Q2 2024 Galaxy Digital Holdings Ltd Earnings Call

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Operator: Please stand by. Your program is about to begin.

Operator: Please stand by. Your program is about to begin. If you need assistance during your conference today, please press star zero. Good morning, and welcome to Galaxy's second quarter 2024 earnings call. Before we begin, please note that our remarks today may include forward-looking statements. However, actual results may differ materially from those indicated or implied by our forward-looking statements as a result of various factors, including those identified in our filings with the Canadian Securities Regulatory Authority on CDAR Plus, available on our website, or in future filings we make with other securities regulators. Forward-looking statements speak only as of today and will not be up to date.

Operator: If you need assistance during your conference today, please press star 0.

Operator: Good morning and welcome to the Galaxy's second quarter 2024 earnings call. Today's call is being recorded.

Speaker Change: Good morning and welcome to the Galaxy second quarter 2024 earnings call.

Operator: If you would like to ask a question, please press star 1 on your telephone keypad. To remove yourself from the queue, please press star 2.

Today's call is being recorded. If you would like to ask a question, please press star 1 on your telephone keypad.

Jonathan Goldowsky: At this time, I would like to turn the conference over to Jonathan Goldowsky, head of Investor Relations. Please go ahead, sir.

Speaker Change: To remove yourself from the queue, please press star 2. At this time, I would like to turn the conference over to Jonathan Goldowsky, Head of Investor Relations. Please go ahead, sir.

Christopher Ferraro: Good morning and welcome to Galaxy's second quarter 2024 earnings call. Before we begin, please note that our remarks today may include forward-looking statements. Actual results may differ materially from those indicated or implied by our forward-looking statements as a result of various factors, including those identified in our filings with the Canadian Securities Regulatory Authority on Cedar Plus and available on our website or in future filings we make with other securities regulators.

Jonathan Goldowsky: In addition, none of the information on this call constitutes a recommendation, solicitation, or offer by Galaxy or its affiliates to buy or sell any securities, including those issued by Galaxy Securities. With that, I'll turn it over to Chris Ferraro, President and CIO of Galaxy. Thanks, Jonathan. Good morning, everyone.

Jonathan Goldowsky: Good morning and welcome to Galaxy's second quarter 2024 earnings call. Before we begin, please note that our remarks today may include forward-looking statements.

Speaker Change: Actual results may differ materially from those indicated or implied by our forward-looking statements as a result of various factors, including those identified in our filings with the Canadian Securities Regulatory Authority on CDAR+,

Jonathan Goldowsky: and available on our website or in future filings we make with other securities regulators.

Christopher Ferraro: Forward-looking statements speak only as of today and will not be updated.

Jonathan Goldowsky: Forward-looking statements speak only as of today and will not be updated.

Christopher Ferraro: In addition, none of the information on this call constitutes a recommendation, solicitation, or offer by Galaxy or its affiliates to buy or sell any securities, including Galaxy securities.

Jonathan Goldowsky: In addition, none of the information on this call constitutes a recommendation, solicitation, or offer by Galaxy or its affiliates to buy or sell any securities, including Galaxy securities.

Christopher Ferraro: With that, I'll turn it over to Chris Ferraro, President and CIO of Galaxy. Thanks, Jonathan. Good morning, everyone.

Jonathan Goldowsky: With that, I'll turn it over to Chris Ferraro, President and CIO of Galaxy.

Christopher Ferraro: Before I turn over to Alex and Mike, I'll first review our operating results for the second quarter of 2024, key trends within our businesses, and the momentum we have heading into the back half of the year. Let's start with global markets. Despite the quarterly-over-quarter decrease in trading volumes and revenues, our counterparty-facing trading business has generated approximately $90 million in revenue year-to-date, an 80% increase relative to the first half of 2023 and nearly the same amount that we earned all of last year.

Christopher Ferraro: Before I turn over to Alex and Mike, I'll first review our operating results for the second quarter of 2024, key trends within our businesses, and the momentum we have heading into the back half of the year. Let's start with global markets. Spot and Derudas trading volumes across the industry decreased in the second quarter as activity fueled by the launch of the Bitcoin ETFs in January returned to more normalized levels. As a result, in Q2, our counterparty trading revenue and volumes decrease compared to the prior quarter, largely in line with the decline seen in the broader crypto market.

Chris Ferraro: Thanks, Jonathan, and good morning, everyone. Before I turn it over to Alex and Mike, I'll first review our operating results for the second quarter of 2024, key trends within our businesses, and the momentum we have heading into the back half of the year.

Speaker Change: Let's start with global markets.

Speaker Change: Spot and derivatives trading volumes across the industry decreased in the second quarter as activity fueled by the launch of the Bitcoin ETFs in January returned to more normalized levels.

Speaker Change: As a result, in Q2, our counterparty trading revenue and volumes decreased compared to the prior quarter, largely in line with the decline seen in the broader crypto market.

Christopher Ferraro: Despite the quarter-over-quarter decrease in trading volumes and revenues, our counterparty-facing trading business has generated approximately $90 million in revenue year-to-date, an 80% increase relative to the first half of 2023, and nearly the same amount that we earned all of last year. As a reminder, earlier this year, we crossed $8 billion in trailing 12-month notional OTC derivatives traded, requiring us to register as a swap dealer in the US and comply with a new set of regulatory requirements. As anticipated, this transition has empowered us to offer larger US institutional clients the chance to participate in a well-established and regulated trading environment.

Speaker Change: Despite the quarter-over-quarter decrease in trading volumes and revenues, our counterparty-facing trading business has generated approximately $90 million in revenue year-to-date, an 80% increase relative to the first half of 2023, and nearly the same amount that we earned all of last year.

Christopher Ferraro: As a reminder, earlier this year, we crossed $8 billion in trailing 12-month notional OTC derivatives traded, requiring us to register as a swap dealer in the U.S. and comply with a new set of regulatory requirements. Through the first half of the year, we have traded approximately $13 billion in notional OTC derivatives, which is already $5 billion more than we traded in all of 2023. Further, we have continued to onboard new clients across our trading offerings and ended the quarter with over 1,200 global markets counterparties.

Speaker Change: As a reminder, earlier this year we crossed $8 billion in trailing 12-month notional OTC derivatives traded, requiring us to register as a swap dealer in the U.S. and comply with a new set of regulatory requirements.

Speaker Change: As anticipated, this transition has empowered us to offer larger U.S. institutional clients the chance to participate in a well-established and regulated trading environment.

Christopher Ferraro: Through the first half of the year, we have traded approximately $13 billion in notional OTC derivatives, which is already $5 billion more than we traded in all of 2023. Further, we have continued to onboard new clients across our trading offerings and ended the quarter with over 1,200 global markets counterparties. Notably, in recent months, we have seen increased engagement with protocols and crypto-native clients who are leveraging our full-product suite to engage with the broader ecosystem. System. We've seen an uptick in on-chain opportunities, such as providing liquidity for protocols and facilitating hedging derivatives and lending for clients with locked token positions.

Speaker Change: Through the first half of the year, we have traded approximately $13 billion in notional OTC derivatives, which is already $5 billion more than we traded in all of 2023.

Speaker Change: Notably, in recent months we have seen increased engagement with protocols and crypto native clients who are leveraging our full product suite to engage with the broader ecosystem.

Speaker Change: We've seen an uptick in on-chain opportunities, such as providing liquidity for protocols and facilitating hedging derivatives and lending for clients with locked token positions.

Christopher Ferraro: We continue to originate new loans to meet increased borrowing demand from both new and existing clients, with our average loan book size growing to just under $700 million. Despite the overall crypto market being down 12% in the second quarter, our ability to increase our lending book by 5% quarter of a quarter signals that we are continuing to win market share in organically scaling our business. We are seeing tangible growth in the build and client adoption of Galaxy One. Our unified technology platform offering institutions all the tools to trade, finance, store, and manage digital assets efficiently.

Christopher Ferraro: Despite the overall crypto market being down 12% in the second quarter, our ability to increase our lending book by 5% quarter over quarter signals that we are continuing to win market share and organically scale our business. We are seeing tangible growth in the build and client adoption of Galaxy One, our unified technology platform offering institutions all the tools to trade, finance, store, and manage digital assets efficiently. We ended the second quarter with over 100 clients and over $1.1 billion of fair market value assets being serviced by the platform. And I'm also excited to share that we continue to facilitate client purchases of LOCK tokens. And subsequent to quarter end, we closed on yet another sizable syndication deal.

Speaker Change: Despite the overall crypto market being down 12% in the second quarter, our ability to increase our lending book by 5% quarter over quarter signals that we are continuing to win market share and organically scaling our business.

Christopher Ferraro: We ended the second quarter with over 100 clients and over 1.1 billion of fair market value assets being serviced by the platform. And I'm also excited to share that we continue to facilitate client purchases of locked tokens, and subsequent to quarter end, we closed on yet another sizable syndication deal. This deal will add approximately $250 million of additional fair market value assets to Galaxy One. These assets will build on the already strong base of recurring service fee revenues on the platform. And finally, in conjunction with this deal, I'm also pleased to share that our digital infrastructure solutions arm will be providing staking services for these new assets as well, continuing to build on that group's quickly growing base of recurring client franchise revenues.

Speaker Change: And I'm also excited to share that we continue to facilitate client purchases of LOCK tokens, and subsequent to Quarter End, we closed on yet another sizable syndication deal. This deal will add approximately $250 million of additional fair market value assets to Galaxy One.

Christopher Ferraro: This deal will add approximately $250 million of additional fair market value assets to Galaxy One. These assets will build on the already strong base of recurring service revenues on the platform. This deal, along with a number of deals like it, both closed and in the pipeline, further showcases the strength of Galaxy's diversified platform, the differentiated institutional service offerings we're able to provide our clients, and importantly, the flywheel that we set out to build here at Galaxy across the firm's operations.

Speaker Change: And finally, in conjunction with this deal, I'm also pleased to share that our digital infrastructure solutions arm will be providing staking services for these new assets as well, continuing to build on that group's quickly growing base of reoccurring client franchise revenues.

Christopher Ferraro: This deal, along with a number of deals like it both closed and in the pipeline, further showcases the strength of Galaxy's diversified platform. The differentiated institutional service offerings were able to provide our clients, and importantly, the flywheel that we set out to build here at Galaxy across the firm's operating units.

Christopher Ferraro: Moving to the other segment of our global markets business investment banking, our team successfully closed two deals in the second quarter, serving as the exclusive financial advisor to Topusware in its sale to Polygon, and to another client on its strategic financing. Additionally, in the quarter, we announced that Galaxy served as the exclusive financial advisor to Bitstamp in its pending sale to Robinhood, which is expected to close in Q1 2025. This quarter, the team also tokenized a 1708 Stradivarius violin utilizing GKH technology, a tangible example of our ability to monetize illiquid assets as part of our broader tokenization strategy.

Christopher Ferraro: Moving to the other segment of our Global Markets business, Investment Banking, our team successfully closed two deals in the second quarter, serving as the exclusive financial advisor to Toposware in its sale to Polygon and to another client on its strategic finance.

Speaker Change: Moving to the other segment of our Global Markets business, Investment Banking.

Christopher Ferraro: Additionally, in the quarter, we announced that Galaxy served as the exclusive financial advisor to Bitstamp in its pending sale to Robinhood, which is expected to close in Q1 2025. Since the announcement, we have received numerous inbound calls from both new and existing clients who have shown interest in fractionalizing and lending against high-value, traditionally illiquid assets. Broadly, while capital markets continue to face headwinds, we expect to see more issuers launch capital raises as well as additional M&A opportunities in the second half of the year and into 2025. While this represents a 42% decrease quarter-over-quarter, the decrease was anticipated and overwhelmingly driven by our continued successful execution in monetizing the FTX estate's digital asset holdings for creditors.

Christopher Ferraro: Since the announcement, we have received numerous imbalances from both new and existing clients who have shown interest in fractionalizing and lending against high value, traditionally illiquid assets. Broadly, while capital markets continue to face headwinds, we expect to see more issuers launch capital raises as well as additional M&A opportunities in the second half of the year and into 2025.

Speaker Change: Since the announcement, we have received numerous inbounds from both new and existing clients who have shown interest in fractionalizing and lending against high-value, traditionally illiquid assets.

Speaker Change: Broadly, while capital markets continue to face headwinds, we expect to see more issuers launch capital raises as well as additional M&A opportunities in the second half of the year and into 2025.

