Net loss of $288
million for the Fourth Quarter 2022
The Company ended 2022 with Partners' Capital
of $1.4 billion and maintains a
strong liquidity
position of $957 million as of year
end
Preliminary First Quarter 2023 Income before
tax of $150
million1
Focus for 2023: Organic platform build
through market downturn, in addition to integrating and
scaling recent strategic acquisitions
NEW
YORK, March 28, 2023 /CNW/ - Galaxy Digital
Holdings Ltd. (TSX: GLXY) ("Galaxy", the "Company" or "GDH Ltd.")
today released financial results for the year ended December 31, 2022 for both itself and Galaxy
Digital Holdings LP (the "Partnership" or "GDH LP").
"2022 was a formative year for Galaxy, and while we and our
industry faced unprecedented macroeconomic events, we succeeded in
staying the course and were able to opportunistically take
advantage of strategic opportunities to build our operating
businesses for the future. I have never been more confident in our
go-forward strategy, businesses, and team," said Michael Novogratz, Founder and CEO of
Galaxy.
"The Company continues to lead from a position of strength,
remaining open for business for our clients and counterparties. And
as the market has improved year to date, we have generated
approximately $150
million1 of Income before tax while retaining a
strong liquidity position through March 24,
2023."
Preliminary Quarter-to-Date Financial Highlights, through
Friday, March 24th
20231
- Income before tax was approximately $150
million1 through Friday,
March 24, 2023.
- Partners' Capital was over $1.5
billion1 through the same period.
- Our liquidity position remains intact, after recent
dislocations in the commercial banking sector. Galaxy had
established multiple redundant banking and brokerage relationships
prior to the disruption which allowed us to be nimble, and quickly
and successfully migrate cash balances. At this time, we're
confident in our diversified U.S. banking relationships.
- Galaxy expects to record net profits1 for the First
Quarter of 2023 in its operating businesses and positive gains from
its balance sheet holdings of liquid coins and investments.
- Our trading operating business benefited from heightened market
volatility and increased volumes from existing counterparties.
- Galaxy Mining has doubled its capacity from the beginning of
the year, as we continue to integrate the Helios site acquired at
the end of last year. By the end of 2023, GM expects to have a
targeted over 4 EH/s of Hashrate Under Management ("HUM"),
approximately 50% of which will come from self-mining.
_______________________________________
|
1 This
preliminary, unaudited year-to-date financial information is as of
March 24, 2023. Financial results exclude impacts from
non-cash equity based compensation and completion of the full
quarterly valuation process of our investment portfolio. This data
is subject to change as management completes its quarterly close
procedures.
|
Select Financial Highlights for the Fourth Quarter and Full Year
2022
- Net loss was $287.8
million for the fourth quarter, compared to net income of
$521.3 million in the prior year
period. For the year ended December 31,
2022, net loss was $1.0
billion, compared to net income of $1.7 billion for the year ended December 31, 2021.
-
- The loss was primarily attributable to unrealized marks to
market on investments in our Principal Investments portfolio,
driven by depressed market conditions.
- As one of the primary observable benchmarks for valuation in
the space, prices for digital assets declined significantly during
the year. Bitcoin declined by 64%, from approximately
$46,500 to $16,500 per coin and Ethereum
declined by 67%, from approximately $3,700 to $1,200
per coin.2
- Partners' Capital ("Equity") was $1.4 billion at the end of the year, down 45%
from $2.6 billion as of the prior
year end. The Company maintained a strong liquidity position of
$957 million as of December 31, 2022.
-
- Liquidity included $542.1 million
in cash and a net digital assets2 position of
$415 million. Net digital assets
included $281 million of
non-algorithmic stablecoins, predominantly USD Coin ("USDC").
- The net digital assets balance of $415
million at December 31, 2022
was flat to the prior quarter, but lower than the $1.2 billion at the end of the prior year. The
decrease in net digital assets balance during the year was a result
of strategic sales of liquid positions and a decrease in digital
asset prices.
Operating Highlights for the Fourth Quarter 2022
- Galaxy Trading ("GT") reported continued growth of
counterparty count and strong GT Operational Net
Revenue3 contributions. GT remains invested in the build
out of our GalaxyOne integrated institutional prime brokerage
platform.
