Galaxy Digital Inc.

Good morning and welcome to the Galaxy Digital Second Quarter 2025 Earnings Call. Today's call is being recorded. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and 1 on your telephone. To withdraw your question, please press star and 2. At this time, I would like to turn the conference over to Jonathan Kodofsky, Head of Investor Relations. Please go ahead, sir.

Good morning, and welcome to Galaxy's second quarter 2025 earnings call. Before we begin, please note that our remarks, including answers to your questions, may include forward-looking statements. Actual results could differ materially from those described in these statements as a result of various factors, including those identified in the disclaimers in our earnings release or other filings, which have been filed with the U.S. Securities and Exchange Commission and on CDAR+. Forward-looking statements speak only as of today and will not be updated. Additionally, we may discuss references to non-GAAP metrics, the reconciliations of which can also be found in our earnings release. Finally, none of the information on this call constitutes a recommendation, solicitation, or offer by Galaxy or its affiliates to buy or sell any securities. With that, I'll turn it over to Mike Novogratz, founder and CEO of Galaxy.

Yeah, good morning, everyone. I don't really give a weather report, and it's pretty darn nice here in New York. Listen, this is our first earnings call after being a U.S. public-listed company, so that's exciting. Tony and Chris are going to go through the second quarter in pretty good detail. I think of these things as a little strange in that we're always looking backwards, talking about what we did, and my job is to look forward to not just to Q3, Q4, but to 2028, 2029, 2030. And so from that perch, I couldn't be more excited. July was, by all accounts, the best month we've had in Galaxy. All our businesses are starting to fire on full cylinders. In the asset management space, this phenomena of balance sheet companies, companies that raising capital in the public markets to deploy in crypto has exploded. We've taken an approach to want to service those. And so we're partnered with over 20 of those companies between capital, execution, asset management. It has probably added close to $2 billion of assets on platform, recurring income that will go on and on and hopefully grow. just literally just in the last short period of time. You know, on the on the trading side, you know, on the on the markets business, we executed a nine nine plus billion dollar trade. It's got to be the largest or one of the largest Bitcoin trades in history. That was fun. It was fun because it yelled loud and clear that there's a group of people that really trust our brand and trust our our discretion or execution services and We did it smoothly. The market took it. It tells you how strong the market is right now. That's a tremendous amount of Bitcoin that the market absorbed. You know, on the data center company, I told you before, I see both the data center business and the crypto business as growth businesses. We executed and bought another one gigawatt of potential capacity around the Helios site. That would make that a three and a half gigawatt site. Got to be one of the top five data centers in the world if we get that fully built out. That's exciting. We also announced CoreWeave executed the third option. And so now that entire 800 megawatt site will be tailor built for CoreWeave and their clients. And so again, firing all cylinders. The Trump administration is doing some amazing things for crypto. If you haven't, I would tell everyone to look at the SEC's SEC chair, Paul Atkins, his speech on, you know, putting the U.S. financial markets and global financial markets on chain. That really is the big challenge for all crypto companies, including Galaxy. And so, you know, when I say we're building to 2028, 2029, 2030, those kind of projects really will define us, you know, in that next decade. And so. We got a lot more to talk about, I think, next quarter. We've got a lot in store. But I couldn't be more bullish. Finally and last, I want to welcome Doug Deason to our board. Doug Deason has decades of experience across financial services, real estate, and public markets. But most importantly for me, he's a true Texan. We have a huge investment in Texas. And Texas is going to be a big part of Galaxy's future. Doug is well connected. His family has been there a long time, and he's going to help us really navigate any potholes in opportunities down in Texas, as well as in D.C. And so I couldn't be more excited. It's also nice to get someone who's a little bit older than me on the board. And so he's now our senior spokesman. With that, I'm going to hand it over to Tony to talk about the quarter. Great.