Christopher Ferraro: Turning to our asset management business, we ended the second quarter with 4.6 billion of AUM. While this represents a 42 percent decrease quarter over quarter, the decrease was anticipated and overwhelmingly driven by our continued successful execution in monetizing the FTX estate's digital assets holdings for creditors. As of quarter end, the value of the assets tied to the various FTX mandates remaining that we are managing was $520 million US. While the AUM and fees associated with the mandates will continue to decrease over the coming months, we have successfully returned over $8 billion to creditors, making Galaxy the only player in the space with a proven track record in executing a complex multi-billion dollar bankruptcy state.

Speaker Change: We ended the second quarter with $4.6 billion of AUM.

Christopher Ferraro: While the AUM and fees associated with the mandates will continue to decrease over the coming months, we have successfully returned over $8 billion to creditors, making Galaxy the only player in the space with a proven track record of executing a complex, multibillion-dollar bankruptcy mandate. Building on our existing partnership footprint in Canada, the U.S., Brazil, and Europe, on June 26, Galaxy Asset Management announced it has joined forces with State Street Global Advisors to develop a suite of manager-directed digital asset ETFs that will offer investors exposure to companies involved in the digital asset space going beyond crypto and Bitcoin.

Christopher Ferraro: And we're incredibly proud to have been instrumental in rectifying the aftermath of the 2022 crypto cycle, aiding creditors and reclaiming their funds, and supporting the industry and rebuilding trust and credibility. Building on our existing partnership footprint in Canada, the US, Brazil, and Europe. On June 26th, Galaxy S Management announced we have joined forces with State Street Global Advisers to develop a suite of manager-directed digital asset ETFs that will offer investors exposure to companies involved in the digital asset space going beyond crypto and Bitcoin. Since its inception, Galaxy has been a leader in active digital asset management.

Speaker Change: Building on our existing partnership footprint in Canada, the U.S., Brazil, and Europe , on June 26th, Galaxy Asset Management announced we have joined forces with State Street Global Advisors to develop a suite of manager-directed digital asset ETFs.

Christopher Ferraro: Since its inception, Galaxy has been a leader in active digital asset management. This collaboration with State Street leverages our combined expertise in creating and managing investment-grade products and ETFs globally, positioning us to make the over $2 trillion digital asset ecosystem more accessible to a broader investment community. We're aiming to go to market with three ETFs in our initial product launch, and we'll keep you updated on progress. The team has also remained focused on the U.S. ETF landscape and, subsequent to quarter end, announced the launch of the Invesco Galaxy Ethereum ETF, QETH, in partnership with Invesco. This offering builds on Galaxy and Invesco's existing product suite following the launch of the Invesco Galaxy Bitcoin ETF, BTCO, earlier this year.

Speaker Change: Since its inception, Galaxy has been a leader in active digital asset management.

Christopher Ferraro: This collaboration with State Street leverages our combined expertise in creating and managing investment-grade products in ETFs globally, positioning us to make the over $2 trillion digital assets ecosystem more accessible to a broader investment community. We're aiming to go to market with three ETFs in our initial product launch, and we'll keep you updated on progress here. The team has also remained focused on the US ETF landscape and subsequent quarter end announced the launch of the Invesco Galaxy Ethereum ETF, QE, in partnership with Invesco. This offering builds on Galaxy and Invesco's existing product suite following the launch of the Invesco Galaxy Bitcoin ETF, BTCO, earlier this year.

Speaker Change: We're aiming to go to market with three ETFs in our initial product launch and we'll keep you updated on progress here.

Speaker Change: The team has also remained focused on the U.S. ETF landscape and subsequent to quarter end announced the launch of the Invesco Galaxy Ethereum ETF, QETH, in partnership with Invesco.

Christopher Ferraro: Finally, on the venture side of our business, we conducted a $113 million initial close for Galaxy Venture Fund 1, our inaugural crypto venture fund focused on investing in early-stage companies across crypto protocols, software infrastructure, and financialized applications. Given that this fund has garnered stronger than expected interest and that opportunities to deploy capital have expanded meaningfully in recent months, we expect to continue fundraising into next year to reach, if not exceed, our $150 million target, aiming to build a targeted portfolio of approximately 30 exciting new digital asset companies. The official launch of this fund marks an over a year-long process of moving Galaxy's core venture investing team off the balance sheet and into Galaxy Asset Management, which we believe will provide long-term, sticky management fee revenues.

Christopher Ferraro: Given that this fund has garnered stronger than expected interest, and that opportunities to deploy capital have expanded meaningfully in recent months, we expect to continue fundraising into next year to reach, if not exceed, our $150 million target, aiming to build a targeted portfolio of approximately 30 exciting new digital assets. The official launch of this fund marks an over a year-long process of moving Galaxy's core venture investing team off the balance sheet and into Galaxy asset management, which we believe Galaxy Asset Management's strong track record and global product reach have laid the groundwork for us to continue to attract institutional capital throughout the second half of 2024 and beyond. With nearly $2.4 billion in passive AUM, over $630 million in active AUM, and $1.5 billion in venture AUM, Galaxy is one of the largest and most trusted digital asset managers globally.

Speaker Change: Given that this fund has garnered stronger than expected interest, and that opportunities to deploy capital have expanded meaningfully in recent months, we expect to continue fundraising into next year to reach, if not exceed, our $150 million target, aiming to build a targeted portfolio of approximately 30 exciting new digital asset companies.

Christopher Ferraro: Galaxy Asset Management's strong track record and global product reach has laid the groundwork for us to continue to attract institutional capital throughout the second half of 2024 and beyond. With nearly 2.4 billion in passive AUM, over 630 million in active AUM, and 1.5 billion in venture AUM, Galaxy is one of the largest and most trusted digital asset managers globally.

Speaker Change: Galaxy Asset Management's strong track record and global product reach has laid the groundwork for us to continue to attract institutional capital throughout the second half of 2024 and beyond.

Speaker Change: With nearly $2.4 billion in passive AUM, over $630 million in active AUM, and $1.5 billion in venture AUM, Galaxy is one of the largest and most trusted digital asset managers globally.

Christopher Ferraro: Turning to our digital infrastructure solutions business, let's start with blockchain infrastructure. This team had an exceptional quarter with our assets under stake reaching 2.1 billion, representing an over 340% increase quarter over quarter. This significant growth has not only bolstered our staking operations meaningfully, but also established Galaxy as currently the largest validator globally on the Solana network.

Christopher Ferraro: Turning to our digital infrastructure solutions business, let's start with blockchain infrastructure. This team had an exceptional quarter, with our assets under stake reaching $2.1 billion, representing an over 340% increase quarter over quarter. This significant growth has not only bolstered our staking operations meaningfully, but also established Galaxy as currently the largest validator globally on the Solana network. We are also excited to share that in July, Galaxy announced the acquisition of crypto manufacturing.

Speaker Change: This significant growth has not only bolstered our staking operations meaningfully, but also established Galaxy as currently the largest validator globally on the Solana network.

Christopher Ferraro: We are also excited to share that in July, Galaxy announced the acquisition of Crypto Manufacturer, a leading blockchain node operator that provides trusted secured services to decentralized protocols across the digital asset ecosystem. In addition to enhancing our position as a leading technical partner to protocols and builders, this strategic acquisition expands our staking capabilities even further, increasing our Ethereum assets under stake by approximately $1 billion, which brings our total assets under stake to over $3.3 billion as of today. By integrating CMS engineering expertise and resources, Galaxy is positioned as a more prominent player in the Ethereum ecosystem, providing enterprise-grade support and innovative solutions to every corner of the digital assets space.

Speaker Change: We are also excited to share that in July , Galaxy announced the acquisition of CryptoManufacture, a leading blockchain node operator that provides trusted, secured services to decentralized protocols across the digital asset ecosystem.

Christopher Ferraro: By integrating CMF's engineering expertise and resources, Galaxy is positioned as a more prominent player in the Ethereum ecosystem, providing enterprise-grade support and innovative solutions to every corner of the digital asset space. Now, turning to mining. Our mining business continues to be positioned as a leading Bitcoin miner globally, reporting revenue of $24 million for the second quarter. Our net power purchase costs and external hosting expenses were approximately $10.5 million, resulting in a 56% direct mining profit margin. And despite the Bitcoin halving event in April, which reduced block rewards by 50% for all miners, we maintained a low marginal average cost to mine of less than $22,500 per Bitcoin in the second quarter.

Speaker Change: By integrating CMF's engineering expertise and resources, Galaxy is positioned as a more prominent player in the Ethereum ecosystem, providing enterprise-grade support and innovative solutions to every corner of the digital assets space.

Christopher Ferraro: Now turning to mining. Our mining business continue to be positioned as a leading Bitcoin miner globally, reporting revenue of $24 million for the second quarter. Our net power purchase costs and external hosting expenses were approximately $10.5 million, resulting in a 56% direct mining profit margin. In the second quarter, we operated at 5.6 ex a half per second of combined hash rate under management, down 3% quarter over quarter, despite network difficulty declining almost 10% during the quarter. And despite the Bitcoin having event in April, which reduced block rewards by 50% for all miners, we maintained a low marginal average cost to mine of less than $22,500 per Bitcoin in the second quarter.

Speaker Change: Our net power purchase costs and external hosting expenses were approximately $10.5 million, resulting in a 56% direct mining profit margin.

Speaker Change: And despite the Bitcoin halving event in April , which reduced block rewards by 50% for all miners, we maintained a low marginal average cost to mine of less than $22,500 per Bitcoin in the second quarter.

Christopher Ferraro: As Q3 will be the first full quarter post-having, and we expect network hash rate to increase significantly in the second half of the year, we do anticipate our marginal cost to mine will increase next quarter. We have been very discerning in when and towards one end we direct our capital investments, with our focus on securing long lead time, electrical infrastructure that is portable across mining and other computing applications. We have also opportunistically upgraded our A6 fleet when marking conditions have been attractive, which is what we did in the first quarter of 2024 when we purchased 3,000 new Bitmain S21 machines.

Christopher Ferraro: As Q3 will be the first full quarter post-halving, and we expect the network cash rate to increase significantly in the second half of the year, we do anticipate our marginal cost to mine will increase next quarter, electrical infrastructure that is portable across mining and other computing applications. We have also opportunistically upgraded our ASIC fleet when market conditions have been attractive, which is what we did in the first quarter of 2024 when we purchased 3,000 new Bitmain S21 machines.

Speaker Change: As Q3 will be the first full quarter post halving, and we expect network hash rate to increase significantly in the second half of the year, we do anticipate our marginal cost to mine will increase next quarter.

Speaker Change: We have been very discerning in when and towards when we direct our capital investments, with our focus on securing long lead time electrical infrastructure that is portable across mining and other computing applications.

Speaker Change: We have also opportunistically upgraded our ASICs fleet when marking conditions have been attractive, which is what we did in the first quarter of 2024 when we purchased 3,000 new Bitmain S21 machines.

Christopher Ferraro: These machines are online today, and we expect to be able to scale to 6x the hash rate under management by the beginning of the fourth quarter without any further material capital expenditure. Now, I want to take a step back and talk a little more detail about our flagship Helios campus located in Dickens County in West Texas.

Christopher Ferraro: These machines are online today, and we expect to be able to scale to 6 ex a hash of hash rate under management by the beginning of the fourth quarter without any further material capital expenditures.

Speaker Change: These machines are online today and we expect to be able to scale to 6x a hash of hash rate under management by the beginning of the fourth quarter without any further material capital expenditures.

Christopher Ferraro: Now, I want to take a step back and talk a little more detail about our flagship Helios campus located in Dickens County in West Texas. Currently, Helios has 200 megawatts of energized mining capacity. We have firm capacity approval from both ERCOT and the Wind Energy Transmission of Texas to scale up to 800 megawatts of power from the existing interconnect. Today, the majority of our site is cooled using liquid cooled infrastructure, with our main data center representing one of the largest liquid cooled data centers in the world. For a small portion of our site, we use newly developed and engineered evaporative cooling units for which we now own the IP.

Christopher Ferraro: Currently, Helios has 200 megawatts of energized mining capacity. We have firm capacity approval from both ERCOT and the Wind Energy Transmission of Texas to scale up to 800 megawatts of power from the existing interconnection. Today, the majority of our site is cooled using liquid-cooled infrastructure, with our main data center representing one of the largest liquid-cooled data centers in the world. For a smaller portion of our site, we use newly developed and engineered evaporative cooling units, for which we now own the IP, and earlier this year, Galaxy built a freshwater pond with a storage capacity of nearly 10 million gallons to expand our cooling capabilities in the most efficient We have six main power transformers installed at our existing project substation, two of which are currently energized and powering our Bitcoin mining operation.

Speaker Change: Today, the majority of our site is cooled using liquid-cooled infrastructure, with our main data center representing one of the largest liquid-cooled data centers in the world.