-
- Cumulative counterparty-facing GT Operational Net
Revenue3 within the quarter was approximately
$18 million, with approximately 40%
derived from our Quantitative Trading businesses, and the remaining
contribution approximately equally split between our Derivatives,
Over-The-Counter Trading and Credit businesses.
- GT ended the year with more than 930 total counterparties after
onboarding over 20 new counterparties to our trading platform
during the fourth quarter. We continue to provide liquidity in over
100 cryptocurrencies.
- Counterparty trading volumes increased by approximately 19%
over the prior quarter while decreasing by just over 65% year over
year.
- The Company's cumulative gross counterparty loan originations
were approximately $370 million
within the quarter. The value of GT's counterparty loan and yield
portfolio decreased approximately 8% quarter over quarter.
- The Company is focused on the strategic build out of GalaxyOne
-- our unified, client-centric prime-brokerage platform for digital
assets. A beta version of the trading component of the platform
will be released to select customers in the second quarter of
2023.
- Galaxy Asset Management ("GAM") reported preliminary
assets under management ("AUM")4 of approximately
$1.7 billion5 as of
December 31, 2022, a 14% decrease
from September 30, 2022. This
decrease was primarily driven by the markdown of assets within
Galaxy Interactive based on the quarterly assessment of NAV,
partially offset by inflows into our Liquid Alpha fund during the
period.
-
- AUM consisted of almost $740
million in GAM's Galaxy Fund Management products and
approximately $965 million in the
Galaxy Interactive venture franchise.
- GAM strategically focused on scaling active strategies within
our Galaxy Fund Management and Interactive products, and as a
result, GAM saw positive net flows this year.
- Within the quarter, Galaxy Asset Management announced a
strategic partnership with Itaú Asset Management to develop a
comprehensive suite of Brazilian-listed, physically backed, digital
asset exchange-traded funds and launched the first ETF of the new
partnership, the IT Now Bloomberg Galaxy Bitcoin
ETF.
- Galaxy Investment Banking ("GIB") had a robust quarter
of deal activity with a number of existing mandates expected to
close in the first half of 2023.
-
- GIB remains engaged in the markets' prominent shift toward
consolidation and M&A activity, while also supporting clients
with innovative financing solutions amid a challenging capital
markets backdrop.
- GIB continues to execute against an active pipeline of mandates
representing over $1 billion in
potential transaction value.
- Within the quarter, GIB advised Genesis Volatility, a digital
assets data and analytics provider, on its sale to Amberdata and
advised CoreWeave, a specialized cloud computing provider, on its
strategic investment from Magnetar Capital.
- GIB also served as financial advisor to the Mining business on
its acquisition of the Helios bitcoin mining facility
and related operations from Argo Blockchain ("Argo").
____________________________________
|
2 Represents
coinmarketcap.com quoted price as of 23:59 UTC for Bitcoin and
Ether.
|
3 GT
Operational Net Revenue is an internal metric that includes revenue
from counterparty-facing activities from our Derivatives, Credit,
Over-the-Counter Trading, and Quantitative Trading businesses, net
of funding charges.
|
4 AUM is an
internal estimate inclusive of a sub-advised fund, committed
capital in a closed-end vehicle, and seed investments by
affiliates. Changes in AUM are generally the result of performance,
contributions, and withdrawals.
|
5 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.
|
- Galaxy Mining ("GM"), following the acquisition of
Helios, ended 2022 with over 1.5 EH/s in Hashrate Under Management
("HUM"), inclusive of both self-mining and hosting services. GM has
approximately doubled that capacity from the beginning of the year,
with approximately 30% from self-mining operations.
-
- In December 2022, Galaxy acquired
the Helios bitcoin mining facility and its related
operations from Argo. The facility is currently able to operate up
to 180 megawatts ("MW") of mining capacity, with significant room
for expansion. We expect to energize approximately 200 MW of mining
capacity at Helios alone by year end 2023, with a mix of capacity
dedicated to hosting and proprietary mining.
- The Helios transaction will continue to accelerate the
expansion of GM's bitcoin mining operations and
services, provide access to tax-efficient mining infrastructure,
and reduce reliance on third-party hosting providers.