Thanks, Mike, and thanks, everyone, for joining the call today. As Mike mentioned, Q2 was a pivotal quarter for Galaxy, and Q3 is already off to an exciting start, which Chris and I will touch on in a little bit more detail in a few minutes. During Q2, we completed our domestication and reorganization in the U.S. We listed on the NASDAQ. We raised nearly $500 million in common equity capital and saw continued progress on building out our operating businesses across digital assets and data centers. From a financial perspective, we made strong progress across the business in the second quarter, generating $299 million in adjusted gross profit and saw a healthy increase in our capital and overall balance sheet. In our operating segments, digital assets delivered $71 million in adjusted gross profit, up 10% quarter over quarter, reflecting continued momentum across the core operating units. Treasury and corporate generated $228 million in adjusted gross profit, driven primarily by mark-to-market gains on the digital assets and investment positions held on our balance sheet. As a reminder, in the data center segment, we do not expect to report financial results until Q1 of 2026, when we begin recognizing revenue from CoreWeave under phase one of our lease agreement. Until then, all expenditures are being capitalized as they directly support the preparation of the facility for operational readiness. Also, beginning this quarter, we're introducing a new profitability metric called adjusted EBITDA. We believe this offers a clearer representation of the business performance in our operating segments going forward. As a reminder, adjusted EBITDA is a non-GAAP measure and should be thought of as complimentary, not a replacement of our GAAP financial metrics. A reconciliation to GAAP net income is available in our earnings release. For Q2, firm-wide adjusted EBITDA came in at $211 million. Our total operating expenses excluding grossed up transaction costs and digital asset impairments were 133 million in Q2. And we recorded a negative, in Q2 we recorded a negative mark-to-market adjustment of $125 million on the embedded derivative associated with our exchangeable notes, which was driven by Galaxy's second quarter stock price performance up until the date of our reorganization in mid-May. With the successful reorganization and consolidation of our reporting structure, Q2 will be the last quarter that we will be impacted by this mark-to-market adjustment. Our Q2 gap net income was $31 million, which included this mark-to-market adjustment, and Q2 gap operating income was $166 million. Turning to the balance sheet, we ended the quarter with $2.6 billion in equity capital, up more than $700 million quarter-over-quarter. This increase was driven by the primary capital raise in May, which generated approximately $480 million in net proceeds, appreciation in our digital assets and balance sheet investments, and a one-time increase of $292 million in equity capital due to the consolidation of our corporate structure as part of the reorganization. In accordance with accounting treatment for reverse acquisitions, this $292 million had no impact on net income or adjusted EBITDA during the quarter, but instead was credited directly to equity capital. Cash and stable coins remain relatively flat at $1.2 billion, with cash proceeds from the May equity raise being used to help fund CapEx related to our Helios data center build-out, as well as continuing to grow our balance sheet and digital assets. We ended Q2 with approximately $2 billion in net digital assets and investments on our balance sheet. As we move forward, we will continue to run our balance sheet with fortress-like principles, managing risks with discipline, and ensuring we have enough capital, liquidity, and access to financial resources as we continue on a growth agenda across both digital assets and data centers. Now turning to our operating business results, starting with digital assets. Our global markets business generated 55 million of adjusted gross profit in the quarter, up from 43 million in Q1. While industry-wide spot crypto trading volumes declined by approximately 30% from Q1, our crypto trading volumes were down 20%, and the business was able to capitalize on market dislocations and outperform the overall market. We continue to see increased engagement from traditional financial institutions, and today we are tracking one of the strongest institutional onboarding pipelines we have seen to date. On the lending side, our average loan book balance exceeded $1 billion for the first time, passing an important growth milestone, and we ended the quarter with roughly $1.4 billion in total loans outstanding. From a net interest margin perspective, we saw modest compression during the quarter and coupled with a mixed shift towards lower margin lending products, our overall lending revenue was down slightly quarter over quarter. And in advisory, Robinhood's acquisition of Bitstamp officially closed, which Galaxy served as the exclusive advisor to Bitstamp on this transaction. Now turning to asset management and infrastructure solutions. We ended the quarter with nearly $9 billion in total assets under management and assets under stake, reflecting market appreciation and organic growth in our asset management business. This business generated $16 million in adjusted gross profit, down $6 million from Q1, driven by more muted revenue on the staking side, which I'll speak to in just a minute. Asset management saw approximately $175 million of net inflows this quarter, driven by our venture fund and treasury management solutions, partially offset by certain ETF net outflows amid the market volatility early in the quarter. On the venture side, we announced the final close of Galaxy Ventures Fund with $178 million, which will be focused on early-stage companies building the infrastructure and applications powering the on-chain economy. The fund exceeded its original target size and has already deployed roughly $70 million with several investments supporting the growth of stablecoin adoption and tokenization. In infrastructure solutions, our assets under stake increased by more than 30% to $3.1 billion in Q2. However, this aggregate staking revenue declined in the second quarter amid a notable drop in on-chain activity across the major protocol ecosystems we support. The slowdown in activity was especially pronounced on the Solana network in Q2, where Galaxy is one of the largest infrastructure providers by stake weight. From a distribution standpoint, we announced our integration with Fireblocks in Q2. Galaxy staking services are now natively accessible to more than 2,000 of the world's largest financial institutions, making secure, scalable staking available directly through a trusted custody framework. This was the third major integration in 2025 and reflects our continued focus on partner integrations to broaden access, expand distribution, and open new channels for our customers, helping to drive organic growth in our assets on platform. More broadly, as regulatory clarity improves and institutional infrastructure matures, we're seeing a clear uptick in companies of all sizes looking to engage in the digital asset ecosystem. One of these areas, as Mike mentioned, is the digital asset treasury companies. The recent pickup in activity in this space represents a cross-platform opportunity for Galaxy, drawing on the strength of our trading, asset management, advisory, and staking businesses to deliver integrated end-to-end solutions. Since kicking off our work with digital asset treasury companies, we've evaluated more than 100 different management opportunities, and as Mike mentioned, we are actively supporting over 20 of the most prominent players, providing them with capital, infrastructure, asset management, and trading services. These companies are coming to Galaxy because we are a trusted brand and because they see the value of working with a partner that is built for scale. This has begun to play out in our results with more than $1.5 billion in assets brought on platform and over $2 billion in notional volumes traded since the first quarter of this year. We are focused on long-term strategic relationships to serve clients, help drive thoughtful innovation in the industry, and generate high-quality and sustainable business for Galaxy. Additionally, last week, AllUnity formally launched their Euro stablecoin to the market. As a reminder, this project has been developed in partnership with DWS and Flow Traders and helps position Galaxy to capitalize on this increasingly important segment of the overall digital asset market. Stepping back, we believe we're at a pivotal moment in the evolution of capital markets. With the passage of the Genius Act and hopefully more legislation coming, we are seeing real integration between traditional finance and on-chain infrastructure. As this convergence accelerates, clients will need unified platforms to access, deploy, and optimize their assets across both environments, which will create entirely new market opportunities. At Galaxy, we're continuing to invest in the technology, research, and product innovation to bridge on-chain and off-chain ecosystems, and you will continue to see us add products, services, and new capabilities in the quarters to come. Before I turn it over to Chris, I want to touch on a quick Q3 update. As Mike mentioned, digital asset prices continue their upward momentum to start the quarter, with Bitcoin reaching new all-time highs in July and Ether and Solana posting strong gains in the last few weeks. July marked the strongest monthly performance for our digital asset operating business in the firm's history. And as Mike mentioned, we completed the sale of over 80,000 Bitcoin on behalf of a client representing one of the largest notional Bitcoin transactions in history. In asset management, we saw strong net inflows and organic growth in staking assets during July. And importantly, in digital data centers, CoreWeave has exercised its final option of on phase three at our Helios campus, and we recently signed a purchase agreement to acquire 160 acres of adjacent land, which could provide an additional one gigawatt of increased power capacity at Helios in the future. With that, let me turn it over to Chris.