Speaker Change: For a smaller portion of our site, we used newly developed and engineered evaporative cooling units, for which we now own the IP, and earlier this year, Galaxy built a freshwater pond with storage capacity of nearly 10 million gallons to expand our cooling capabilities in the most efficient way.

Christopher Ferraro: And earlier this year, Galaxy built a fresh water pond with storage capacity of nearly 10 million gallons to expand our cooling capabilities in the most efficient way. We have six main power transformers installed at our existing project substation, two of which are currently energized in powering our Bitcoin mining operations. We plan to energize the next two transformers by this time next year, which will add an additional 300 megawatts to the site's current capacity, bringing our total capacity to 500 megawatts, and the final two power transformers are expected to be energized in early 2027, which will enable us to deliver the full 800 megawatts of high-voltage capacity for which we are already fully approved.

Speaker Change: We have six main power transformers installed at our existing project substation, two of which are currently energized and powering our Bitcoin mining operations.

Christopher Ferraro: We plan to energize the next two transformers by this time next year, which will add an additional 300 megawatts to the site's current capacity, bringing our total capacity to 500 megawatts, and the final two power transformers are expected to be energized in early 2027, which will enable us to deliver the full 800 megawatts of high-voltage capacity for which we are already fully approved. Our positioning in Texas also allows us to benefit from the competitive, deregulated market structure employed by the ERCOT grid and the relatively high degree of renewable energy in the region, given the feasibility of wind and solar generation. Last quarter, we expanded our campus by purchasing an additional 160 acres adjacent to Helios.

Christopher Ferraro: Helios is also strategically positioned adjacent to the Cottonwood Switching Station, one of the largest electrical switches in Texas. Several gigawatts of electricity generated by wind and solar energy are delivered through Irkut's transmission system here, providing us with an incredible amount of reliable power right next door. Our positioning in Texas also allows us to benefit from the competitive, deregulated market structure employed by the Irkuts grid, and the relatively high degree of renewables in the region given the feasibility of wind and Foundation. Last quarter, we expanded our campus by purchasing an additional 160 acres adjacent to Helios.

Speaker Change: Last quarter we expanded our campus by purchasing an additional 160 acres adjacent to Helios. We now have a total 320 acres of contiguous land and we've submitted additional load studies and new interconnect requests that are pending approval to service our expanded footprint and expected future growth at Helios.

Christopher Ferraro: We now have a total of 320 acres of contiguous land, and we've submitted additional load studies and new interconnect requests that are pending approval to service our expanded footprint and expected future growth at Helios. Additionally, the Helios campus has the opportunity to enhance our network presence by connecting to existing long-haul dark fiber routes that provide scalable bandwidth, low latency, and redundancy between the Helios campus and the Dallas area. We have done the work to define the engineering requirements, receive quotes on the components required, and reviewed proposals to construct scalable fiber for the Helios Campus.

Christopher Ferraro: We now have a total of 320 acres of contiguous land, and we've submitted additional load studies and new interconnect requests that are pending approval to service our expanded footprint and expected future growth at Helios. Additionally, the Helios campus has the opportunity to enhance its network presence by connecting to existing long-haul dark fiber routes that provide scalable bandwidth, low latency, and redundancy between the Helios campus and the Dallas area. When we acquired Helios back in December of 2022, our thesis was simple: to be a leader in the Bitcoin mining industry over time, you need one, to own your own infrastructure, and two, to have access to low-cost power at scale.

Speaker Change: Additionally, the Helios campus has the opportunity to enhance our network presence by connecting to existing long-haul dark fiber routes that provide scalable bandwidth, low latency, and redundancy between the Helios campus and the Dallas area.

Speaker Change: We have done the work to define the engineering requirements, received quotes on the components required, and reviewed proposals to construct scalable fiber for the Helios campus.

Christopher Ferraro: When we acquired Helios back in December of 2022, our thesis was simple. To be a leader in the Bitcoin mining industry over time, you need one, to own your own infrastructure, and two, to have access to low cost power at scale. Our Helios acquisition checked these boxes, and we've seen that in the ongoing success of our mining operations. However, as we've scaled, we've also seen the opportunity set in front of us rapidly evolve. Advancements in both AI and HPC industries are driving what appear to be the early innings of an insatiable demand for data center capacity, with access to low cost power, and with the ability to scale on an expedited timeline.

Christopher Ferraro: Our Helios acquisition checks these boxes, and we've seen that in the ongoing success of our mining operations. However, as we've scaled, we've also seen the opportunity set in front of us rapidly evolve. Advancements in both AI and the HPC industries are driving what appear to be the early innings of an insatiable demand for data center capacity, with access to low-cost power, and with the ability to scale on an expedited timeline. We have been evaluating this sector and the possibility of utilizing Helios beyond the scope of just Bitcoin mining for the past several months.

Christopher Ferraro: We have been evaluating the sector and the possibility of utilizing Helios beyond the scope of just Bitcoin mining for the past several months. With land to scale and approved interconnection of 800 megawatts, long lead time components already acquired and scheduled to be energized, access to water, and a low cost power, Helios is positioned to be one of the most optimal sites to build and operate large scale data centers for a variety of different computing applications. We recognize the value of the asset that we have, and we do not need to make a quick, reactive commitment, but rather are going to take a long-term, measured approach to scaling this facility.

Christopher Ferraro: With land-to-scale and approved interconnection of 800 megawatts, long lead time components already acquired and scheduled to be energized, access to water, and low-cost power, Helios is positioned to be one of the most optimal sites to build and operate large-scale data centers for a variety of different computing applications.

Christopher Ferraro: We recognize the value of the asset that we have, and we do not need to make a quick or reactive commitment but rather are going to take a long-term measured approach to scaling this facility. Our primary goal is to monetize our electric capacity and existing infrastructure in the most profitable way possible. And I am unbelievably excited for what it is.

Speaker Change: We recognize the value of the asset that we have, and we do not need to make a quick or reactive commitment, but rather are going to take a long-term measured approach to scaling this facility.

Christopher Ferraro: Our primary goal is to monetize our electric capacity and existing infrastructure in the most profitable way possible, and I am unbelievably excited for what is to come.

Speaker Change: and existing infrastructure in the most profitable way possible and I am unbelievably excited for what is to come.

Christopher Ferraro: The strong performance of each of our three operating businesses in the first half of this year underscores the strength of our diversified business model and our ability to both support and capitalize on the influx of institutional capital into the digital asset ecosystem. I am more confident than ever in Galaxy Strategic Vision and our team's ability to drive continued growth and success.

Christopher Ferraro: The strong performance of each of our three operating businesses in the first half of this year underscores the strength of our diversified business model and our ability to both support and capitalize on the influx of institutional capital into the digital asset ecosystem. I'm more confident than ever in Galaxy's strategic vision and our team's ability to drive continued growth and success. Alex, over to you. Yeah. Thank you, Chris. Good morning. In the second quarter, we reported a net loss of $177 million, primarily driven by reduced values of digital assets.

Speaker Change: I'm more confident than ever in Galaxy's strategic vision and our team's ability to drive continued growth and success.

Alex: As a point of reference, at the end of this quarter, we held more than 900 million in net long digital assets and spot Bitcoin ETFs. Our liquidity remains strong. Our total liquid assets were $1.3 billion at the end of this quarter, consisting of $409 million of cash and stablecoins, $501 million of net digital assets excluding stablecoins, and $418 million of spot Bitcoin ETF. We continue to make progress on our U.S. list. Last Friday, we filed an amendment to our registration statement responding to the seventh round of SEC comments.

Michael Novogratz: Alex, over to you. Yeah, thank you, Chris. Good morning. In the second quarter, we reported the net loss of 177 million, primarily driven by reduced value sub-digital assets. After a steep run-up of prices in the first quarter, this affected our digital assets and investment flying items on the P&L. As a point of reference, at the end of this quarter, we held more than 900 million of net long digital assets and spot Bitcoin ETFs. Our equity capital was 2.1 billion as of June 30th. We opportunistically completed a capital raise of 120 million net of fees during the second quarter.

Michael Novogratz: For the first half of the year, we generated $245 million in net income, driven by positive digital asset price movements and strong operating business performance described by Chris, with strong momentum heading into the second half of this year. Our operating expenses increased by approximately 16% quarter over quarter, primarily driven by an accounting measure that requires Galaxy to capture staking rewards that Galaxy generates from staking for others on a gross basis in lending and staking revenue, with rewards passed through to the customers that delegate to us shown as an expense. This business grew sufficiently to have a new line item on the P&L—named staking costs.

Speaker Change: Our operating expenses increased by approximately 16% quarter over quarter.

Speaker Change: primarily driven by an accounting measure that requires Galaxy to capture staking rewards that Galaxy generates from staking for others on a gross basis.

Speaker Change: in lending and staking revenue, with rewards passed through to the customers that delegate to us shown as an expense. This business grew sufficiently to have a new line item on the P&L named staking costs.

Michael Novogratz: Excluding gross stops staking costs, we decreased our operating expenses by approximately 5% quarter over quarter. Our liquidity remains strong. Our total liquid assets were 1.3 billion at the end of this quarter, consisting of 409 million of cash and stable coins, 501 million of net digital assets excluding stable coins, and 418 million in spot Bitcoin ETFs. We continue to make progress on our U.S. listing.

Speaker Change: Our liquidity remains strong. Our total liquid assets were $1.3 billion at the end of this quarter.

Speaker Change: We continue to make progress on our U.S. listing. Last Friday, we filed an amendment to our registration statement responding to the seventh round of SEC comments.

Michael Novogratz: Last Friday, we filed an amendment to our registration statement responding to the seventh round of SEC comments. We feel encouraged by the progress we have made and by the last set of comments from the SEC staff. We will keep you updated as we continue to advance through this process.

Michael Novogratz: We feel encouraged by the progress we have made and by the last set of comments from the SEC staff. We'll keep you updated as we continue to advance through this process. I know we're supposed to talk about our quarter, but... We're kind of in a spectacular place for this industry. I've literally never been more bullish on Galaxy and never been more bullish on our whole industry. And so when I think about two years ago, even, we were often seen as pariahs, like, what's up with this industry? Do we trust them?

Michael Novogratz: Now, I will turn the call over to Mike, and then we will take questions. Guys, good morning. It's a beautiful day here in New York, and I live in a kind of marked moment. I know we're supposed to talk about our quarter, but we're kind of at a spectacular place for this industry. I have literally never been more bullish on Galaxy and never been more bullish on our whole industry. And so when I think about two years ago, even, we were often seen as pariahs. Like, what's up with this industry? Do we trust them? And let me, 24 months later, we have a presidential candidate who made a Bitcoin speech or a crypto speech at the Nashville Bitcoin Conference, which, if I had written, it would have been a dream.

Speaker Change: Now, I will turn the call over to Mike, and then we will take questions.

Speaker Change: We were often seen as pariahs. Like, what's up with this industry? Do we trust them? And literally 24 months later, we have a presidential candidate who made a Bitcoin speech.

Michael Novogratz: And literally 24 months later, we have a presidential candidate who made a Bitcoin speech or talked about crypto, which, if I had written, it would have been a dream. Like, he left everything in our industry, and how do we go from here to there? Listen, even on the Democratic side, which had been, you know, really not helpful to our industry the last four years, we've already seen a big shift towards pro-innovation and pro-crypto.

Speaker Change: or a crypto speech at the Nashville Bitcoin Conference.

Speaker Change: which, if I had written, it would have been a dream. Like, he left everything in that our industry wants.

Michael Novogratz: Like, he left everything in that our industry wants, and how do we go from here to there? Listen, even on the Democratic side, which had been really not helpful to our industry the last four years, we'd already seen a big shift towards pro-innovation and pro-crypto. And I am fairly certain and hopeful that nominee Harris, Kamala Harris, the Vice President, is going to soon make comments that show that she's from San Francisco, the land of innovation, and that she wants to be a pro-innovation pro-crypto president. And so hats off to everybody at Galaxy that has worked so hard to build this acceptance, to everyone in the community.

Michael Novogratz: And I am fairly certain and hopeful that, you know, nominee Harris, Kamala Harris, the Vice President, is going to soon make comments that show that she's from San Francisco, the land of innovation, and that she wants to be a pro-innovation, pro-crypto president. And so hats off to everybody at Galaxy that has worked so hard.

Speaker Change: towards pro-innovation and pro-crypto, and I am fairly certain and hopeful that you know, nominee Harris, you know, Kamala Harris, the vice president, is going to

Speaker Change: soon, you know, make comments that show that she's from San Francisco, the land of innovation, and that she wants to be a pro-innovation, pro-crypto president. And so, hats off to everybody at Galaxy that has worked so hard.

