Q4 2024 Galaxy Digital Holdings Ltd Earnings Call

Operator: Good morning and welcome to the Galaxy Digital fourth quarter 2024 earnings call. Today's call is being recorded. Later, you have the opportunity to ask questions.

Good morning, and welcome to the Galaxy Digital fourth quarter 2024 earnings call. Today's call is being recorded later, you'll have the opportunity to ask questions to restaurateur ask a question. Please press the star and want at any time.

Operator: To register to ask a question, please press the star and one at any time.

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

Speaker Change: At this time I would like to turn the conference over to Jonathan Godowsky head of Investor Relations. Please go ahead.

Jonathan Goldowsky: Good morning and welcome to Galaxy's fourth quarter and full year 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 CDAR Plus and available on our website or in future filings we make with other securities regulators.

Speaker Change: Good morning, and welcome to galaxies fourth quarter and full year 'twenty 'twenty four earnings call before.

Speaker Change: 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 SEDAR plus.

Speaker Change: And available on our web site or in future filings, we make with other securities regulators.

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

Forward looking statements speak only as of today, and we will not be updated.

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 security.

Speaker Change: 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 with that I'll turn it over to Mike Novogratz founder and CEO of Galaxy.

Michael Novogratz: With that, I'll turn it over to Mike Novogratz, founder and CEO of Galaxy. Good morning. Listen, we've got a lot to unpack today. I'm going to dive right in. But not before I tell you it's a beautiful day in New York City. I'm very pleased with our full year 2024 results. I certainly wish they were indented by our settlement with the Attorney General. Our team thought long and hard about settling, but when we weighed being tied up for two to three years in a lawsuit with the New York AG versus the opportunity ahead of us, It was pretty clear that the right thing for Galaxy to do was to put this behind us and move on.

Speaker Change: Good morning.

Speaker Change: Listen we've got a lot to unpack today I'm going to dive right in but not before I tell you its a beautiful day in New York City.

Speaker Change: I'm very pleased with our full year 2024 results.

Speaker Change: I certainly wish they were invented by our settlement with the attorney General.

Speaker Change: Our team thought long and hard about settling but when we weighed being tied up for two to three years in a lawsuit with the New York AG first the opportunity ahead of us.

Speaker Change: It was pretty clear that the right thing for Galaxy to do was to put this behind us and move on.

Michael Novogratz: What I most... pleased with in 2024 is that our operating business had both positive EBITDA and over $400 million of revenue. In 2018, when we started Galaxy, the idea was to build an institutional crypto business. And I really feel like 2024, we hit the first major milestone in accomplishing that. With the Trump administration's new, really welcome approach to crypto, we're seeing nothing but new opportunities with institutions getting in the space. So I couldn't be more excited for the forward trajectory. Our balance sheet had a fine 2024, which should have been expected given crypto's excellent performance.

Speaker Change: What I'm most.

Speaker Change: Pleased with in 2024 is that our operating business had both positive EBITDA and over 400 million of revenue.

Speaker Change: In 2000 22018, when we started galaxy the idea was to build an institutional crypto business and I really feel like 2024.

Speaker Change: Hit the first major milestone at accomplishing that.

Speaker Change: With the Trump administration's new really welcome approach to crypto, we're seeing nothing but new opportunities with institutions getting in the space. So I couldn't be more excited for the the forward trajectory.

Speaker Change: Our balance sheet, how to find 'twenty 'twenty, four which should have been expected.

Speaker Change: Given cryptos excellent performance. Unfortunately, 2025 has not been kind to many of the crypto assets we hold.

Michael Novogratz: Unfortunately, 2025 has not been kind to many of the crypto assets we hold, and our balance sheet has suffered some. I point this out because up until now, Galaxy's results really have been driven by balance sheet management and the balance sheet in general.

Speaker Change: Our balance sheet has suffered some I point this out because up until now galaxy's results really have been driven by balance sheet management.

Speaker Change: And the balance sheet in general.

Michael Novogratz: I firmly believe that we're at the cusp of transitioning from a balance sheet company to a company with two great operating businesses, one in crypto and one in data centers. And over time, the balance sheet will have less impact on results. That probably doesn't happen for at least one or two more years, but that's certainly the direction we're traveling.