Thanks, Tony. Focusing on our data center business, I'm pleased to announce that subsequent to quarter end, we expanded our partnership with CoreWeave, who exercised its final option to access an additional 133 megawatts of critical IT load for its AI and HPC operations at our Helios data center campus. With this expansion, CoreWeave has now committed to the full 800 megawatts of gross power currently approved for at Helios. This additional capacity will be structured on terms similar to those outlined for both phases one and two. Throughout the second quarter, the team was laser focused on execution as we continue transforming the Helios campus into a world-class AI and HPC campus. We're now squarely in the build phase, and I couldn't be more pleased with the pace and precision we're delivering at the site level. From a construction perspective, we have made meaningful progress in retrofitting the existing building and campus. The interior phase one building has been fully demolished in preparation for the build out of the data center, including the removal of legacy infrastructure, including immersion cooling systems and the former Bitcoin mining machines. We are finalizing an agreement to sell over half of our legacy Bitcoin mining machines, and that sale is expected to close by the end of Q3. For the remaining machines, we have now signed a new hosting agreement. Upon energization with our new hosting provider beginning in late 2025 and into the first half of 2026, and combined with our East Texas Bitcoin mining site, we anticipate a total mining capacity of approximately 1.8 exahash per second. At today's Bitcoin prices and network difficulty, we expect our mining operations to generate more than $30 million in annual revenue and be an EBITDA-positive contributor to the business. At the Helios campus, we're working to complete the earthwork and concrete foundations for our new electrical, mechanical, and backup generator infrastructure. The backup generators are scheduled to be delivered throughout the second half of this year and into Q1 2026, keeping us on track for energization. These backup generators are a key part of our electrical infrastructure and are designed to provide full backup power for all critical and mechanical systems for the data center. On the electrical front, we've taken a modular approach to accelerate the deployment and commissioning of the systems by prefabricating electrical houses offsite. These electrical houses, or e-houses, are self-contained units that house switchboards, UPS systems, batteries, transformers, and other distribution gear. These are being assembled offsite at multiple fabrication facilities, The first units are expected to ship later this month to the Helios campus for installation and integration with the onsite electrical infrastructure. Our chillers begin arriving this month and will continue into Q4. These chillers will operate as part of our broader mechanical cooling infrastructure, providing chilled water to cool the GPUs. Together with our coolant distribution units, the chillers provide a next generation cooling solution for critical AI infrastructure. In order to bring all these components together and execute the build, we are partnering with Clayco as our general contractor, operating under a construction management scope for the Phase 1 project. Clayco brings deep expertise in mission-critical infrastructure and a strong track record that includes more than $12.7 billion in advanced technology projects. Clayco's expertise gives us high conviction in their ability to deliver large, complex infrastructure projects requiring tight coordination on aggressive timelines, which is exactly what we're building at the Helios campus. They have a team of over 100 subcontractors and trade partners who are boots on the ground at Helios now as we speak, driving progress forward. The combination of earthwork, electrical, and mechanical contractors are coming together as planned, and we remain confident in our ability to hit key delivery and construction milestones in the second half of 2025 and first half of 2026. This keeps us firmly on track to deliver the 133 megawatts of critical IT capacity for Phase I in various tranches throughout the first half of 2026, aligned with CoreWeave's deployment timelines. With Phase 1 advancing towards energization, we're preparing to seamlessly transition into Phase 2 construction. Let's shift to capital and financing, where we've made equally important progress. We are in the very final stages of securing Phase 1 project-level debt financing. Project-level debt financing agreements for large-scale data center developments are inherently complex, requiring extensive due diligence, bespoke structuring, and lengthy negotiation processes. As such, these transactions often take considerable time to finalize, even when counterparties are highly engaged. That said, based on the strength of the asset and the structure we've developed, we believe we're well positioned to close this financing imminently. As a reminder, the equity portion of Phase 1 has already been funded through our existing equity capital. Once we have secured the project-level debt financing, we will have the capital necessary to fund the anticipated CapEx for Phase 1 of approximately $11 million to $13 million per megawatt. For phase two, we are still finalizing the design and engineering specifications, but expect the total project capex to be slightly higher than the phase one on a per megawatt basis. We have already commenced work on project-level debt financing for the phase two project. Throughout the phase one financing processes, we've established strong relationships with a wide range of banks and private credit managers who are active in the space, and I have confidence in our ability to secure debt financing for phase two in the coming months. On the equity side, we are exploring supplementing our parent company equity with project-level equity financing, particularly from infrastructure-focused and private equity-style funds that are actively seeking exposure to AI and HPC data center projects. As always, our approach to capital is opportunistic and disciplined. Once these projects are stabilized and generating revenue, we'll look to refinance at lower cost of capital. This opportunity is expected to unlock committed equity, allowing us to recycle capital into future buildouts while keeping our capital stack nimble and optimized for growth. Finally, shifting to power, we developed a healthy origination pipeline focused on land, powered land, powered shells, and built to suit data centers. This pipeline remains a critical part of how we scale in a disciplined and capital efficient way. Since last quarter, we've narrowed our pipeline from over 40 sites to a select set of high quality opportunities, Regulously evaluated based on development stage, power capacity, and energization timelines. We are highly selective when it comes to power land, ensuring that any project we pursue meaningfully expands our data center footprint and advances our position as a multi-asset owner and developer. We've already begun to execute on our growth objectives. Subsequent to quarter end, we entered into a definitive purchase and sale agreement to acquire 160 acres and a one gigawatt load interconnection request adjacent to the Helios campus. At the close of this land acquisition, we will have expanded the Helios campus to over 1,500 acres of contiguous land under Galaxy's direct control, and we'll have increased our total potential power capacity at the Helios campus to 3.5 gigawatts, giving it the potential to become one of the largest AI data center campuses in the world. It also provides us with an important plot of land adjacent to what will be two of the largest switching stations in Texas, strengthening our long-term presence in the region. With 2.7 gigawatts of total power capacity now under various stages of study, we're working very closely with ERCOT, AEP, WET, and other stakeholders to finalize studies and approvals. The load interconnection process for the original 1.7 gigawatts we submitted in 2024 has taken longer than initially anticipated, largely due to ERCOT's efforts to clean up a backlog of speculative and inactive projects that have congested the load interconnection queue. As a result, ERCA and the transmission utility companies are applying greater scrutiny to new load interconnection requests to ensure that near-term development is anchored in real execution. From our perspective, that's a positive shift and one that ultimately benefits well-capitalized, credible developers like Galaxy. We expect to have clear visibility in the back half of this year. We have also been actively building out our data center team, hiring key talent with deep industry expertise, including engineering and construction team members with experience at leading hyperscalers like Microsoft and Meta. We're full speed ahead on phase one with construction advancing in line with our delivery schedule. Phase two is ramping with both infrastructure planning, lease finalization, and capital formation progressing well. And we'll share more on phase three as decisions take shape. I'm incredibly encouraged by the momentum this team has built. We've made real progress this quarter, and we're going to stay focused, disciplined, and execution-driven as we enter into the second half of this year.