Michael Novogratz: We are now a political voice. I said over and over there, 80 million crypto owners; that's more people that own dogs in America, and I think people are finally listening, right? Crypto is here to stay, Bitcoin is here to stay, our industry is here to stay, and that, beyond anything, is wildly important for how I look at this business, how Chris looks at this business, and how Galaxy is prosecuting this business. We come at this with a whole new renewed sense of confidence. The, you know, you never get the timing perfect on when this happens, but I am fairly certain we will get a market infrastructure bill in the next six to 12 months.

Speaker Change: to build this acceptance to everyone in the community. We are now a political voice.

Speaker Change: I said over and over, there are 80 million crypto owners, that's more people that own dogs in America, and I think people are finally listening.

Michael Novogratz: We come at this with a whole new renewed sense of confidence. You know, you never get the timing perfect on when this happens, but I am fairly certain we will get a market infrastructure bill in the next six to 12 months. We will get a stable coin bill.

Speaker Change: We come at this with a whole new renewed sense of confidence.

Michael Novogratz: And maybe more importantly, we'll get direction from the Fed and the OCC to allow the trade-fied companies to participate in our industry. And that will bring in a wave of capital. And so, you know, what does capital do? It drives prices up, but more importantly, it drives innovation. It drives people into the space.

Michael Novogratz: We will get a stable coin bill, and maybe more importantly, we'll get direction to the Fed and the OCC to allow the trade-fi companies to participate in our industry. And that will bring in a wave of capital. And so, you know, what does capital do? It drives prices up, but more importantly, it drives innovation. It drives people into the space. And so, I literally want to just, you know, start by saying I couldn't be more bullish.

Speaker Change: to participate in our industry. And that will bring in a wave of capital. And so, you know, what does capital do? It drives prices up, but more importantly, it drives innovation. It drives people into the space. And so...

Michael Novogratz: And so...um, and so, starting there, what does that mean? It means that in time, we're going to have a lot more competition. And so I think that's a great thing, right? Competition makes you sharper.

Speaker Change: I literally want to just, you know, start by saying I couldn't be more bullish.

Michael Novogratz: And quite frankly, thankful to everybody, because this is, you know, Galaxy has done our part 100%, but it's taken an entire movement to really orangepill, you know, the majority of skeptics out there who now see Bitcoin as an asset class, and the crypto as an asset class, and who believe in the transformative power of this decentralized technology. And so, starting there, like what does that mean? It means that, in time, we're going to have a lot more competition. And so, I think that's a great thing, right? Competition makes you sharper. One way we've approached that is we're already in great partnerships with lots of, you know, powerful trade-fi companies.

Speaker Change: And quite frankly, thankful to everybody, because this is, you know, Galaxy has done our part 100%, but it's taken an entire movement.

Speaker Change: to really orange pill, you know, the majority of skeptics out there who now see Bitcoin as an asset class, who see crypto as an asset class, and who believe in the transformative power of this decentralized technology.

Speaker Change: [inaudible]

Speaker Change: And so I think that's a great thing, right? Competition makes you sharper. One way we've approached that is we're already in great partnerships with lots of, you know, powerful trade by companies. And I think our evolving role will probably include a lot of those.

Michael Novogratz: One way we've approached that is we're already in great partnerships with lots of powerful trading companies, and I think our evolving role will probably include a lot of those. Helping people access on-chain, helping people access our acumen, the partnership with StateStreet comes to mind. And so you're going to see more of that in the future, I think, from us and probably from other crypto companies. We're already seeing the changes, right? You might not have noticed, but Steve Fulham, who is the mayor of Jersey City and is a friend of mine, their pension fund is invested in Bitcoin, right? The state of Michigan's pension fund has invested in it.

Michael Novogratz: And I think our evolving role will probably include a lot of those. Helping people access on shame, helping people access our acumen. The partnership with State Street comes to mind. And so, you're going to see more of that in the future, I think from us and probably from other crypto companies. We're already seeing the changes, right? You might not have noticed, but Steve Fulham, who is the mayor of Jersey City and as a friend of mine, their pension fund is invested in Bitcoin, right? The state of Michigan's pension fund has invested. And so, I think I can see more and more institutions. You know, in 2015, I started talking about the herd is coming.

Speaker Change: helping people access on-chain, helping people access our acumen, the partnership with State Street comes to mind. And so you're going to see more of that in the future, I think, from us and probably from other crypto companies.

Speaker Change: Jersey City, and as a friend of mine, their pension fund is invested in Bitcoin, right? The state of Michigan's pension fund has invested.

Michael Novogratz: And so I think you're going to see more and more institutions. You know, in 2015, I started talking about the herd coming. And I meant the institutions would come to Bitcoin. And I was way early, and probably looked a little silly for a long time.

Speaker Change: and so I think you're going to see more and more institutions.

Michael Novogratz: And I meant the institutions would come to Bitcoin. And I was way early and probably looked a little silly for a long time. Let me tell you, the herd is now here. We get calls every day from new clients who want to either understand or participate in this ecosystem. And so, I would guess that our business grows quarter on quarter, you know, for the foreseeable future. I say, I guess I see it. I see our sales force being more stressed as people went on board. I see our bankers doing more pitches. I see our asset management group coming up with more products.

Speaker Change: 2015 I started talking about the herd is coming.

Michael Novogratz: Let me tell you, the herd is now here. We get calls every day from new clients who want to either understand or participate in this ecosystem. And so, Salesforce being more stressed as people go on board. I see our bankers doing more pitches. I see our asset management group coming up with more products. And so, I couldn't be more bullish. Listen, the macro backdrop is also helpful.

Speaker Change: Salesforce being more stressed as people went on board. I see our bankers doing more pitches. I see our asset management group coming up with more products.

Michael Novogratz: And so, it couldn't be more bullish. Look, from the macro backdrop is also helping. Right? The global economy is slowing period. And the Fed will be cutting rates in September, unless something dramatic happens. You know, lowering rates adds to the narrative of crypto. The other thing I would say is we have two candidates running for president in America. And neither of them. Have talked about cutting the deficit. Neither of them talked about reducing spending on entitlements, Social Security, and Medicare, reforming Social Security and Medicare over the, and they're very politically unpopular things to talk about.

Speaker Change: and so couldn't be more bullish. Listen, the macro backdrop is also helping, right? The global economy is slowing, period, and the Fed will be cutting rates in September unless something dramatic happens, you know, lowering rates.

Michael Novogratz: Cutting rates in September, unless something dramatic happens, uh, you know, lowering rates adds to the narrative of crypto. The other thing I would say is that we have two candidates running for president in America, and neither of them have talked about cutting the deficit. Neither of them talked about... Reducing spending on entitlements, right? Social Security and Medicare, reforming Social Security and Medicare over the, and they're very politically unpopular things to talk about.

Speaker Change: Reducing

Speaker Change: Reducing spending on entitlements, right? Social Security and Medicare. Reforming Social Security and Medicare over the... and they're very politically unpopular things to talk about.

Michael Novogratz: We're at $35 trillion of debt. We're adding a trillion dollars of debt every 100 days, and until that paradigm shifts, it's hard to see a shifting, Bitcoin as a store of value, Bitcoin as digital gold is going to have an amazing appeal to investors around the world. And Bitcoin has traditionally driven our whole industry. Money comes in a Bitcoin, then it finds its way into the rest of the industry. And so I think we've got a macro backdrop. Now we have a political backdrop. That's all bullish.

Michael Novogratz: We're at $35 trillion in debt. We are adding a hundred, we're adding a trillion dollars of debt every 100 days. And until that paradigm shifts, and it's hard to see it shifting, Bitcoin as a store of value, Bitcoin as digital gold, is gonna have an amazing appeal to investors around the world. And Bitcoin has traditionally driven our whole industry. Money comes into Bitcoin, then it finds its way into the rest of the industry. And so I think we've got a macro backdrop. Now we have a political backdrop.

Speaker Change: We're at $35 trillion of debt. We are adding a hundred...

Galaxy: And so, I think we've got a macro backdrop, now we have a political backdrop, that's all bullish. And listen, you know, Galaxy, I couldn't be more proud of what's happening here. Chris did a nice job of...

Michael Novogratz: That's all bullish. And listen, Galaxy; I couldn't be more proud of what's happening here. Chris did a nice job of going through the quarter and through some of the really exciting things.

Michael Novogratz: And listen, you know, Galaxy, I couldn't be more proud of what's happening here, a twisted and nice job of, you know, going through the quarter and through some of the really exciting things. But when I think about digital infrastructure, one of our three businesses, right, this mining stuff is real. AI is not going away. The big, you know, companies Google, Meta, you know, Microsoft, OpenAI, their CAPEX budget on data centers is, you know, supposed to be 300 billion a year, as far as I can see. We are going to participate in that. We have gotten very focused on this Helios asset.

Speaker Change: You know, going through the quarter and through some of the really exciting things. But when I think about digital infrastructure, one of our three businesses.

Michael Novogratz: But when I think about digital infrastructure, one of our three businesses, right? This mining stuff is real. AI is not going away.

Michael Novogratz: The big, you know, companies, Google, Meta, you know, Microsoft, OpenAI, their CapEx budget on data centers is, [inaudible] You know, stay tuned. But that's very exciting. And then the staking business, you know, out of nowhere, six months ago, we're now over $3 billion in assets staked and growing. And I think that's going to be a bigger and bigger business for us. And so, like digital infrastructure, it feels pretty good for me.

Speaker Change: Right? This mining stuff is real. AI is not going away. The big companies, Google, Meta, Microsoft, OpenAI, their CapEx budget on data centers is

Speaker Change: You know supposed to be 300 billion a year as far as the eye can see We are going to participate in that we have gotten Very focused on this Helios asset. Chris was just down there yesterday and so

Michael Novogratz: Chris was just down there yesterday. And so you know, stay tuned, but that's very exciting. And then the staking business, you know, at a nowhere six months ago, we're now over $3 billion of asset state and growing. And I think that's going to be a bigger and bigger business for us. And so, like digital infrastructure feels pretty good for me. Our asset management business, Steve Kurz and his team are hustling new products. We launched our first in-house venture fund. Right, we've always done venture on the balance sheet. And now we're bringing clients into that expertise.

Speaker Change: You know stay tuned, but that's that's very exciting and then

Speaker Change: the staking business. You know, out of nowhere, six months ago, we're now over $3 billion of asset state.

Speaker Change: and growing. And I think that's going to be a bigger and bigger business for us. And so like digital infrastructure feels pretty good for me. Our asset management business, Steve Kurz and his team are hustling new products. We launched our first

Michael Novogratz: Our asset management business, Steve Kurz and his team are hustling new products, we launched our first, in-house venture fund, right? We'd always done venture on the balance sheet and now we're bringing clients into that expertise and that's exciting and so asset management is working and our flagship, you know, our markets business Jason Urban and his team, new clients, you know, record derivative exposure, our lending business continues to grow, and so couldn't be more bullish there, and so when I wrap it all up, I'm bullish, and, you know, couldn't be more excited for the future.

Speaker Change: in-house venture fund, right? We'd always done venture on the balance sheet and now we're bringing clients into that expertise and that's exciting. And so asset management is working. And our flagship, you know, our markets business.

Michael Novogratz: And that's exciting. And so asset management is working. And our flagship, you know, our markets business, Jason Urban and his team, new clients, you know, record derivative exposure; our lending business continues to grow. And so couldn't be more bullish there. And so when I wrap it all up, I'm bullish. And you know, couldn't be more excited for the future.

Operator: Hello.

Operator: By operator, I think we're ready to open it up for questions. Thank you at this time. If you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue by pressing star two. Once again, that is star one to ask a question. And we will pause for a moment to allow everyone an opportunity to signal.

Michael Novogratz: [inaudible] Operator, I think we're ready to open it up for questions. Thank you. At this time, if you would like to ask a question, please press star 1 on your telephone keypad. You may remove yourself from the queue by pressing star 2.

Speaker Change: Hello.

Operator: Once again, that is Star 1 to ask a question, and we will pause for a moment to allow everyone an opportunity to signal. Loanbook was one big metric that we looked at. That's been part of our bread and butter at the firm, generating good risk-adjusted returns with our capital from the very beginning, so we're excited about that growth. And we're actually looking to the future of that. That business today is still largely a largely bilateral relationship with our clients on sort of a, on a one-off basis, and that Galaxy One's development focus going forward is really tying that into, tying that into, trade opportunities with clients. We're actually directly financing trades and holding those trades in a prime brokerage-like fashion.