- Subsequent to year end, Galaxy hedged a majority of Helios'
power obligations with a 24x7 fixed price block of power, which
protects from rising power prices, improves site uptime, and allows
Galaxy to achieve a lower effective cost of power. Galaxy will
layer on additional blocks of power as the site is expanded and
wholesale pricing becomes favorable.
- As announced during Galaxy's third quarter earnings call,
Galaxy has also begun energization of our first proprietary mining
site in Diboll, Texas, with over
half the site expected to be energized in April 2023 and the full 16 MW expected to be
energized by end of the second quarter 2023.
- On a proprietary basis, GM continues to mine at well-under the
fair market value of bitcoin.
- By the end of 2023 GM expects to have a targeted over 4 EH/s of
HUM, approximately 50% of which will come from self-mining.
- GM remains committed to its goal to reach an 80% sustainable
energy mix6 and is actively pursuing multiple long-term
solutions to achieve this target.
- Principal Investments ("GPI"): The Company holds 145
investments across 104 portfolio companies as of December 31, 2022. Within the fourth quarter
2022, GPI made an investment in verification platform Veridise,
which provides thorough security audits for DeFi applications, and
continues to explore additional compelling opportunities in the
investing space.
Corporate Updates
- Senior Leadership Update: As previously disclosed, early
in the first quarter of 2023 Damien Vanderwilt stepped down from
his role as Co-President at the Company, was named a Senior Advisor
to Galaxy and joined the Company's Board of Directors.
- US Listing: As previously announced, the Company intends
to complete 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 approval of such listing. On
February 9th, 2023 Galaxy filed an
amendment to its registration statement responding to SEC comments,
which is under review.
- Share Repurchase Program: As announced on May 16, 2022, the Company entered into a Share
Repurchase Program and as of October 24,
2022, had purchased all 10,596,720 ordinary shares allowable
at an average price of $6.65
CAD.
-
- Additionally the Company has purchased and cancelled
$55 million worth of the 3.00%
Exchangeable Senior Notes due 2026 (the "Notes") that were
announced on December 9, 2021 at a discount, for approximately
$30 million, including accrued
interest.
- The Company will continue to use all available methods to
manage its share capital when it believes that the current market
price of its shares does not reflect their intrinsic value and if
doing so is consistent with the objective of creating long term
shareholder value.
- Helios Acquisition: On December
28, 2022, the Partnership acquired the Helios mining
facility from Argo.
-
- Helios is a large-scale bitcoin mining facility
located in Dickens County, Texas,
that has the ability to operate up to 180 megawatts (MW) of mining
capacity, utilizing immersion cooling technology.
- Upon receipt of certain approvals and incremental investments,
Helios could be expanded to provide Galaxy with as much as 800 MW
of capacity, enabling the Company to grow its proprietary and
hosted bitcoin mining infrastructure.
- The purchase price was approximately $77
million, including transaction costs.
- GK8 Acquisition: Subsequent to year end on February 21, 2023, the Company acquired the
assets of GK8, a digital asset self-custody platform for
approximately $44 million.
-
- We believe the market opportunity for GK8's custodial
technology services continues to expand rapidly, particularly as
institutional demand in the asset class grows. As such, our primary
focus is to invest in GK8's sales footprint and existing product
roadmap to begin capturing market share this year.
- Furthermore, the Company will use GK8's custody solution in the
ongoing development of GalaxyOne, our own unified, client-centric
prime-brokerage platform for clients to engage with digital
assets.
- Additional benefits of the transaction include expansion of the
Company's geographic reach, adding an office in Tel Aviv, and onboarding an experienced team
of nearly 40 individuals, including cryptographers and blockchain
engineers.
- The founders of GK8, CEO Lior Lamesh and CTO Shahar Shamai, will lead Galaxy's custodial
technologies offering.
______________________________________
|
6
"Sustainable Energy Mix" is defined by the Bitcoin Mining Council
(BMC) as energy sourced from hydro, wind, solar, nuclear and
geothermal energy sources. The BMC's "Sustainable Energy"
definition is based on the principles brought forward by the U.S.
Energy Information Administration (EIA) Net Zero by 2050 Report.