Now, back to the operator for questions. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your telephone. If you are using a speakerphone, please pick up your handset before asking a question. If at any time your question has been addressed and you would like to withdraw your question, please press star and two. Our first question comes from James Yarrow and Goldman Sachs. Please go ahead.

Thank you for taking the question. I was hoping you might be able to touch a little bit on the outlook for growth of non-US dollar stablecoins. There's been quite limited non-US dollar stablecoin growth so far, and a material portion of the US dollar stablecoins are as customers want access to dollars. Do you expect these non-US dollar stablecoins to resemble the size of the dollar ones, and perhaps why?

You know, in the short run, no. Most stablecoins right now are used for liquidity in markets, and that is still mostly denominated in dollars. But over time, I think you're going to see the Euro stable coin and other stable coins from separate countries pick up as digital currencies start replacing traditional currencies and the FX market moves to a more digital place. That's going to also happen with payments, European payments, with when AI takes off and the agents are starting to spend money. And so I would guess in the short run, no, they're not going to be nearly as big, but I think long-term potential is really great.

That's really helpful. Thank you. And then maybe just turning to the data centers, we've seen tightening credit spreads over the past few months. Maybe just any update on the expected financing costs range for the project debt for phases one and two?

Yeah. Hey, James. Good morning. Thank you. I think our expectation on where we land on phase one is in line with what we've articulated in the past. It will come out at a sub-10% stream rate, but when you take into account upfront fees and potential breakage, depending on when you assume we'd have a refinancing event or not, we'll likely end up in the 10% to 11% expected yield in terms of cost of capital. um even as credit spreads are tightening sort of in real time like these these are negotiated deals that have been going on for months and so um we look to that as as the expected uh direction of travel once we look at a stabilized project for takeout um on the phase two side we'll you know we're pretty preliminary there it'll be interesting i think our expectation is um that uh we're a young company doing this and uh As we produce results, as we sign leases, as we get financing closed and we start building, then we sort of earn the right to achieve larger financing at lower cost. And so our goal on phase two is going to be sort of twofold. One, it's for sure going to be a larger project. And so just getting that financed, I think, is the primary goal. But also the profile of our company, both now as a U.S. public company, larger equity capital base, clear line of sight to delivering stabilization on phase one. Our expectation is that should lead lenders to also give us positive treatment on that front.

The next question comes from Patrick Moldy with Piper Sandler. Please go ahead.

Yes, good morning. Thanks for taking the question. I was hoping you'd just update us on your just general conversations with hyperscalers and other ai adjacent companies it seems like you know with the decision to expand the footprint at helios those conversations must be going pretty well um demand seems like it remains strong across the board but any color that you can give on on how those conversations have been going would be great thanks sure um i'll start so the you know the

The most recent announcement, which we put out with regards to CoreWeave executing the third option, I think is the most important sign. They signaled their intent from the beginning to ultimately be the single build-to-suit tenant for our existing 100 megawatts. They had the option to step into that relationship basically over the past year. And this final execution, I think, just crystallizes that. at least from their end, the opportunities that they're seeing with their clients in terms of on the demand side. With other hyperscalers, obviously we're not continuing to acquire a pipeline of potential energy for no reason. I think our partnership with CoreWeave is going to take up the vast majority of our attention over the next few years. That being said, the other hyperscalers out there are equally committed to growing. I think if you see in their guidance and their numbers on the CapEx perspective, they've all not only reiterated their expected CapEx budgets, but actually have started to increase them as well. And so I think what you're seeing publicly in terms of their announcements is very consistent with the conversations that we're having with them. And so the other thing we are seeing, which is what we expected to see, which was all of those potential clients focused on power when we started this journey over a year ago was on near-term power 2026, 2027 deliveries. And as time ticks on, their interest in power deliveries that are now 27, 28, 29, they've just rolled that interest forward. And so I think we're seeing continued demand extending through out years now, which fits nicely with basically the asset and the energy capacity that we're accruing in Texas.