Speaker Change: Thank you. At this time, if you would like to ask a question, please press star 1 on your telephone keypad. You may remove yourself from the queue by pressing star 2. Once again, that is star 1 to ask a question, and we will pause for a moment to allow everyone an opportunity to signal.

Joseph Vafi: And we'll take our first question from Joseph Vaffey from Canaccord. Hey guys, excuse me, good morning, great to see all the operational progress and the industry backdrop here, looking a little bit better. I was wondering; I know Chris, you mentioned that your loan book was up while volumes were down. I mean, I think that's a sign of gaining share. Are there any other metrics to point to in the market's business on potential share gains, and how you look at your position there, and then I'll have a quick follow up?

Speaker Change: And we'll take our first question from Joseph Vafi from Canaccord.

Joseph Vafi: Gaining share, are there any other metrics to point to in the markets business on potential share gains and how you look at your position there? And then I'll have a quick follow-up.

Christopher Ferraro: Yeah, hey Joe, good morning. I appreciate you joining. Thanks for the question. Yeah, so loan book was one big metric that we looked at. That's been part of our bread and butter at the firm from generating good risk-adjusted returns with our capital from the very beginning. So we're excited about that growing, and we're actually looking to the future of that. That business today is still a largely bilateral relationship with our clients on a one-off basis. The Galaxy One's development focus on the go forward is really tying that into trade opportunities with clients. We're actually directly financing trades and holding those trades in a prime brokerage-like fashion.

Speaker Change: Yeah, hey, Joe, good morning. Appreciate you joining. Thanks for the question. Yeah, so.

Speaker Change: with our clients on sort of a on a one-off basis. The Galaxy One's development focus on the go-forward is really tying that into tying that into

Christopher Ferraro: That margin-based financing product we're already in testing on is pretty excited to launch since the focus for the back half of the year.

Unnamed Speaker: That margin-based financing product, we're already in testing on and are pretty excited to launch, and it's the focus for the back half of the year. And so, on a go-forward basis, that lending business, we think has the opportunity to scale even a lot faster than we've done sort of one-off hand-to-hand combat that's historically growing the book. And to add a little more color on the lending business alone, that book generated approximately $11 million in net profit so far. The other metrics in the business we look at are, there's a lot going on. The crypto spot exchange volumes were down 18% quarter over quarter in the second quarter.

Christopher Ferraro: And so on the go forward basis, that lending business, we think at the opportunity to scale even a lot faster than we've done sort of one-off hand-to-hand combat historically growing the book. And to add a little more color on the lending business alone, that book generated approximately $11 million in that profit so far. The other metrics in the business we look at are, you know, there's a bunch going on. The crypto-spot exchange volumes were down 18% quarter over quarter in the second quarter. And so, you know, while we had our businesses' volumes and revenue declines were similarly in line, the same token is that the other thing we pointed to was we have been growing our derivative volume fast and much faster in a declining market than we see on the screens and then we see with our competitors.

Speaker Change: at the opportunity to scale even a lot faster than we've done sort of one-off hand-to-hand competition, historically growing the book. And to add a little more color on the lending business alone, that book,

Speaker Change: The other metrics in the business we look at are, you know, there's a bunch going on. The crypto spot exchange volumes were down 18% quarter over quarter in the second quarter. And so, you know, while we had...

Unnamed Speaker: And so while we had, our businesses' volumes and revenue declines were similarly in line. The same token is, the other thing we pointed out was that we have been growing our derivative volume fast and much faster in a declining market than we see on the screens and then we see with our competitors. And so that business, having crossed through 8 billion of TTM, notional volume, and then jumping to 13 now just year to date alone, I think is a pretty tangible data point where we obviously have an edge and where we're gaining share.

Speaker Change: Our business's volumes and revenue declines were similarly in line. The same token is, the other thing we pointed to was, we have been growing our derivative volume.

Christopher Ferraro: And so, that business having crossed the rate billion of TTM, notional volume, and then jumping to 13 now just year to date alone, I think is a, both a pretty tangible data point in where we obviously have edge and where we're getting share. And it's also a business that has a motor around it because it's complicated to manage risk there. Requires capital, requires pretty heavy regulatory infrastructure around it, which we now have in our one or one or two in the market who even have that.

Speaker Change: Ioffe, Jonathan Goldowsky, Michael Novogratz, Christopher Ferraro

Unnamed Speaker: And it's also a business that has a motor around it because it's complicated to manage risk there, requires capital, and requires pretty heavy regulatory infrastructure around it, which we now have in our one of one or one of two in the market who even have that.

Christopher Ferraro: And it provides us an opportunity to really have a basic profitability as opposed to the base spot business, which generally in crypto and across all tri-fi assets is really a scratch at best kind of business. And so, that's what I would point to.

Unnamed Speaker: And it provides us with an opportunity to really have a base of profitability as opposed to the base spot business, which, generally, in crypto and across all TradFi assets, is really a scratch at the best kind of business. And so that's what I would point to. And then, you know, on Helios, it's still kind of early days on, you know, maybe monetizing the asset other than Bitcoin. But in a sense, maybe it's not that early. You know, if you've got it.

Joseph Vafi: Sure, that's great. Thanks, Chris.

Christopher Ferraro: And then, you know, on Helios, you know, it's still kind of early days on, you know, maybe monetizing the asset other than Bitcoin, but in a sense maybe it's not that early, you know, if you've got, I think it's over 200 megawatts that are going to be energized next year. You know, how, you know, I know you're going to try to monetize it the best way possible, but any other additional color, especially on this, you know, next phase of energy is energization since it's coming, you know, what you're looking at, you know, potential timing on any deals, et cetera.

Speaker Change: Sure, that's great. Thanks, Chris. And then, you know, on Helios, you know, it's still kind of early days on, you know, maybe monetizing the asset, other than Bitcoin, but in a sense, maybe it's not that early, you know, if you've got

Unnamed Speaker: I think it's over 200 megawatts that are going to be energized next year. So just, you know, just kind of wanted to drill down there on, you know, how, you know, I know you're going to try to monetize it the best way possible, but any other additional color, especially on this, you know, next phase of energy, energization, since it's coming, you know, what you're looking at, you know, potential timing on any deals, etc. Thanks a lot.

Speaker Change: So, just, you know, just kind of wanted to drill down there on, you know.

Joseph Vafi: Thanks a lot.

Christopher Ferraro: Yep. So let me start by being a little more specific and clarifying what we see as the electrical roadmap, so the capacity for electricity, right? So today, we have 200 megawatts energized and operating consistently every day, dedicated towards Bitcoin.

Unnamed Speaker: Yep. So let me start by being a little more specific and clarifying what we see as the electrical roadmap. So the capacity for electricity, right? So today we have 200 megawatts energized and operating consistently every day dedicated to the Bitcoin market. The big electrical infrastructure that we have installed and is going to be energized this time next year adds another 300 megawatts of electrical capacity that currently does not have a tie into an existing data center that exists there today.

Speaker Change: Yep.

Speaker Change: So...

Speaker Change: Let me start by...

Christopher Ferraro: The big electrical infrastructure that we have installed and is going to be energized this time next year as another 300 megawatts of electrical capacity that currently does not have a tie into an existing data center that exists there today. And so that additional 300 megawatts is available for either us to develop an additional data center capacity that would be one and a half x our current size for Bitcoin mining or to greenfield a data center dedicated towards other uses. That this time next year from a base electrical capacity, which is really the most important foundation for anything we're going to do next, it gets us to 500 megawatts and we can increase that further to 800 megawatts by 2027, which is our what we're currently approved for.

Speaker Change: The big electrical infrastructure that we have installed and is going to be energized this time next year adds another 300 megawatts.

Speaker Change: of Electrical Capacity, that currently does not have a tie into an existing data center

Unnamed Speaker: And so that additional 300 megawatts is available for either us to develop an additional data center capacity that'd be one and a half X our current size for Bitcoin mining or to Greenfield, a data center dedicated to other users. That by this time next year, from a base electrical capacity, which is really the most important foundation for anything we're going to do next, it gets us to 500 megawatts, and we can increase that further to 800 megawatts by 2027, which is what we're currently approved for.

Speaker Change: is available for either us to develop an additional data center capacity that would be 1.5x our current size for Bitcoin mining or to green field a data center dedicated towards other uses.

Speaker Change: It gets us to 500 megawatts, and we can increase that further to 800 megawatts by 2027, which is what we're currently approved for. Now, I think you've probably seen other...

Christopher Ferraro: Now, I think you've probably seen other people in the market throw out like, you know, big numbers on their electrical capacity and how big they could be. Fact for us is, in addition to our 800 megawatts that we already have approved and we have the long lead time infrastructure purchased and installed already. We have two other work streams that can more than triple that capacity over the long, long term. One is an additional 800 megawatts that we've done the low studies for that we've submitted, which relate to our existing tie-in at the existing substation. So that would be capacity going 800 already approved to 1.6 gigawatts.

Unnamed Speaker: Now, I think you've probably seen other people in the market throw out big numbers on their electrical capacity and how big they could be. The fact for us is, in addition to our 800 megawatts that we already have approved, and we have the long-lead time infrastructure purchased and installed already, we have two other work streams that can more than triple that capacity over the long, long term. One is an additional 800 megawatts that we've done load studies for that we've submitted, which relate to our existing tie-in at the existing substation.

Speaker Change: In addition to our 800 megawatts that we already have approved and we have the long lead time infrastructure purchased and installed already, we have two other work streams that can more than triple that capacity over the long, long term.

Speaker Change: One is an additional 800 megawatts that we've done load studies for that we've submitted, which relate to our existing tie-in at the existing substation. So that would be capacity going from 800 already approved to 1.6 gigawatts.

Unnamed Speaker: So that would be capacity going from 800 already approved to 1.6 gigawatts. And then we have also submitted for an additional interconnect with ERCA and WET for the new LAN we purchased, which is for another 900. And so 1.6 would go to 2.5 gigawatts total on our existing LAN footprint at Helios, assuming, over time, we get that approved. And that is a massive scale of electricity relative to any other asset in the country in terms of potential for unlocking opportunities.

Christopher Ferraro: And then we have also submitted for an additional interconnect with Irka and wet for the new land we purchased, which is for another 900 and so 1.6 would go to 2.5 gigawatts total on our existing land footprints ad Helios assuming over time we work with the we we get that approved and that that is a massive scale of electricity relative to. Anybody, any other asset in the country in terms of potential on locking opportunity in terms of what we do next.

Unnamed Speaker: In terms of what we do next, I think it's a little premature to land on anything specifically, but what I would say is we have been relentlessly investigating and having higher and higher-level conversations with the biggest companies in and around HPC and AI data centers around a number of different potential models as that industry opportunity develops.

Christopher Ferraro: I think it's, it's we feel like it's a little premature to land on anything specifically, but what I would say is we have been relentlessly investigating and having higher and higher level conversations with. The biggest companies in and around HPC and AI data centers around a number of different potential models as that industry opportunity develops, and those models range anywhere from. Partnerships on green fielding new dedicated data centers for very for specific AR HPC and uses with partners for our grow our electricity capacity growth that we have there to to potentially retrofitting existing data center capacity, which, which the bars higher for us because there's an opportunity cost because we have a great Bitcoin mining business already today.

Unnamed Speaker: And those models range anywhere from partnerships on greenfielding new dedicated data centers for specific AI HPC end uses with partners for our electricity capacity growth that we have there to potentially retrofitting existing data center capacity, which the bar is higher for us because there's an opportunity cost because we have a great Bitcoin mining business already today, to partnering in joint ventures with those operators or chip manufacturers to operate AI as a service, for example, in certain megawatt, small mega So there's actually a pretty wide palette of opportunity sets, all of which are partner dependent, end use dependent, capital need, and economics dependent, but all of which are super exciting economically, we think, relative to just our basic existing business that we built today. That's great! A lot to do, exciting stuff, and exciting times.

Speaker Change: potential models

Speaker Change: New dedicated data centers for specific AIR HPC end uses with partners.

Speaker Change: for our electricity capacity growth that we have there to potentially retrofitting existing data center capacity, which the bar is higher for us because there's an opportunity cost because we have a great Bitcoin mining business already today.

Christopher Ferraro: To partnering and joint ventures with those operators or chip manufacturers to operate AI as a service, for example, in certain megawatt like small megawatt clusters within our existing data center or in the data center growth that we're going to that we're going to pursue. So there's like there's actually a pretty wide pallet of opportunity sets, all of which sort of are partner dependent and use dependent, capital need and economics dependent, but all of which are. Super exciting economically. We think relative to just our basic existing business that we built today.

Speaker Change: A.I. as a service, for example, in certain small megawatt clusters within our existing data center or in the data center growth that we're going to pursue.