The definition was updated in the fourth quarter to exclude
carbon-based energy with net carbon credits.
|
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 December 31, 2022, 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
year-end closing share price. An impairment expense of $109.0 million was recognized for the quarter and
$252.5 million for the year ended
December 31, 2022. The net
comprehensive loss of GDH Ltd. was $522.7
million for the year ended December
31, 2022.
Important U.S. Tax Information - Action Required by U.S.
Shareholders
Galaxy shareholders who are U.S. taxpayers
should be aware that there may be significant and adverse U.S.
federal income tax consequences relating to Galaxy's PFIC status
for 2022 and prior years and in connection with Galaxy's
domestication from Cayman to Delaware unless they make certain elections on
their originally filed U.S. federal income tax returns for 2022,
which are generally due on April 18,
2023 (subject to allowable extensions). These consequences
and, therefore, the need to take action apply to both direct and
indirect holdings of Galaxy shares. These elections are described
in the notice posted by Galaxy in March
2023 on its website at
https://investor.galaxy.com/financials/annual-reports/default.aspx.
Before filing their U.S. federal income tax returns for 2022,
direct and indirect Galaxy shareholders who are, or who have
investors who are, U.S. taxpayers are urged to review the notice
and to consult their tax advisors regarding the advisability of
making these elections on their U.S. federal income tax returns for
2022.
Earnings Conference Call
An investor conference call will be held today, March 28, 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 1-877-300-8521, or
1-412-317-6026 (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
April 18, 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: 10176337.
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 institutions, startups, and qualified individuals access
to the crypto economy. Our full suite of financial
services is custom-made for a digitally native ecosystem, spanning
multiple synergistic business lines: Trading, Asset Management,
Investment Banking, Mining, and Ventures.
Galaxy's CEO and Founder Michael
Novogratz leads a team of crypto enthusiasts
and institutional veterans working together on a mission to
engineer a new economic paradigm. 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 year ended December 31,
2022 and (ii) GDH Ltd.'s Management Discussion and Analysis
and Consolidated Financial Statements for the year ended
December 31, 2022 (together, the
"Consolidated Financial Statements" and "MD&As"), which have
been filed on SEDAR at www.sedar.com.
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 first 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.sedar.com.
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 First Quarter 2023
results, the market opportunity and expansion for GK8, the amount
of bitcoin expected to be mined and hashrate under
management, GalaxyOne Prime, the closing of certain investment
banking mandates 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. Forward-looking statements in this document may
