $4.6 billion. Management and performance fees also fell by 19% to $14.5 million.

These declines were mainly due to the liquidation of assets associated with the FTX estate and general market depreciation. Nonetheless, GAM announced the launch of the Invesco Galaxy Ethereum ETF in collaboration with Invesco, a strategic move to enhance its product offerings.

The Digital Infrastructure Solutions segment reported mining revenue of $24 million for the quarter, down 24% from the first quarter. This decline was primarily attributed to the Bitcoin halving in April.

Galaxys proprietary mining hashrate decreased by 5% to 2.9 EH/s. However, the segment experienced a 341% increase in assets under stake, reaching $2.1 billion by the end of June, highlighting Galaxys growing influence as a major validator on the Solana network.

Outlook

Galaxy Digital continues to advance its strategic initiatives, including a planned reorganization and domestication to become a Delaware-incorporated company.

Additionally, the company aims to list on Nasdaq, pending regulatory and shareholder approvals. It filed an amendment to its registration statement on July 26, which is currently under review by the SEC.

The reorganization and planned Nasdaq listing aim to align Galaxy Digital with regulatory standards and enhance its market positioning. The move is expected to attract more institutional investors and provide greater liquidity for the companys shares.

Galaxy Digital said it remains optimistic about its future prospects despite the challenges faced in the second quarter. The company is focused on expanding its digital asset and blockchain infrastructure, as evidenced by the acquisition of CryptoManufaktur and collaborations with major financial institutions.

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