Okay, that's great color. And then just as a follow-up, switching over to the digital asset business, you mentioned the strong institutional client pipeline and called out some of the Bitcoin treasury companies that you're working with. Could you maybe just talk a little bit about traditional financial firms, asset managers, hedge funds, you know, how that base of clients has looked? Like, are you seeing a big uptick there? And how are these, you know, potential new customers engaging you on the traditional finance side?

Thanks. Well, I think one, you know, you can answer it from a few different angles. One angle we're seeing is that almost every trade buy company is preparing or starting to prepare for a world where things move from accounts to wallets. where stocks, equities are tokenized, where funds are tokenized, where stable coins become a much bigger part of payment systems. And so on the infrastructure side, we're engaged in lots of conversations with both asset managers and banks. On the sales and trading side, we have TradeFi hedge funds that are far more comfortable in crypto than they were two years ago. And so, you know, Bitcoin has become just a macro asset for most hedge funds. It's not a big deal to either buy it or sell it anymore where it used to be huge, huge hurdles of approval. They still feel more comfortable in equities than crypto. And so you're seeing a lot of action in ETFs and these balance sheet companies. That will change in time. Some of that is financing, right? ETFs are easier to finance than, say, prime brokers. But I think you're going to see kind of a merger of both on-chain crypto and TradeFi stuff over the next few years.

Our next question comes from Brett Knobloch with CounterFigure. Please go ahead.

Hi, guys. This is Thomas Shinsky on for Brett. Thank you for taking my question. Just one for me, I guess. Regarding the recent sale of over 80,000 Bitcoin on behalf of a Satoshi-era client, I guess, can you just share any insight into how Galaxy was selected for this mandate? Was there a formal RFP process? And what do you think differentiated Galaxy from other potential counterparties for this mandate? you know, client looking to offload his Bitcoin.

As a start, one of the reasons we got that trade and many others is that we are really religious about not speaking about why clients do things or their motivations. I would say we've worked really hard since 20, really 2016, 2017, even pre-Galaxy at building up a network of people that care about this community. And this was, you know, our relationships that have have gone back many years now of just building trust. And, you know, in lots of ways, as much as this is a digital platform, you know, technology, there's still a whole lot of hand-to-hand combat in trust. And, you know, we do that every single day and, you know, we hammer it into our employees that that's all we have, right? You know, and so... I mean, I think that's a, maybe it doesn't answer exactly what you want, but that's the answer I'm going to give you.

No worries. Thanks, Mike.

The next question comes from Greg Lewis with PDIG. Please go ahead.

Yeah, thank you, and good morning, everybody, and thanks for taking my questions. You know, I was hoping you could talk a little bit more. You know, you mentioned in Q2 about, you know, the slowdown in activity on the Solana Layer 1. Kind of curious, you know, at a high level, maybe what was driving that. And then as we look at July... You know, it seems like a lot of things are, you know, improving in terms of activity along the crypto ecosystem. Kind of curious what you're seeing on the Solana network in July, if you're able to comment on that at this point.

Yeah, sure. Morning, Greg. I'll start. Yeah, I think what we saw pretty much through the first half of this year was a coming off of a pretty aggressive like localized, uh, volume on Solana for, for things like meme coin launches and things like that. And so it really cute Q2 was, was more of the same, um, after that activity in prior quarters, um, in the prior year, uh, had slowed down and leveled off. Um, I, I could tell you that, um, Solana, um, as well as, um, some of the other, other non-Bitcoin layer ones, um, the teams all around those ecosystems, whether it's the foundations or app builders and things like that who are committed to those networks, are pretty aggressively focused on how do we now build functionality so that on-chain volumes are not flash-in-the-pan meme coin type volumes and instead are enduring volumes to either support things like stablecoin payments and money movements actual consumer apps and things like that. So that takes time to like to layer into to the layer ones, no pun intended, and actually have working technology. But that is the focus of the industry now is bringing durable, growing volumes on chain. Just where we're at now is at least in Solana specifically was a kink following a pretty aggressive on chain volume run up for meme coins.

Okay, great. And then my other question is around these treasury strategies. I mean, clearly, Galaxy's working hard. You called out the 20 customers that you brought on. As you think of the revenue lifecycle of that opportunity for Galaxy, obviously the initial acquisitions of the companies, cryptocurrencies is important in a revenue driver. But then, you know, could you talk a little bit beyond, you know, once they're, you know, I guess on the platform, you know, how we're thinking about, you know, there's other opportunities in terms of the asset management and the staking and potentially the lending kind of like how you think that that kind of plays out in terms of a revenue opportunity?