Speaker Change: I firmly believe that we're at the cusp of transitioning from a balance sheet company to a company with two great operating businesses, one in crypto and one in data centers.

Speaker Change: And over time, the balance sheet will have less impact on results that probably doesn't happen for at least one or two more years.

Speaker Change: But that's certainly the direction we're traveling at.

Michael Novogratz: The most exciting news of the day is certainly our announced deal with CoreWeave. This is a giant and great first step in what I believe will be building out one of the U.S.'s largest AI data.

Speaker Change: The most exciting news of the day, it's certainly our announced deal with core ways. This is a giant and great first step in what I believe will be building out one of the U S is largest AI data centers.

Michael Novogratz: I'm going to give most of the details of this to Chris Ferraro, who has worked diligently and tirelessly to get this done with a great team.

Speaker Change: I'm going to hand, most of the details of this to Chris Ferrara, who has worked diligently and tirelessly to get this done with it with a great team.

Speaker Change: Okay.

Michael Novogratz: Finally, I want to leave you guys with some macro thoughts. We went into the year with risk assets mostly on the high. AHHH equities were expensive, and you know, crypto had had a great run. The Donald Trump presidency has certainly added volatility into the mix. And if you think about it, we are taking 40 to 60 years of what was a security apparatus built around NATO and a financial apparatus built around. built around multilateral cooperation, trade agreements that existed since after World War II, and changing all of that. And I think that's going to continue to provide a lot of volatility to the market.

Speaker Change: Finally, I want to leave you guys with some macro thoughts.

Speaker Change: We went into the year with risk assets, mostly on the highs.

Speaker Change: Uh huh.

Speaker Change: Equities were expensive and you know crypto.

Speaker Change: Crypto it had a great run.

Speaker Change: The Donald Trump presidency has certainly added volatility into the mix.

Speaker Change: And if you would think about it we are taking the 40 to 60 years of what was a security apparatus built around NATO and financial apparatus built around.

Speaker Change: Uh huh.

Speaker Change: Built around the.

Speaker Change: Our multi lateral cooperation or trade agreements that existed since before the civil.

Speaker Change: Since after World War two.

Speaker Change: And changing all of that and I think that's going to continue to provide a lot of volatility to the market overall.

Michael Novogratz: Overall, I think it's going to be a tough time for risk assets for a while. equities probably don't trade nearly as well as they did last year. The dollar probably is sold off and yield curves probably. And so in that environment, some of that is bad for crypto and some of that is good for crypto. Crypto went into the year with this spectacular enthusiasm based on coming out of four years of purgatory and into this new regulatory environment that was very pro-crypto. We can't really have a more pro-crypto administration than the one we have right now.

Speaker Change: Overall, I think it's gonna be a tough time for risk assets for a while.

Speaker Change: Equities, probably don't trade nearly as well as they did last year.

Speaker Change: The dollar probably has sold off and yield curves, probably steepen and so in that environment. Some of that is bad for crypto and some of that is good for crypto.

Speaker Change: [noise] crypto went into the year with this spectacular enthusiasm.

Speaker Change: Based on.

Speaker Change: Coming out of four years of purgatory and into this new regulatory environment that was very pro crypto, we can't really have a more pro crypto administration than the one we have right now.

Michael Novogratz: And so a lot of people ask me, well, why are the prices lower? Well, every once in a while in the markets, lots of the good news get priced in. And I think you saw probably a short term market top around the inauguration. right? There was plenty of euphoria. There was a crypto ball in DC where everyone wanted to go. Crypto CEOs were everywhere. And while that maybe marked a short-term top, I think for the medium and longer term, it's wildly bullish.

Speaker Change: And so a lot of people asked me well why are the prices lower well every once in a while end markets lots of the the good news get priced in and I think you saw probably a short term market top around the inauguration.

Speaker Change: Right. There was plenty of euphoria, there was a crypto ball and in D. C where everyone wanted to go crypto Ceos were everywhere and while that may be mark to short term top I think for the medium and longer term, it's wildly bullish.

Michael Novogratz: What do I see for the rest of this year? I think we're going to have choppy to tough markets for the next quarter or so, but by the second half of the year, the Fed should be cutting interest rates. We already have China and Europe increasing money supply, so when you have all three major major forces in the world increasing money supply. That's usually good for Bitcoin and the rest of crypto assets. We also have a government that has pledged to make a lot of changes in crypto regulation. That doesn't happen really to the second half of the year.