include, for example, statements about our businesses and their
go-forward strategies and our ability to complete the proposed
domestication and reorganization transactions. 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 banking
mandates and (13) those other risks contained in the Annual
Information Form for the year ended December
31, 2022 available on the Company's profile at www.sedar.com
and its Management's Discussion and Analysis, filed on March 28, 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 mandates; delays or other challenges in the mining
business related to hosting or power; 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)
|
December 31,
2022
|
|
December 31,
2021
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalent
|
$
542,101
|
|
$
840,776
|
Digital
assets
|
566,690
|
|
2,420,777
|
Receivable for digital
asset trades
|
9,063
|
|
8,332
|
Digital assets loans
receivable, net of allowance
|
49,971
|
|
192,684
|
Digital assets
receivables
|
12,423
|
|
52,998
|
Assets posted as
collateral
|
25,138
|
|
71,400
|
Receivables
|
10,887
|
|
26,665
|
Derivative
assets
|
17,719
|
|
45,669
|
Prepaid expenses and
other assets
|
32,818
|
|
25,768
|
Loans
receivable
|
62,611
|
|
190,087
|
Due from related
party
|
13,857
|
|
25,023
|
Total current
assets
|
1,343,278
|
|
3,900,179
|
|
|
|
|
Digital assets
receivables
|
5,154
|
|
18,659
|
Investments (includes
$235.4 and $350.6 million of equity method
investments)
|
595,122
|
|
1,069,776
|
Loans receivable,
non-current
|
100,977
|
|
—
|
Right of use
assets
|
13,735
|
|
11,746
|
Property and
equipment
|
208,538
|
|
58,187
|
Deferred tax
asset
|
47,746
|
|
10,259
|
Intangible
assets
|
6,948
|
|
3,087
|
Goodwill
|
24,645
|
|
24,645
|
Total non-current
assets
|
1,002,865
|
|
1,196,359
|
Total
assets
|
$
2,346,143
|
|
$
5,096,538
|
|
|
|
|
Liabilities and
equity
|
|
|
|
Current
liabilities
|
|
|
|
Investments sold
short
|
91
|
|
11,630
|
Derivative
liabilities
|
16,568
|
|
25,567
|
Warrant
liability
|
—
|
|
20,488
|
Accounts payable and
accrued liabilities
|
67,081
|
|
146,243
|
Payable to
customers
|
9,591
|
|
142,441
|
Taxes
payable
|
22,717
|
|
42,341
|
Payable for digital
asset trades
|
2,557
|
|
13,216
|
Digital assets loans
payable
|
170,566
|
|
905,013
|
Loans
payable
|
—
|
|
33,289
|
Collateral
payable
|
131,506
|
|
480,088
|
Due to related
party
|
53,984
|
|
—
|
Lease
liability
|
4,467
|
|
2,164
|
Non-controlling
interest liability
|
—
|
|
161,536
|
Total current
liabilities
|
479,128
|
|
1,984,016
|
|
|
|
|
Notes
payable
|
384,515
|
|
475,330
|
Deferred tax
liability
|
31,302
|
|
25,608
|
Lease
liability
|
12,406
|
|
13,233
|
Total non-current
liabilities
|
428,223
|
|
514,171
|
Total
liabilities
|
907,351
|
|
2,498,187
|
|
|
|
|
Equity
|
|
|
|
Partners'
capital
|
1,438,792
|
|
2,598,351
|
Total
equity
|
1,438,792
|
|
2,598,351
|
|
|
|
|
Total liabilities
and equity
|
$
2,346,143
|
|
$
5,096,538
|
Galaxy Digital Holdings LP's Consolidated Statements of
Income (Loss) and Comprehensive Income (Loss) (unaudited)
(in
thousands)
|
Year ended
December 31, 2022
|
|
Year ended
December
31, 2021
|
Income
|
|
|
|
Advisory and
management fees
|
$
29,952
|
$
|
15,736
|