Sure. So there's an asset management fee that we're getting in most of these. for managing the assets, which roughly is about a percent. There is a staking opportunity in most of these, not the Bitcoin versions, of course, but the non-Bitcoin versions. And so our assets under stake are going up. And there's, of course, staking revenue that comes with that. And the push for all of these companies is going to be to say, hey, we can do something that an ETF doesn't do. uh, to drive extra return. And so you're going to see lending, uh, you're going to see on chain, uh, activity, uh, and there's in essence, a race to create, uh, the most value, right? Again, Michael Saylor, uh, pioneered this idea and, you know, he was able to create value and micro strategy, uh, via being first and providing access, uh, to Bitcoin when a lot of people didn't have that access and created this almost machine and hasn't had to do much more than just buy the Bitcoin and provide leverage. And he's doing it with all kinds of different preferred structures that first converts now preferred equity, preferred debt. I think you're going to see the other companies have to go one step further. And we're seeing that. And those are the services we're trying to provide.

Yeah, and the only thing I'll add, if I may, Mike, is I think it's important that our relationship with these companies spans the capital creation, as Mike said, on the way in, as well as the ongoing management of the assets in the companies. In a lot of cases, those are actually being done under multi-year contracts. And then if you think about the vehicles, what's different about these vehicles is they're really closed-end perpetual vehicles. And so... Our goal is to do a really good job to help the management teams and the shareholders of these companies make sure they have hardened infrastructure, that they're managing their assets well, that they're growing their asset base in the underlying currencies as most efficiently as they can. And that should set us up for having basically a perpetual relationship with them because these vehicles don't have redemption. They're not ETFs. And so once the capital is in, it's there forever.

And so it's just our job to do a great job forever.

The next question comes from Chris Berneller with Rosenwald Securities. Please go ahead.

Hi. Thanks for the question. Congratulations on the results and also appreciate the additional disclosure. I'm going to train right now, so I'm going to ask my two-part question and call it once. The first question is on the data center business. how much you want to lean into this business. We're already sort of building the pipeline of 28 now, but I know you're actively looking for additional sites. You're expanding Helios, but also looking for additional sites. Is there a plan to potentially add a lot more capacity before the end of the decade, or is this going to be more methodical so that future growth will be by 2029, 2030, and that kind of thing? And the second part of the question is, How big do you want the data center business to be? It's kind of a different business than the digital assets business.

And your updated thoughts on separating the two at some point would be great. Thanks so much. Yeah, thanks, Chris.

I'll take at least the first part, and I think Mike will chime in as well long-term strategically for us. The answer to your question today is definitely door number two, which is methodical growth. And that's for a couple of reasons, right? Like one, the industry is relatively nascent and people's expectations long-term around demand are forming. Obviously, they're forming across the board at the biggest companies in the world in tens to hundreds of billions of dollars in terms of notional. And so it's one of the biggest commitments to a new growth industry that I think the world has ever seen. But it's still pretty nascent. And then there's also a practical component, which is, These are very large-scale, long-term development projects that take a lot of capital. And so our ability to grow into the opportunity is sort of wholly dependent on two things. One, us executing excellently, but then also, two, growing and getting bigger as a company so that we can actually support the growth. So, you know, meaning like it would be totally imprudent for us to to now take on in parallel, for example, like another $10 billion build, because that requires a capital base and the attention and resources that we're just not built out for today. So I think the idea is to methodically build a base of really high quality assets and high recurring revenue, which then allows us to then accelerate growth from there as we see the opportunity develop. So that's the way we're approaching it in terms of how large we want to be.

In terms of We have two businesses under one roof. There are a lot of great companies with multiple businesses under one roof. I think of Amazon with a retail business, an entertainment business, and a cloud business. We're going to keep them under one roof for a while, and as long as one plus one equals more than two, we'll probably keep this set up. If the markets at one point tell us, hey, you're going to get more value by splitting them, then we're pretty rational guys. I do think, you know, to highlight what Chris said, this next 12 months is really important because we go from putting out a lot of money to having an asset that starts spitting out cash. And, you know, once 12 months from now, 24 months from now, Helios becomes a big cash generator for us. It allows... it allows a lot more flexibility in how we deploy capital. Right now in some ways we're sharing capital because while the leases are mostly under, I'm sorry, the financing is mostly underwritten by this wonderful lease, there's still a parent guarantee and parent equity requirements. And so we're having the best of both worlds in lots of ways. We're going to kind of run that until we think there's a more accretable path for it.

Our next question comes from John Peterson with Jefferies. Please go ahead.

Oh, great. Thank you. Good morning, guys. In turn, maybe just to come back to stick with data centers, and I'm curious for more commentary on hyperscalers. I know you talked about it earlier, but I'm curious what hurdles you think that Galaxy might still need to cross to convince hyperscalers to, you know, to sign a deal with Galaxy. Are they waiting to see a finished product with the CoreWeave data centers? Or is it more about, you know, proving that you have funding capacity or something else?

Yeah. Morning, John.

So, yeah, I think practically speaking, the – Other hyperscalers evaluating Galaxy as a partner, the reality was is that we dedicated our first 800 megawatts of available capacity to CoreWeave. And so, you know, I do think it is true that the bigger, more established hyperscaler companies do care a whole lot about who their counterparties are, have they built data centers for the last 10 years, what's their track record, et cetera, which, of course, Up until now, we haven't had, and so I do think that they will care about it. But we also, once we made the decision to partner with CoreWeave, we really didn't have anything to sell them, to be totally candid. So I think it's less about, it's been less about us being evaluated as a new upstart from a data center development perspective, and more about just literal practical availability. So I think for us, the setup for us was let's partner with CoreWeave, let's execute on our existing 800 megawatt project, which is a very large project and is going to span multiple years. And along the way, let's make sure we build up a pipeline of additional capacity that we are going to get approved for over time. And as that capacity comes on, we'll have demonstrated our ability to deliver and sort of check that box off for the hyperscaler. So slightly different characterization than I think that, you know, you would think, but that's been the reality.