Speaker Change: Super exciting economically, we think, relative to just our basic existing business that we built today.

Joseph Vafi: That's great.

Unnamed Speaker: Thanks a lot, Chris, and everybody else. And we'll take our next question from Martin Toner from ATB Capital Markets. Thank you very much for taking my question. I want to circle back to Mike's comment about Trump's speech and regulation. Mike, can you talk a little bit about that?

Joseph Vafi: A lot to do. Exciting stuff. Exciting times. Thanks a lot, Chris.

Speaker Change: That's great. A lot to do, exciting stuff, exciting times. Thanks a lot, Chris, and everybody else.

Operator: Everybody else.

Martin Toner: And we'll take our next question from Martin Toner from ATB Capital Markets. Thank you very much for taking my question. I want to circle back to Mike's comments about Trump's speech and regulation. Mike, can you talk a little bit about what some of the regulation you mentioned would do for your business? Yeah, listen, one of the great overhangs that our whole industry has had is the fear of the SEC Wells notice, the fear of the Department of Justice saying, hey, you're trading assets that we think are securities and you think are not securities. And so just the clarity around a market infrastructure bill, which tells you what is what, who regulates what?

Chris Ferraro: Thank you very much for taking my question. I want to circle back to...

Michael Novogratz: Some of the regulation you mentioned would do for your business... Yeah, listen. One of the great overhangs that our whole industry has had is the fear of the SEC Wells Notice. The fear of the Department of Justice saying, hey, you're trading assets that we think are securities and you think are not securities. And so just the clarity around a market infrastructure bill, which tells you what is what, who regulates what, will unleash people's confidence to invest in this business from the players here, but more meaningfully will unleash asset managers' willingness to hold these assets.

Speaker Change: Yeah, listen, one of the great overhangs that our whole industry has had is the fear of

Speaker Change: The SEC Wells Notice.

Speaker Change: The fear of the Department of Justice saying, hey, you're trading, you know...

Speaker Change: And so, just the clarity around a market infrastructure bill, which tells you what is what, who regulates what, will unleash people's confidence to invest in this business from the players here.

Michael Novogratz: Will unleash people's confidence to invest in this business from the players here, but more meaningfully, will unleash asset managers' willingness to hold these assets. And so it's been the uncertainty and, quite frankly, the cost, right? Our legal costs are counting costs are significantly higher than they would be if we were trading by companies, partly because of this uncertainty. And so the biggest in some ways, you know, I was arguing in DC 12 months ago, it doesn't even matter how perfect the bill is. I now think we're going to get a very good bill, but even back then, I was like, just give us a bill because it takes the uncertainty down.

Speaker Change: and more meaningfully, Will Unleash.

Michael Novogratz: And so it's been the uncertainty and, quite frankly, the cost, right? Our legal costs, our accounting costs are significantly higher than they would be if we were a trade pipe, partly because of this uncertainty. And so the biggest thing, and in some ways, you know, I was arguing this in D.C. 12 months ago, it doesn't even matter how perfect the bill is.

Speaker Change: And so, it's been the uncertainty, and quite frankly, the cost, right? Our legal costs, our accounting costs.

Speaker Change: And so, the biggest, and in some ways, you know, I was arguing this in DC 12 months ago, it doesn't even matter how perfect the bill is.

Michael Novogratz: I now think we're going to get a very good bill. But even back then, I was like, just give us the bill because it takes the uncertainty down. And so that's the first thing. The second thing, I guess, is around what we've called Operation Showpoint 2.0. There was a determined and methodical move amongst the government to really stifle crypto in it; banks were told not to lend to crypto people.

Speaker Change: I now think we're going to get a very good bill. But even back then I was like, just give us a bill because it takes the uncertainty down.

Michael Novogratz: And so that's the first thing. You know, the second thing I guess is around what we've called Operation 2.0. There was a determined and methodical move amongst the government to really stifle crypto innovation. Banks were told, don't lend to crypto people. Plenty of cases where, you know, clients of ours, friends of ours, had their accounts shut down at major institutions because they were involved in this industry. That's changing. It will change really fast when it gets, when it gets direction from the top. And I think certainly the Republican side has said that's coming. I believe the Democrats side will as well.

Speaker Change: And so that's the first thing. You know, the second thing, I guess, is around what we've called Operation Showpoint 2.0. There was a...

Speaker Change: determined and methodical move amongst the government to really stifle crypto innovation.

Michael Novogratz: Lots of cases where, you know, clients of ours, friends of ours had their accounts shut down at major institutions because they were involved in this initiative. That's changing. It will change really fast when it gets Direction from the top. I think certainly, the Republican side has said that's coming. I believe the Democratic side will do it as well. They haven't done it yet, and so it's early. Vice President Harris has only been in this seat for less than 10 days, but all my intel and all my instincts tell me that.

Speaker Change: That's changing. It will change really fast when it gets

Michael Novogratz: They haven't done it yet. And so, you know, it's early. You know, Vice President Harris has only been in this seat for less than 10 days. But all my intel and all my instinct tells me. And I think what is best for crypto is that this is bipartisan. I'm working really hard on the Democratic side now. Mostly because we don't want to be a one-party industry. We're a technology at a movement, and it should be bipartisan. And if we get the Democrats to go where I think they're going. And plenty of already were already there.

Michael Novogratz: And I think what is best for crypto is that this is bipartisan. I'm working really hard on the Democratic side now, mostly because we don't want to be a one-party industry. We're a technology and a movement, and it should be bipartisan. And if we get the Democrats to go where I think they're going – and plenty of them are already there. And so, listen, when Joe Biden stepped down, Elizabeth Warren's, (inaudible) You know, her influence is waning.

Speaker Change: But all my intel and all my instinct tells me

Speaker Change: And I think what is best for crypto is that this is bipartisan. I'm working really hard on the Democratic side now.

Michael Novogratz: I keep Jeffries was very open-minded to crypto. Richie Torres. There's a there's a litany of Democrats that were supporting. Then it's like Yasi, as Arthur Hayes would say. And now we got both sides. And we can be less worried about who wins in Washington, more worried about prosecuting our business. Justice, and so, listen, when Joe Biden stepped down, Elizabeth Warren's power was diminished immensely, and she was the one who really was slowing down the growth of crypto. She had a banner ad like "Join my anti-crypto army," and so not a real good look if you're a crypto voter.

Speaker Change: Power.

Speaker Change: was diminished immensely. And she was the one who really was slowing down the growth of crypto. She had a banner ad, like, join my anti-crypto army. And so, not a real good look if you're a crypto voter.

Michael Novogratz: And I think, you know, her influence is waning. We will see, but I think that's really the, will be the big shift.

Michael Novogratz: We will see. But I think that's, that's really the big shift. If Republicans win, it's, it's, you know, he laid out a plan that is unbelievably bullish for our industry. I'm hoping and thinking that Democrats are going to do something similar. That's great. Thanks very much.

Michael Novogratz: If Republicans win, it's, you know, he laid out a plan that is unbelievably bullish for our industry. I'm hoping in thinking that Democrats are going to do something similar.

Martin Toner: That's great. Thanks very much. So we had a bumpy quarter for digital asset prices in Q1, excuse me, Q2.

Speaker Change: That's great. Thanks very much.

Unnamed Speaker: Can you, so we had a bumpy quarter for Digital Asset Prices in Q1, to make money, not lose money, and what you did with leverage. Our franchise businesses, right, the businesses that buy and sell with clients, that lend to clients, that do derivatives with clients, as Chris said, volumes there were down, roughly in line with the volumes in the overall industry, and profits came down.

Michael Novogratz: Can you talk a little bit to Galaxy, specifically GGM's strategy to, you know, make money, not lose money, and what you did with leverage over the quarter. Sure, listen, so our, our franchise businesses, right, the businesses that buy and sell with clients, that lend the clients, that do deliver those clients. As Chris said, volumes there were down roughly in line with the volumes in the overall industry, and profits came down accordingly, but still a profitable business. Our balance sheet, I'll call it treasury, you know, we were long called it a billion dollars crypto, and crypto went down 14%, and there's 140 million dollars, and that's simplifying it.

Speaker Change: Sure. Listen, so our...

Speaker Change: Our franchise businesses, right? The businesses that buy and sell with clients, that lend to clients, that do derivatives with clients.

Unnamed Speaker: You know, accordingly, but still profitable. You know, we were long, call it a billion dollars of crypto, and crypto went down 14%, so there's $140 million, and that's, that's great, Chris. Thank you very much.

Michael Novogratz: With hindsight, I guess I was long less crypto, and you know, so more on the high, and bought more on the low. In general, we try to outperform the overall market, but we have a very long bias to this firm. I believe Bitcoin will be a lot higher a year from now. I believe Nijal assets as a total market cap will be a lot higher a year from now, and so again, we try to stay long assets that we think are core foundational assets, and we trade around others that we think are overvalued in the short run, but this was mostly just a beta move.

Speaker Change: With hindsight, I guess I was long less crypto and sold more on the high and bought more on the low.

Speaker Change: The overall market, but we have a very long bias to this firm.

Speaker Change: I believe Bitcoin will be a lot higher a year from now. I believe digital assets as a total market cap will be a lot higher a year from now. And so, again, we try to stay long.

Speaker Change: But this was mostly just a beta move.

Christopher Ferraro: Yeah, and a couple of things I'll add. One, you know, in my comments earlier, I highlighted a strategy that we saw as a market opportunity pretty early on late last year, and we've been executing on, which has really, which is sort of syndicating lock token deals to clients, and that is an example of things that that business has done to evolve, to turn what is a transactional, largely transactional revenue driven business into something that has a base of reoccurring revenue. And so when we bring clients on platform by facilitating purchases of assets that have long-term lockups that are going to sit on our platform and be clients on our platform, I'll look by definition for years, that also generate annual management fees and provide captive clients to then ad trading services.

Speaker Change: earlier I highlighted a strategy that that we saw as a market opportunity pretty early on

Speaker Change: have long-term lockups that are going to sit on our platform and be clients on our platform by definition for years that also generate annual

Speaker Change: management fees

Christopher Ferraro: Those are the kinds of things that we do that we are doing to build ballots in the business that don't necessarily wax away with the price of crypto directly every day, and the cool thing about that whole platform in GGM now is it's starting to reach across and connect to other parts of the business like our blockchain infrastructure group, where those assets and the clients of that group then have an opportunity to stake their assets in our own blockchain nodes, which also creates a recovery revenue line item. All still have some level of correlation to the price of crypto, like that is something that is impossible to eliminate solely in our industry today, but creates sticky revenue streams that, while they have a correlation, are sort of there quarter and quarter out. The more we layer those on top of one another, the more the quarter quarter movements in the underlying price are going to be a lot less impactful on revenue.

Speaker Change: like our blockchain infrastructure group.

Speaker Change: then have an opportunity to stake their assets in our own blockchain nodes.

Christopher Ferraro: Startings. That's that's great Chris. Thank you very much.

Unnamed Speaker: Last one for me, your curtailment revenue in the quarter, $10 million on 5. 6, Exahash, it looks like you, you know, punched above your weight. Can you, can anyone just talk to them about what was at work there? So, the $10 million you're referencing is actually our total cost to produce. So that's electricity cost plus what we give up to our clients. Okay, yeah, no.

Joseph Vafi: Last one for me, your curtailment revenue in the quarter: 10 million on 5.6. That's a hash. You look like you you know punched above your weight.

Christopher Ferraro: Can anyone just talk to the what was that work there? So the 10 million you're referencing, I believe, is actually our start total cost to produce. So that that's electricity cost plus plus give up to. Oh, I see. Okay. Yeah. Okay. Yeah. No. So yeah, so I was going to say so I can address the couple of things where what I think you're getting at there, which is you know, ultimately in the quarter, we mined a marginal cost at approximately 22,500 per Bitcoin, which I don't think all the numbers have come out, but I'm pretty confident puts us in in the pretty high, a pretty high core tile or desk tile in the whole industry in terms of in terms of cost.

Unnamed Speaker: Okay, so that's, yeah, so I'll go ahead. No, I was gonna say, so I can address a couple things where it was what I think you're getting at there, which is, you know, ultimately, in the quarter, we minded a marginal cost of approximately 22,500 per Bitcoin, which I don't think all the numbers have come out, but I'm pretty confident puts us in the pretty high, pretty high quartile or decile in the whole industry in terms of cost.

Christopher Ferraro: But what what what we're doing there today in addition to just just the fact that we we operate in an area where we collect correctly selected that that an average is going to generate have pretty low cost of electricity. We we have been we've taken the view that writing index in those markets is the right strategy and index has closed significantly lower than where if we otherwise or market participants otherwise would be paying had they hedged out exposure. And so all that is to say that just paying market prices for electricity has been the smart decision to make for the entire year so far, and that's what we've done.