Net realized gain on
digital assets
|
55,138
|
|
1,014,260
|
Net realized gain on
investments
|
42,022
|
|
231,388
|
Income from
lending
|
36,762
|
|
73,051
|
Net derivative
gain
|
191,520
|
|
10,761
|
Income from
mining
|
35,384
|
|
14,703
|
Other
income
|
28,684
|
|
5,682
|
|
419,462
|
|
1,365,581
|
|
|
|
|
Operating
expenses
|
|
|
|
Compensation and
compensation related
|
127,909
|
|
114,426
|
Equity based
compensation
|
100,849
|
|
70,891
|
General and
administrative
|
163,955
|
|
37,430
|
Professional
fees
|
28,223
|
|
53,329
|
Profit share
arrangement expense
|
—
|
|
16,568
|
Interest
|
38,896
|
|
70,155
|
Notes interest
expense
|
37,029
|
|
1,769
|
|
(496,861)
|
|
(364,568)
|
|
|
|
|
Other
|
|
|
|
Net unrealized gain
(loss) on digital assets
|
(659,169)
|
|
451,465
|
Net unrealized gain
(loss) on investments
|
(496,184)
|
|
546,997
|
Net gain on notes
payable - derivative
|
57,998
|
|
12,132
|
Net gain (loss) on
warrant liability
|
20,322
|
|
(45,644)
|
Foreign currency gain
(loss)
|
(316)
|
|
2,590
|
Loss (gain)
attributable to non-controlling interests liability
|
97,219
|
|
(197,376)
|
|
(980,130)
|
|
770,164
|
|
|
|
|
Income (loss) before
income taxes
|
(1,057,529)
|
|
1,771,177
|
Income taxes
|
(35,952)
|
|
56,900
|
Net income (loss)
for the period
|
$
(1,021,577)
|
$
|
1,714,277
|
|
|
|
|
Other comprehensive
income (loss)
|
|
|
|
Foreign currency
translation adjustment
|
$
(1,726)
|
$
|
367
|
|
|
|
|
Net comprehensive
income (loss) for the period
|
$
(1,023,303)
|
$
|
1,714,644
|
|
Year ended
December 31, 2022
|
Year ended
December 31, 2021
|
GDH LP Net income
(loss) per unit:
|
|
|
Basic
|
$
(3.13)
|
$
5.38
|
Diluted
|
(3.13)
|
4.88
|
Weighted average
units:
|
|
|
Basic
|
326,024,679
|
318,659,926
|
Diluted
|
326,024,679
|
349,318,648
|
Reportable segments (unaudited)
Income and expenses by each reportable segment of GDH LP for the
three months ended December 31, 2022
are as follows:
(in
thousands)
|
Trading
|
Principal
Investments
|
Asset
Management
|
Investment
Banking
|
Mining
|
Corporate
and
Other
|
Totals
|
Income
(loss)
|
|
|
|
|
|
|
|
Advisory and management
fees
|
747
|
—
|
5,495
|
2,000
|
—
|
(1,000)
|
7,242
|
Net realized gain
(loss)
on digital assets
|
(75,840)
|
7,182
|
(4,762)
|
—
|
—
|
—
|
(73,420)
|
Net realized gain
(loss)
on investments
|
(3,540)
|
(18,591)
|
—
|
—
|
—
|
—
|
(22,131)
|
Income from
lending
|
5,671
|
5
|
—
|
—
|
—
|
—
|
5,676
|
Net derivative
gain
|
11,760
|
(61)
|
—
|
—
|
—
|
—
|
11,699
|
Income from
mining
|
—
|
—
|
—
|
—
|
9,014
|
—
|
9,014
|
Other income
|
(1,872)
|
(29)
|
3
|
—
|
540
|
25,745
|
24,387
|
|
(63,074)
|
(11,494)
|
736
|
2,000
|
9,554
|
24,745
|
(37,533)
|
|
|
|
|
|
|
|
|
Operating
expenses
|
63,459
|
2,636
|
6,037
|
3,376
|
15,429
|
39,653
|
130,590
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
Net unrealized gain
(loss) on digital assets
|
(67,556)
|
62,501
|
10,092
|
—
|
—
|
—
|
5,037
|
Net unrealized gain
(loss) on investments
|
1,715
|
(126,695)
|
1,114
|
—
|
—
|
—
|
(123,866)
|
Net gain on notes
payable - derivative
|
—
|
—
|
—
|
—
|
—
|
1,442
|
1,442
|
Net gain on warrant
liability
|
—
|
—
|
—
|
—
|
—
|
317
|
317
|
Foreign currency
gain
|
(3,591)
|
—
|
—
|
—
|
—
|
(18)
|
(3,609)
|
Loss attributable