Yeah, that's really helpful. Would you say, I guess when we, I know we're thinking ahead past the 800 megawatts, but would it be a priority to diversify and bring in a different customer, or are you comfortable with, you know, building solely for Corby's?

Yeah, I think that we have definitely gotten comfortable taking on pretty significant exposure to CoreWeave relative to the size of our business. I think that can't be debated based on the size of the mandate that we committed to them. On a go-forward basis, I think it would be natural for anyone who had an opportunity in front of them to build a portfolio of data centers to think about diversification. in terms of end client, in terms of regional geography, etc. I think generally speaking, from a real estate or portfolio perspective, that kind of diversification usually leads to premium valuation, usually leads to ability to finance things more effectively. And so that's definitely on our long-term roadmap. I don't want to undersell, though, A, how good a partner Corley has been, and B, as their business grows and they're successful, and their success grows and their credit quality improves, which would be our expectation over time, that it certainly doesn't preclude us from wanting to continue to do business with them as a result. So we're gonna keep an eye on it. I think it would be natural for all businesses to think about broader diversification to build the best and most durable business over time.

So we're definitely gonna look at that.

The next question. comes from Matthew Galenko and Maxim Group. Please go ahead.

Hey, good morning. Thanks for taking my question. I guess going back to the treasury companies, I'm curious if you can maybe talk about the competitive environment and the process of sort of building those relationships and winning them. And if you have a pulse on maybe, you know, what we should expect to see in, you know, second half of 25 and into 2026 as far as maybe new players coming into the the treasury space and sort of how, I don't know if you could offer a number, like what percentage you feel like you're touching before they're announcing and engaging or how you feel about the outreach and getting to them before they commit to anybody else. Thank you.

Yeah, listen, we are seeing a tremendous amount of opportunities. It will slow. At one point, the market gets saturated. most of them are offering similar product and so you'll see them in different tokens or different mixes of tokens but i think we're probably we've probably gone through peak treasury company issuance uh of new companies uh what will be most interesting is which of the existing companies uh become monsters right i mean you think about the impact that microstrategy has had on the entire bitcoin ecosystem know it's probably the single most important player in the bitcoin ecosystem it's bought the most coins it's because of that has this huge uh marketing piece to it um we've seen that in ethereum there are you know two leaders and a and a few coming up uh that all of a sudden ethereum from having from having zero treasury companies um you know, eight weeks ago, 10 weeks ago, now the biggest buyers of ETH are, you know, SharpLink, you know, which is Joe Lupin's company, where we're participating, and Tom Lee's company. And so I think you're going to continue to see those companies grow. And I think the new companies in those markets ecosystems will have a harder time getting oxygen, but there'll be new companies and new ecosystems as we go forward. What I think we learned in this, and it's a great lesson for me, was how much bigger the equity market investor base is than the traditional crypto market investor base. And so if you think about from the very start as a Bitcoin investor, You're trying to bring people into the tent, right? The job was to orange pill people and explain how this worked and bring them into the community. These treasury companies have done an amazing job of bringing people into the crypto tent. And I think they're going to continue to play a pretty important part.

The next question. Comes from Edward Engel with Compass Point. Please go ahead.

Hi, thanks for taking my question. Just wanted to follow up on some of the digital asset treasury companies. I do see Galaxy has been on some of the pipe deals for some of these. I'm just wondering, are these meaningful investments for your balance sheet or kind of just smaller contributions just kind of invest alongside some of your clients? Thanks.

Hey, Ed. Thanks. Good morning. Yeah, I think generally speaking, these are relatively small investments for us. uh, our, our primary focus has been, uh, how can we, um, how can we put our franchise forward and partner with people who actually value our franchise and the skills and the, the experience you bring to the table to help them make their company better rather than, you know, I'll characterize it as buying your way in. So we, we definitely, we definitely write checks. We do that generally in general course of business, um, through a lot of different sleeves at galaxy through our venture fund, their opportunistic fund, uh, pockets of capital, but our commitment from a capital perspective on these is really one of support with our business and reputation and services very much front and center as the goal.

Great, and then just to squeeze one more in, for the additional capacity that you're purchasing adjacent to Helios, I'm curious just if the timeline of that for Ricardo approval is any different than your existing pipeline?

Yeah, so... I would think about the additional one gigawatt of interconnect request at the land we are acquiring to be somewhat on par with our existing 1.7 in the backlog. And so think about 1.7 sort of going to 2.7 in terms of timeline. To be a little more specific, this new property interconnect is largely focused on the new pitchfork switching station that's being built and delivered. And so our existing 1.7, you know, effectively was parsed between our existing tie line into the cottonwood switching station, which has up to 1.6 gigawatts today approved, which would be an incremental 800 from what we already have. And so this sort of layers into the new cap edge project that's already been approved and is in flight in ERCOT for the new switching station, which now we own a significant amount of the land all surrounding that new project.

Our next question comes from David Ryan with Citizens. Please go ahead.

Hey, thanks. Good morning. Just want to come back to the theme of tokenization as we get closer to market structure clarity. Just get an update on how you see Galaxy as a player as TradFi comes on-chain. Essentially, you see yourself as helping product manufacturers tokenize assets, raise primary capital. Do you have interest in providing traditional assets like tokenized stocks and bonds? And you really just want to think about where you want to play or other areas where you don't want to participate there. And then just what other resources you need to add to get where you want to be. Thanks.