Unnamed Speaker: What we're doing there today, in addition to just the fact that we operate in an area where we collect correctly selected that is going to generate, have a pretty low cost of electricity. We have been, we've taken the view that riding the index in those markets is the right strategy. And the index has closed significantly lower than where we otherwise or market participants otherwise would be paying had they hedged out exposure. And so all that is to say that just paying market prices for electricity has been the smart decision to make for the entirety of this year so far, and that's what we've done.

Speaker Change: Today, in addition to just just the fact that we

Speaker Change: We operate in an area where we correctly selected that on average is going to generate, have pretty low cost of electricity. We have been, we've taken the view that riding index

Speaker Change: in those markets is the right strategy, and index has closed.

Speaker Change: significantly lower than where it we otherwise or market participants otherwise would be paying had they hedged out exposure. And so all that is to say that

Christopher Ferraro: In addition to that, the flexibility of our load there allows us to sort of shape add some shape to when we mine and when we don't. And therefore the cost that we incur or don't incur her unit of production. And so just to add a little bit more clarity to that, like in Q2, on average we mine 22 at a 24 hours per day. And that produced 56% gross gross margins. Based on where Q2 power prices were as an example, just deciding to not mine for the on average those two hours a, although it's concentrated when we make those decisions.

Unnamed Speaker: In addition to that, the flexibility of our load there allows us to sort of... shape, add some shape to when we mine and when we don't, and therefore the cost that we incur or don't incur per unit of production. And so just to add a little bit more clarity to that, like in Q2, on average, we mine 22 out of 24 hours per day. And that produced 56% gross margins. Based on where Q2 power prices were, as an example, just deciding to not mine on average those two hours a day, although it's concentrated when we make those decisions, we reduced costs by 38% in the quarter.

Speaker Change: When we mine and when we don't, and therefore the cost that we incur or don't incur per unit of production. And so just to add a little bit more clarity to that, like in Q2, on average we mine 22 out of 24 hours per day.

Speaker Change: and that produced 56% gross margins. Based on where Q2 power prices were, as an example, just deciding to not mine on average those two hours a day, although it's concentrated when we make those decisions, we reduced cost by 38%.

Christopher Ferraro: We reduced cost by 38% in the quarter. Right. And so, so by taking, you know, less than 10% of your time offline, you're reducing cost by almost 40%.

Unnamed Speaker: And so by taking less than 10% of your time offline, you're reducing costs by almost 40%. That trade-off is a very smart one economically. And I think decisions like that and how we operate are what we think have driven our performance to be pretty best in class. That's great, fellas. Thank you very much.

Speaker Change: in the quarter.

Speaker Change: And so by taking less than 10% of your time offline, you're reducing costs by almost 40%. That trade-off is a very smart one economically, and I think decisions like that on how we operate is what we think have driven our performance to be pretty best in class.

Christopher Ferraro: That tradeoff is a very smart one economically and that think decisions like that on how we operate is what we think have driven have driven our performance to be to be you know pretty pretty best in class. That's great. Thank you very much. Is that helpful that we are trying to get up? Yeah, and that's great. Thanks.

Unnamed Speaker: Is that helpful? Is that what you were trying to get at? That's all for me.

Joseph Vafi: That's all for me.

Speaker Change: That's all for me.

Joseph Flynn: And we'll take our next question from Jo Flynn from Compass Point Research. I had a question on the Helios asset and it looks like there's significant expansion potential there, but I just regard to the early stages with customers according to the stages of any L.I. sign or anything you could comment on regarding the structure, whether that be more of a kind of a cost plus type deal for the land or a co-location where you actually build a data center delivered to suit. Thanks.

Operator: And we'll take our next question from Joe Flynn from Compass Point Research, customers. Comment on and regarding the structure, you know, whether that's more of a kind of a cost plus. Yeah, hey, uh... Hey, Joe.

Speaker Change: And we'll take our next question from Joe Flynn from Compass Point Research.

Joe Flynn: All right, a question on the Helios asset, and it looks like, you know, there's...

Speaker Change: Anything you could comment on regarding the structure, whether that be more of a cost plus type deal for the land or a co-location where you actually build the data center and deliver it to suit.

Christopher Ferraro: Hey Joe, good morning. We can't donate and report tangibly yet on any specific deals or what the structures look like. I think it's a little early, but the progress we've made over the last quarter in understanding what we have, understanding what we would need to invest in. To service various potential partners and clients, structures has gone from, you know, has gone from very early exploratory stage to us having specced out how to lay how we're going to lay dark fiber or what it's going to cost us, all that kind of stuff. And so we're, we've made a ton of progress in understanding what we're going to need to do, what it's going to cost, and what the opportunity set is.

Speaker Change: Yeah, hey, uh...

Speaker Change: Hey, Joe. Good morning. We don't have anything to report tangibly yet on any specific deals or what the structures will look like. I think it's a little early, but the progress we've made over the last quarter in

Speaker Change: understanding what we have, understanding what we would need to invest in to service various potential partners and clients and structures has gone from, you know, has gone from

Unnamed Speaker: Good morning, very early exploratory. So we've made a ton of progress in understanding what we're going to need to do, what it's going to cost, and what the opportunity set is. And we're at the stage now where we are sorting through a number of conversations, very specific conversations, on a single data center that provides constraints around what kind of deal we could do. What we have is a large campus with an incredibly talented team, access to more talent in our way in the city of Lubbock with Texas Tech, and flexibility to sort of pick and choose how we want to develop the whole footprint in a number of different ways.

Speaker Change: Very early exploratory.

Speaker Change: to us having spec'd out how we're going to lay dark fiber,

Speaker Change: all that kind of stuff. And so we've made a ton of progress in understanding what we're gonna need to do, what it's gonna cost, and what the opportunity set is. And we're at the stage now where we are sorting through a number of conversations, very specific conversations on

Christopher Ferraro: And we're at the stage now where we are shorting through a number of conversations, very specific conversations on different opportunities that, by the way, are not mutually exclusive. So the good thing about what we have is we have a campus, both in terms of geographical footprint and electrical footprint, that would allow us to do a number of different things with the site; like we don't have a single data center that provides constraints around what kind of deal we could do. What we have is a large campus with an incredibly talented team, access to more talent in our way in the city of Lubbock with Texas Tech, and flexibility to sort of pick and choose how we want to develop the whole footprint in a number of different ways.

Speaker Change: single data center that provides

Speaker Change: constraints around what kind of deal we could do. What we have is a large campus with an incredibly talented team, access to more talent in our way in the city of Lubbock with Texas Tech.

Speaker Change: and flexibility to sort of pick and choose how we want to develop the whole footprint in a number of different ways. So that's the way we're thinking about it today.

Joseph Flynn: So that's the way we're thinking about it today. And we're pretty bullish, and we're pretty excited about what it could be. We're just literally to be able to announce anything or got anyone towards anything specific.

Unnamed Speaker: So that's the way we're thinking about it today. And you know, we're pretty bullish, we're pretty excited about what it could be. We're just, we're just literally to be able to announce anything or guide anyone towards anything specific. Do you want me to answer that?

Joseph Flynn: That's fair. And then you know, piggybacking off a question earlier with London being a quarter of a quarter.

Speaker Change: That's fair. Piggybacking off a question earlier with London being up quarter for quarter.

Michael Novogratz: Can you give a sense of just like what the overall, you know, environment looks like we're crypto, you know, credit conditions, whether they're improving or, you know, we're still relatively early, what it would take to rejuvenize kind of the space. Yeah, listen, I mean, the crypto credit conditions often track crypto enthusiasm and crypto pricing. And so certainly are improving, and you know, when people are more optimistic, they want to use more leverage. And so I see that business going up, not down.

Unnamed Speaker: Yeah, you can start. Yeah, listen, crypto credit conditions often track crypto enthusiasm and crypto pricing and are certainly improving. And, you know, when people are more optimistic, they want to use more leverage. And so I see that people that have created a bunch of crypto wealth that don't want to lose their crypto and will borrow dollars against it. And so you can take collateral.

Michael Novogratz: We have plenty of. People that have created a bunch of crypto wealth that don't want to lose their crypto, and will borrow dollars against crypto. And so you can take in collateral. We are, we are pretty conservative.

Speaker Change: people that have created a bunch of crypto wealth that don't want to lose their crypto and will borrow dollars against crypto. And so you can take in, you know, collateral. We are we are pretty conservative lenders still.

Unnamed Speaker: We are pretty conservative lenders still. We're looking at it more systemically or systematically, I'm sorry, and, you know, as Chris said, once we add Prime, it's either going to, hopefully, turbocharge it, and so I would hope that, in addition to risk management of building a good financing business, having good consistent access to capital is having good, consistent access to capital. And so on our end, since the beginning of the year, you've seen our own book value increase, which is part from performance, part from also raising a small bit of equity, which we did.

Michael Novogratz: Lenders still, I think that DNA comes from Chris's background as a credit guy, not my background as a macro guy. And, you know, we're also lending on chain. And so we're looking at, you know, where do we borrow and where do we lend, and that business is growing for us.

Chris Ferraro: I think that DNA comes from Chris's background as a credit guy, not my background as a macro guy. And, you know, we're also lending on Shane. And so we're looking at, you know, where do we borrow and where do we lend? And that...

Christopher Ferraro: We injected more talent into it. We're looking at it more systemically, our systematically, I'm sorry. And, you know, as Chris said, once we had Prime, these are going to hopefully going to turbo charge it. And so I would hope that 12 months from now, 24 months from now, it's one of our biggest businesses.

Speaker Change: That business is growing for us. We injected more talent into it.

Speaker Change: I would hope that 12 months from now, 24 months from now, it's one of our biggest businesses. It's one of our most steady revenue generators.

Christopher Ferraro: It's one of our most steady, rather generous.

Christopher Ferraro: Yeah, the only thing I would add is an important part in addition to risk managing of being building a good financing business is having good, consistent access to capital. And so on our end, you know, you've seen since the beginning of the year, you've seen our own book value increase, which is part from performance, part from also raising a small bit of equity, which we did. But you've also seen our balance sheet expand. And so if you just, if you just look at, you know, like debt equity, for example, to give you an order of magnitude, we went from roughly 1.05 times to 1.4 times.

Speaker Change: And so...

Speaker Change: On our end, you know, you've seen since the beginning of the year, you've seen our own book value increase.

Speaker Change: which is part from performance, part from also raising a small bit of equity, which we did. But you've also seen our balance sheet expand. And so if you just if you just look at, you know, like debt to equity, for example, to give you an order of magnitude, we went from roughly 1.05 times to 1.4 times as a business.

Michael Novogratz: As a business from the end of the year to June 30th. And a big part of that is our access to be able to borrow capital from clients and from market participants has opened up again after a pretty long way of everyone being pretty constrained in terms of their willingness to provide credit. And so I think it's an important point, just to note that like our ability to galaxies, brand reputation, balance sheet, creditworthiness, and the counter parties, expect view of our creditworthiness is paramount to our success. And we're proving it by being able to show that we can expand our balance sheet, which would then allow us to use that balance sheet to help clients finance or trades more efficiently.

Speaker Change: opened up again after a pretty long wave of everyone being pretty constrained in terms of their willingness to provide credit. And so I think it's an important point just to note that like our ability to... Galaxy's brand reputation, balance sheet, credit worthiness, and the

Speaker Change: counterparty's view of our creditworthiness is paramount to our success and we're proving it by being able to show that we can expand our balance sheet, which would then allow us to use that balance sheet to help clients finance their trades more efficiently.

Michael Novogratz: And so I think I'd point to that as like there's clearly something because, because, and when when as that thought occurs, capital flows to the most trusted market participants, and we're seeing that, and we're seeing that we think we're the beneficiary of that early on.

Speaker Change: I think I point to that as like, there's clearly some thawing because, because and when when as that thaw occurs, capital flows to the most trusted

Michael Novogratz: And finally, let me put an emphatic point on this. We have been trying and continue to try and are more optimistic of, you know, read on the signs of the US and listing in the US. That access to capital markets, which the US really is the dominant platform of, is wildly important to us. And I think once we make that shift, once the SEC opens the gates again and allows crypto companies to tap the US capital markets, you'll see our cost of funding go down and our businesses grow accordingly.

Bill Papanastasiou: We'll take our final question from Bill Papinastio. Hi. Good morning. Thanks for taking my questions.

Unnamed Speaker: But you've also seen our balance sheet expand. And so if you just look at debt to equity, for example, to give you an order of magnitude, we went from roughly 1.05 times to 1.4 times as a business from the end of the year to June 30.