to
non-controlling
interests liability
|
—
|
—
|
(7,941)
|
—
|
—
|
—
|
(7,941)
|
|
(69,432)
|
(64,194)
|
3,265
|
—
|
—
|
1,741
|
(128,620)
|
|
|
|
|
|
|
|
|
Income (loss)
before
income taxes
|
$
(195,965)
|
$
(78,324)
|
$
(2,036)
|
$
(1,376)
|
$
(5,875)
|
$
(13,167)
|
$
(296,743)
|
Income tax
benefit
|
—
|
—
|
—
|
—
|
—
|
(8,968)
|
(8,968)
|
Net income (loss)
for
the period
|
$
(195,965)
|
$
(78,324)
|
$
(2,036)
|
$
(1,376)
|
$
(5,875)
|
$
(4,199)
|
$
(287,775)
|
Foreign currency
translation adjustment
|
—
|
—
|
—
|
—
|
—
|
(1,016)
|
(1016)
|
Comprehensive
income (loss) for the
period
|
$
(195,965)
|
$
(78,324)
|
$
(2,036)
|
$
(1,376)
|
$
(5,875)
|
$
(5,215)
|
$
(288,791)
|
Income and expenses by each reportable segment of GDH LP for the
three months ended December 31, 2021
are as follows:
(in
thousands)
|
Trading
|
Principal
Investments
|
Asset
Management
|
Investment
Banking
|
Mining
|
Corporate
and
Other
|
Totals
|
Income
(loss)
|
|
|
|
|
|
|
|
Advisory and
management fees
|
$
1
|
$
—
|
$
3,762
|
$
4,092
|
$
—
|
$
—
|
$
7,855
|
Net realized gain
(loss)
on digital assets
|
305,021
|
3,223
|
7,384
|
—
|
—
|
—
|
$
315,628
|
Net realized gain
(loss)
on investments
|
—
|
6,391
|
(61)
|
—
|
—
|
—
|
$
6,330
|
Income from
lending
|
33,279
|
377
|
—
|
—
|
—
|
—
|
$
33,656
|
Net derivative gain
(loss)
|
(94,595)
|
—
|
—
|
—
|
—
|
—
|
$
(94,595)
|
Income from
mining
|
—
|
—
|
—
|
—
|
8,383
|
—
|
$
8,383
|
Other income
|
443
|
—
|
3
|
58
|
15
|
—
|
$
519
|
|
244,149
|
9,991
|
11,088
|
4,150
|
8,398
|
—
|
277,776
|
|
|
|
|
|
|
|
|
Operating
expenses
|
14,143
|
677
|
9,676
|
611
|
3,458
|
5,286
|
33,851
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
Net unrealized gain
(loss) on digital assets
|
157,441
|
45,578
|
26,578
|
—
|
(672)
|
—
|
228,925
|
Net unrealized gain
(loss) on investments
|
2,050
|
129,919
|
13,799
|
—
|
—
|
—
|
145,768
|
Net gain on notes
payable - derivative
|
—
|
—
|
—
|
—
|
—
|
12,132
|
12,132
|
Net gain (loss) on
warrant liability
|
—
|
—
|
—
|
—
|
—
|
(20,842)
|
(20,842)
|
Foreign currency
gain
|
950
|
—
|
—
|
—
|
—
|
(2)
|
948
|
(Gain) loss
attributable
to non-controlling
interests liability
|
—
|
—
|
(32,646)
|
—
|
—
|
—
|
(32,646)
|
|
160,441
|
175,497
|
7,731
|
—
|
(672)
|
(8,712)
|
334,285
|
|
|
|
|
|
|
|
|
Income (loss)
before
income taxes
|
$
390,447
|
$
184,811
|
$
9,143
|
$
3,539
|
$
4,268
|
$
(13,998)
|
$
578,210
|
Income tax
expense
|
—
|
—
|
—
|
—
|
—
|
(56,900)
|
(56,900)
|
Net income (loss)
for
the period
|
$
390,447
|
$
184,811
|
$
9,143
|
$
3,539
|
$
4,268
|
$
(70,898)
|
$
521,310
|
Foreign currency
translation adjustment
|
—
|
—
|
—
|
—
|
—
|
26
|
26
|
Comprehensive
income (loss) for the
period
|
$
390,447
|
$
184,811
|
$
9,143
|
$
3,539
|
$
4,268
|
$
(70,872)
|
$
521,336
|
Assets and liabilities by reportable segment of GDH LP as of
December 31, 2022 are as follows:
(in
thousands)
|
Trading
|
Principal
Investments
|
Asset
Management
|
Investment
Banking
|
Mining
|
Corporate and
Other
|
Totals
|
Total
assets
|
$
1,333,985
|
$
634,121
|
$
32,749
|
$
24,797
|
$
241,743
|
$
78,748
|
$
2,346,143
|
|
|
|
|
|
|
|
|
Total
liabilities
|
$
351,662
|
$
374
|
$
710
|
$
2,104
|
$
10,519
|
$
541,982
|
$
907,351
|