Yeah, that's the $64,000 question for where crypto is going. And I think everybody in this industry, including Galaxy, is trying to figure out what role we best play. Listen, we have a tokenization engine. We have a wallet business in GK8. We are doing a lot of staking. And so we put that together as an infrastructure package. And we're going to certainly look to be part of the solution for people on infrastructure. It's unclear where these are going to trade still. We will certainly be trading once they're trading and debating you know, do you team up with people to be part of that exchange or platform? But it hasn't, you know, the roadmap's not necessarily written there yet. Some of that is, a lot of that is regulatory. And so, if we tokenize, you know, Apple stock, for instance, you know, where's the liquidity of that going to exist? And so, Yeah, there's not a great answer yet, other than we're hyper-focused on it. We do think more, I mean, the head of the SEC said we're going to try to move things on chain.

And, you know, building that backbone and muscle is really important. Got it. Thank you.

And just a quick follow-up, maybe shorter term, just the outlook to the investment banking team is the crypto capital market is real. Obviously, companies come in public here. There's a lot of M&A, and I think there will probably be a lot more M&A in the space. I know it's not necessarily a core driver, but it can drive also from quarter to quarter. So just any sense of the opportunity from here in any way can frame maybe the incremental revenues that you see from that.

Yep. So on the investment banking side, I would say where we've really shined over the years is focusing on boutique M&A opportunities where our expertise on both the buy and the sell side, specifically to crypto, crypto companies, where they sit in the ecosystem, what their value added is, really shines. That pipeline is the highest quality and largest in terms of dollar numbers and and live transactions than we've ever seen before. And what's important about it is, historically, if you remember, we had a pipeline in that business that was pretty large, and there were some really chunky, very large transactions in there. Now we have numerous nine-figure M&A proposed transactions that we're pursuing all at once. And so we have... higher number and a lot broader and durable pipeline of opportunities. They're all very high quality companies that will very likely get bought and sold. And so that part of the business we're actually pretty excited about. It's, you know, given the size of that market and those opportunities relative to the rest of our business, it's for the foreseeable near term, it's going to be a relatively smaller contributor, but nonetheless, an important growing one that's important to the not just the earnings of the business, but also the knowledge base and continuing to build our reputation as being one of the smartest players in the space. So that's what we're most excited about there. What the team is also focused on outside of that, which are really near-term deals we are transacting in, is a little bit what Mike said, which was investing in talent, some licensure around traditional broker-dealer abilities, and thinking about what an on-chain capital markets business would look like. I think what we knew all along was we're unlikely to be smart to compete against the large banks for traditional capital markets deals. But I'm not sure that we agree that that should be applied to the new on-chain economy that's growing. And so what we are investing in early stages is thinking about our strategy around capital raising on-chain, whether that be in security token form or non-security other token form, depending on where market structure comes out.

So that's our R&D phase today right now.

The next question comes from Joseph Vaffey with Carnacord. Please go ahead.

Hey, guys. Good morning. Great progress on everything. A lot of questions have been answered or asked, so I'll just ask a quick one. Just really curious on this $9 billion notional trade. You know, it feels like the market absorbed that trade really well. So, A, congratulations on that execution. But just kind of, you know, peeling a layer of the onion off the mechanics of it, were you surprised to see that trade It felt like the, you know, Bitcoin market only dropped, you know, a very small amount on such a large trade. So just, you know, you know, any color on the mechanics and, you know, demand you saw for that block. Thanks.

Yeah, I mean, I'll give you some public info. You can just because Michael Saylor, you know, puts out what he bought each, you know, puts out what he buys each week. Call it grace, call it luck, call it fortune, call it timing. A combination of all the, but, you know, the execution happened when there was a tremendous amount of buying, and that buying is coming mostly from these balance sheet companies, not just Michael Saylor's, but the Truth Social, the Trump version. You know, lots of them happen to be buying in that same, in that public information. And so, you know, supply met demand. Our demand met supply. And we continue to see, you know, big buying of crypto from balance sheet companies. You know, the Ethereum companies are buying, you know, a couple hundred million dollars each a week, at least. And so I think as long as that continues, crypto prices are going to look pretty good. Now, there's a backdrop that this all happens in, right? We've got the economy finally showed a big dropping jobs and the revisions to jobs last Friday. We're now pricing an 80% chance of a cut in September. The president is becoming more and more vocal about a new Fed chief. And he fundamentally believes Chairman Powell is making a mistake not having cut rates sooner. But when the executive gets involved with the central bank and fires the head of the BLS, all of that plays into the Bitcoin narrative, plays into, oh, heck, we're going to have to inflate our way out of this giant debt trap. And so the macro story for Bitcoin and crypto is increasing, not decreasing. And so I think you're going to continue to see decent demand for people wanting Bitcoin as part of their portfolio.

Great. Thanks for that call, Mike.

Ladies and gentlemen, in the interest of time, this concludes our question and answer session. I would like to turn the conference back over to Mike Novogratz, founder and CEO of Galaxy, for any closing remarks.

Guys, thanks a ton. We do notice that we had more demand than spots for the conference call, for the earnings call, and you can call that a rookie mistake as our first U.S. listed earnings call. We promise Next time we won't make that mistake. We are working hard. We're excited over here. I said that earlier. You know, July was the best month we've had. There's a tremendous amount that we didn't talk about happening here. We have 615 employees that are coming to work with big smiles every day. And I bet you by the time we speak to you next time, that number is bigger. Anyway, thanks a lot and look forward to talking to you next next quarter.

Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.