Bill Papanastasiou: For the first one, I'm wondering whether you could provide your outlook on Bitcoin and mining economics over the near-to-medium term. In this quarter, Galaxy achieved a marginal cost of mine, as mentioned, of less than $23,000 for Bitcoin, which is not only attractive but yes, the lowest we've seen thus far. And maybe you can draw some parallels or contrast to the margin profile in the HPC verticals that Galaxy is considering here. Yeah, so let me give it an attempt at this. I think we have a perspective, and I think this is generally held, that hash rate is likely to increase over the near-term.

Speaker Change: In this quarter, Galaxy achieved a marginal cost to mine, as mentioned.

Unnamed Speaker: And a big part of that is our access, which opened up again after a pretty long wave of everyone being pretty constrained in terms of their willingness to provide credit. And so I think it's an important point just to note that, like our ability to access credit, Galaxy's brand reputation, balance sheet, credit worthiness, and the counterparty's view of our credit worthiness are paramount to our success. And we're proving it by being able to show that we can expand our balance sheet, which would then allow us to use that balance sheet to help clients finance their trades more efficiently.

Speaker Change: Yeah, let me give let me give an attempt to this. I think the we have a perspective and I think this is generally held that

Christopher Ferraro: And that is largely because there have been backlogs of both older machines that have been on the sidelines for a long time, as well as new production of newer, more efficient machines from the ASIC manufacturers that are in the channel and that are making their way into the market. There is still reasonable dearth of good, reliable data center capacity to house all that, and so I would temper it a little bit, but our expectation is that hash rate over the near-term is going to go up. And so, you know, absent price going up, which I'll leave to Mike to predict, the all else being equal, hash rate going up, it's going to impact all miners.

Speaker Change: that have been on the sidelines for a long time, as well as new production of new and more efficient machines from the ASIC manufacturers that are in the channel and that are making their way into the market. There is still...

Unnamed Speaker: And so I think I'd point to that as like, there's clearly some thawing because, when that thaw occurs, capital flows to the most trusted market participants. And we're seeing that, and we're seeing that we think we're the beneficiary of that early on. And finally, let me put an emphatic point on this. We have been trying and continue to try, and we are more optimistic about, you know, redomicizing to the US and enlisting in the US. Hi, good morning.

Speaker Change: absent price going up, which I'll leave to Mike to predict, the all else being equal, hashrate going up, it's going to impact all miners.

Christopher Ferraro: Our, for our business, and I think we've started to prove it, which is the most important part, than me just saying it, in Q2 is a good example of where we sit and our strategy, our power management strategy, and our flexibility over asset is such that we can make small changes in our decisions of when to produce and when not, that can have a big impact positively on ultimately bottom line, and so our positioning to be able to manage through a flatter declining price environment, while hash rate near-term is going up, we think is a real competitive advantage and a real mode around the way we operate our business and we can operate it profitably, month over month over month over month, going forward.

Mike: Our for our business, and I think we've started to prove it, which is the most important part than me just saying it in in Q2 is a good example of

Unnamed Speaker: Thanks for taking my question on the HPC verticals that Galaxy is considering here. Yeah, so, Yeah, let me give it an attempt. I think we have a perspective, and I think this is generally held, that hash rate is likely to increase over the near term. And that is largely because there are there have been backlogs of both older machines that have been on the sidelines for a long time, as well as new production of new and more efficient machines from the ASIC manufacturers that are in the channel and that are making their way into the market. There is still data center capacity to house all that.

Mike: Where we sit and our strategy, our power management strategy, and our flexibility of our asset is such that we can make small changes in

Unnamed Speaker: And so I would temper it a little bit, but our expectation is that hash rate, over the near term, is going to go up. And so, you know, absent price going up, which I'll leave to Mike to predict, the all else being equal hash rate going up, it's going to impact all miners. For our business, and I think we've started to prove it, which is the most important part, than me just saying it, Q2 is a good place where we sit, and our strategy, our power management strategy, and our flexibility of our asset is such that we can make small changes in our decisions of when to produce and when not to, that can have a big impact positively on the ultimately the bottom line.

Unnamed Speaker: And so our positioning to be able to manage through a flatter, declining price environment while the hash rate, near term, is going up, we think is a real competitive advantage and a real motor around the way we operate our business, and we tend to operate it profitably month over month over month over month going forward. Now, there is a bigger macro dynamic, which is hard to predict, which we're not factoring in yet.

Mike: The way we operate our business and the way we tend to operate it profitably month over month over month over month.

Christopher Ferraro: Now there is a bigger macro dynamic, which is hard to predict, which we're not factoring yet, but I do think over the longer run is going to, we think is going to have a big impact, which is, and you alluded to this, the value per megawatt of infrastructure that's installed now looking like it's, you know, I'll directly make up a number, but in order of magnitude larger per unit of megawatt in other computing environments like AI, HPC versus Bitcoin mining suggests that, but Hashray may not perform, you know, not perform the way everyone thinks over the meeting the longer term because the economics suggests that electoral capacity will be diverted towards other uses, which could put a ceiling on Hashray and actually could be beneficial to Bitcoin miners over the meeting the longer term.

Speaker Change: going forward.

Speaker Change: Now, there is a bigger macro dynamic, which is hard to predict, which we're not factoring in yet.

Unnamed Speaker: But I do think over the longer run, we think is going to have a big impact, which is, and you alluded to this, that the value per megawatt of infrastructure that's installed now looking like it's, and I'll directionally make up a number, but in order of magnitude larger per unit of megawatt in other computing environments like AIHPC versus Bitcoin mining, suggests that know, not perform the way everyone thinks over the medium to longer term, because the economics suggest that electrical capacity will be diverted towards other uses, which could put a ceiling on hash rate and actually could be beneficial to Bitcoin miners over the medium to longer term.

Speaker Change: I'll directionally make up a number, but in order of magnitude larger per unit of megawatt in other computing environments, like AIHPC versus Bitcoin mining, suggest that

Mike: hashrate may not perform.

Mike: you know.

Mike: Not perform the way everyone thinks over the medium to longer term because the economics suit

Mike: Suggest that electrical capacity will be diverted towards other uses, which could put a ceiling on hashrate and actually could be beneficial to Bitcoin miners.

Unnamed Speaker: And so we're looking at that dynamic, right? We're obviously at play in that dynamic as well, and it's going to be a factor in what we decide to do. But I do think you have to zoom out a little bit and look at those dynamics and think about what that means for the economics of Bitcoin mining, specifically going forward. And so I think within that, I hit a lot of what you were trying to get to. The replacement cost for other compute now appears to be significantly, significantly higher per unit than Bitcoin mining. And I think that's going to have a related impact on what Bitcoin miners decide to do, which is going to then have a drastic impact on hash rates too.

Christopher Ferraro: And so we're looking at that dynamic, right? We're obviously at playing that old dynamic as well, is going to be a factor in what we decide to do, but I do think you have to zoom out a little bit and look at those dynamics and think about what that means for the economics of Bitcoin mining specifically going forward. And so I think within that I hit a lot of what you were trying to get to, the replacement, the opportunity cost for other compute now appears to be significantly significantly higher per unit than Bitcoin mining, and I think that's going to have like a related impact for what Bitcoin miners decide to do, which is going to have then have a natural impact on Hashray too.

Mike: over the medium to longer term. And so we're looking at that dynamic, right? We're obviously at play in that all dynamic as well, and it's going to be a factor in what we decide to do. But I do think you have to zoom out a little bit and look at those dynamics and think about what that means for the economics of Bitcoin mining, specifically going forward. And so I think within that I hit a lot of what you were trying to get to, the replacement, the opportunity cost for other

Mike: compute now appears to be significantly, significantly higher per unit than Bitcoin mining. And I think that's going to have like a related impact for what Bitcoin miners decide to do, which is going to have then have a natural impact on hashrate too.

Bill Papanastasiou: Awesome, I really appreciate the color there.

Michael Novogratz: Shifting gears to the final question, I want to ask one that's kind of a bigger picture. So understanding that Galaxy has built a solid institutional focus digital asset business might has previously mentioned that one of the next stages of evolution will be for the firm to have a higher on-chain presence. Mike, perhaps you can speak to some of the infrastructure gaps that need to be solved before we teleport to this new galaxy for lack of better terms. Thank you. We are actually there now. We've got a great on-chain lending team. We've got a on chain over, we're providing validator service for lots of different protocols.

Speaker Change: Awesome, I really appreciate the color there. Shifting gears to the final question, I want to ask one that's kind of a bigger picture.

Unnamed Speaker: So understanding that Galaxy has built a solid institutional-focused digital asset business, Mike has previously mentioned that one of the next stages of evolution will be for the firm to have a higher on-chain presence. We are actually there now. We've got a great on-chain lending team. We've got a decentralised platform, and we're providing a validator service for lots of different protocols. We've got an on-chain trading team. And so stay tuned, but we've hired the teams, we're participating in the markets, we're building our confidence, and couldn't be more excited, cautious about making sure we weren't going to violate KYC, you know, know your customer anti-money laundering levels. Like when you're trading in pools, how do you make sure they're Coca-Cola clean pools? And now we've gotten comfortable, and we're, you know, I also think... In addition to the regulatory side, security is a pretty big component of it.

Speaker Change: So, understanding that Galaxy has built a solid, institutional-focused digital asset business, Mike has previously mentioned that one of the next stages of evolution will be for the firm to have a higher on-chain presence.

Speaker Change: Mike, perhaps you can speak to some of the infrastructure gaps that need to be solved before we teleport to this new galaxy, for lack of better terms. Thank you.

Mike: We are actually there now. We've got a great on-chain lending team, we've got a on-chain, we're providing validator service for lots of different protocols.

Michael Novogratz: We've got an on-chain trading team, and so stay tuned, but we've hired the teams. We're participating in the markets. We're building our confidence and could have been more excited. Pretty sure it was a while to get there, and let it delay was part of our DNA, right? We were very cautious about making sure we weren't going to violate KYC, know your customer, and I money laundering levels. Like when you're trading in pools, how do you make sure they're co-cleaned pools? And now we've gotten comfortable, and we're the gas pedal is fully pressed. I also think, in addition to the regulatory side, security is a pretty big component of it.

Mike: We've got an on-train trading team. And so, stay tuned. But we've hired the teams, we're participating in the markets, we're building our confidence, and couldn't be more excited.

Mike: cautious about making sure we weren't going to violate KYC, you know, know your customer, anti-money laundering levels, right? When you're trading in pools, how do you make sure they're clean pools? And now we've gotten comfortable and we're, you know,

Unnamed Speaker: And all the protocols and everything on chain, you know, they're all still very nascent. And so as time goes on, more and more, like time shows whether there are security gaps or not in any one given protocol. Security audits happen, and they happen on top of each other and continue to prove which protocols and which chain venues have gaps or don't have gaps.

Michael Novogratz: And all the protocols and everything on chain had, they're all still very nascent. And so as time goes on, more and more, like time shows whether there are security gaps or not in any given protocol. Security audits happen and then happen on top of each other and continue to prove which protocols and which on-chain venues have gaps or don't have gaps. And so, from our perspective, seeing that develop is critical to us deciding whether we would put any capital risk, let alone open up windows to allow clients to put capital risk. And so time is actually a necessary component to solving the adoption curve on-chain activity.

Speaker Change: More and more like time time shows whether there are security gaps or not in any one given protocol security audits

Unnamed Speaker: And so, you know, from that point on, I think I was relatively clear, bullish on the industry and for Galaxy. Really appreciate your time. Look forward to getting back to you in a few months. Take care.

Speaker Change: are have gaps or don't have gaps. And so, you know, from,

Speaker Change: From our perspective, seeing that develop is critical to us deciding whether we would put any capital risk, let alone open up windows to allow clients to put capital risk.

Mike: Time is actually a necessary component to solving the adoption curve on on-chain activity, I think, writ large, broadly, for market participants.

Michael Novogratz: I think writ large broadly from our participants.

Michael Novogratz: Thank you.

Michael Novogratz: And with no further questions in the queue, I will turn the program back over to Mike Novogratz for any additional or closing remarks. Yeah, I think I was relatively clear bullish for the industry and for Galaxy. I really appreciate your time. Look forward to getting back to you in a few months. Take care.

Mike: And with no further questions in the queue, I will turn the program back over to Mike Novogratz for any additional or closing remarks.

Mike Novogratz: Yeah guys, I think I was relatively clear. Bullish for the industry and for Galaxy. Really appreciate your time. Look forward to getting back to you in a few months. Take care.

Operator: And this concludes today's conference. We thank you for your participation. You may now disconnect.

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