Assets and liabilities by reportable segment of GDH LP as of
December 31, 2021 are as follows:
(in
thousands)
|
Trading
|
Principal
Investments
|
Asset
Management
|
Investment
Banking
|
Mining
|
Corporate and
Other
|
Totals
|
Total
assets
|
$
2,971,090
|
$
1,277,707
|
$
193,436
|
$
10,727
|
$
292,942
|
$
350,636
|
$
5,096,538
|
|
|
|
|
|
|
|
|
Total
liabilities
|
$
1,666,488
|
$
174
|
$
171,784
|
$
122
|
$
3,202
|
$
656,417
|
$
2,498,187
|
Select statement of financial position information
The fair value of select assets by reporting segment of GDH LP
as of December 31, 2022 is as
follows:
(in
thousands)
|
Trading
|
Principal
Investments
|
Asset
Management
|
Investment
Banking
|
Mining
|
Corporate
and Other
|
Totals
|
Digital
assets
|
$
566,690
|
$
—
|
$
—
|
$
—
|
$
—
|
$
—
|
$
566,690
|
Digital assets
receivables
|
12,980
|
4,597
|
—
|
—
|
—
|
—
|
17,577
|
Digital assets posted
as
collateral
|
25,138
|
—
|
—
|
—
|
—
|
—
|
25,138
|
Investments:
|
|
|
|
|
|
|
|
Pre-network
launch
|
—
|
5,500
|
—
|
—
|
—
|
—
|
5,500
|
Convertible
Notes
|
—
|
12,649
|
—
|
—
|
—
|
—
|
12,649
|
Preferred
Stock
|
250
|
256,111
|
—
|
—
|
2,100
|
—
|
258,461
|
Common Stock
|
121
|
61,146
|
—
|
381
|
—
|
—
|
61,648
|
LP/LLC
Interests
|
—
|
255,799
|
—
|
—
|
—
|
—
|
255,799
|
Warrants/Trust
Units/Trust Shares
|
—
|
1,065
|
—
|
—
|
—
|
—
|
1,065
|
|
$
605,179
|
$
596,867
|
$
—
|
$
381
|
$
2,100
|
$
—
|
$
1,204,527
|
The fair value of each asset class by reporting segment of GDH
LP as of December 31, 2021 is as
follows:
(in
thousands)
|
Trading
|
Principal
Investments
|
Asset
Management
|
Investment
Banking
|
Mining
|
Corporate
and Other
|
Totals
|
Digital
assets
|
$ 2,121,772
|
$
123,210
|
$
165,300
|
$
—
|
$
10,495
|
$
—
|
$ 2,420,777
|
Digital assets
receivables
|
—
|
71,657
|
—
|
—
|
—
|
—
|
71,657
|
Digital assets posted
as
collateral
|
71,400
|
—
|
—
|
—
|
—
|
—
|
71,400
|
Investments:
|
|
|
|
|
|
|
|
Pre-network
launch
|
—
|
6,393
|
—
|
—
|
—
|
—
|
6,393
|
Convertible
Notes
|
—
|
9,768
|
—
|
—
|
—
|
—
|
9,768
|
Preferred
Stock
|
—
|
382,182
|
—
|
—
|
—
|
—
|
382,182
|
Common Stock
|
34,991
|
236,303
|
—
|
—
|
—
|
—
|
271,294
|
LP/LLC
Interests
|
—
|
383,279
|
—
|
—
|
—
|
—
|
383,279
|
Warrants/Trust
Units
|
7,963
|
8,897
|
—
|
—
|
—
|
—
|
16,860
|
|
$ 2,236,126
|
$ 1,221,689
|
$
165,300
|
$
—
|
$
10,495
|
$
—
|
$ 3,633,610
|
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 December 31,
2022 is as follows:
(in
thousands)
|
As of
December 31,
2022
|
As of
December 31,
2021
|
Assets
|
|
|
Digital
assets
|
$
566,690
|
$
2,420,777
|
Digital asset loans
receivable, net of allowance
|
49,971
|
192,684
|
Digital assets
receivable, current
|
12,423
|
52,998
|
Digital assets
receivable, noncurrent
|
5,154
|
18,659
|
Assets posted as
collateral
|
25,138
|
71,400
|
|
659,376
|
2,756,518
|
Liabilities
|
|
|
Payables to
customers1
|
—
|
18,565
|
Digital asset loans
payable
|
170,566
|
905,013
|
Collateral
payable1
|
73,458
|
458,949
|
Non-controlling
interests liability
|
—
|
161,536
|
|
244,024
|
1,544,063
|
Digital assets,
net
|
$
415,352
|
$
1,212,455
|
Stablecoins,
net
|
$
281,048
|
$
240,634
|
Digital assets, net
excl. stablecoins
|
$
134,304
|
$
971,821
|
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.