Speaker Change: What do I see for the rest of this year.

Speaker Change: I think we're gonna have choppy the tough markets for the next quarter or so.

Speaker Change: But by the second half of the year the state should be cutting interest rates, we already have China and Europe, increasing money supply. So when you have all three.

Speaker Change: Major.

Speaker Change: Major forces in the world increasing money supply that's usually good for bitcoin and the rest of crypto assets. We also have.

Speaker Change: Our government that has.

Speaker Change: I pledge to make a lot of changes in crypto regulation.

Speaker Change: That doesn't happen really to the second half of the year. So you talked about it early and then you get it.

Michael Novogratz: So you talk about it early and then you get it. you know, you put the sausage through the sausage machine, but we should end up by third quarter, fourth quarter at latest with stable coin legislation, with market structure legislation, and with potentially the federal government figuring out ways to buy crypto. And so when I look at that backdrop, While I'm cautious in the short run, I'm still very optimistic about crypto in the long run.

Speaker Change: You put the sources through the sausage machine, but we should end up by the third quarter fourth quarter at latest with stable coin legislation with market structure legislation and with potentially the federal government to figure out ways to buy crypto and so when I look at that backdrop.

Speaker Change: While I am cautious in the in the in the short run I'm still very optimistic about crypto in the long run.

Michael Novogratz: Finally, I want to welcome Tony Paquette to Galaxy as our new Chief Financial Officer. Tony joins us from Point72, where he was a CFO for the past four years, leading their global finance team and overseeing the implementation of their digital assets trading strategy. He brings extensive experience in banking, fintech, and asset management, and his strategic vision and leadership will be instrumental in driving our business forward.

Speaker Change: Finally, I want to welcome Tony put cat to Galaxy as our new Chief Financial Officer, Tony joins US from point 72, where he was the CFO for the past four years, leading a global finance team overseeing the implementation of their digital assets trading strategy. He brings extensive experience in banking fintech and asset management.

Speaker Change: The strategic vision and leadership will be instrumental in driving our business forward Tony.

Tony Paquette: Tony, now over to you. Thanks, Mike, and thank you, everyone, for joining the call today. I'll start with a quick review of 2024, then talk about the details for Q4, and lastly, provide an update on Q125 preliminary results and an update on our U.S. listing process. First, 2024 was a milestone year for Galaxy, as Mike mentioned, marked by record operating business performance and the decision to strategically expand into building and operating AI infrastructure. Throughout the year, we developed and deepened partnerships with leading institutions globally, expanded our trading capabilities and investment offerings to meet the evolving needs of our clients, and played a pivotal role in executing the largest bankruptcy mandate in the history of crypto while ensuring maximum value recovery for creditors.

Speaker Change: Tony now over to you.

Tony Putcat: Thanks, Mike and thank you everyone for joining the call today.

Tony Putcat: I'll start with a quick review of 2024, then talk about the details for Q4, and lastly provide an update on Q1 'twenty five preliminary results and an update on our U S listing process.

Tony Putcat: 2024, it was a milestone year for Galaxy as Mike mentioned marked by record operating business performance and the decision to strategically expand into building and operating AI infrastructure.

Tony Putcat: Throughout the year, we developed and deepen partnerships with leading institutions globally expanded our trading capabilities and investment offerings to meet the evolving needs of our clients and played a pivotal role in executing the largest bankruptcy mandate in the history of crypto, while ensuring maximum value recovery for creditors.

Tony Paquette: In 2024, we delivered $365 million in net income, or $1.02 per diluted share, which includes the $166 million charge from the legal settlement with the New York Attorney General, which is the discounted value of the $200 million in total that will be paid out over three years. Excluding this settlement charge, in 2024, we generated $532 million in net income, or $1.49 per share, on operating revenues of more than $400 million, surpassing the total generated over the previous two years combined. And importantly, this marked the first year of our combined operating businesses achieving profitability, as Mike mentioned.

Tony Putcat: In 2024, we delivered $365 million and net income or $1 <unk> per diluted share, which includes the $166 million charged from the legal settlement with the New York Attorney General, which is this which is the discounted value of the $200 million in total that will be paid out over three years X.

Tony Putcat: Excluding the settlement charge and.

Tony Putcat: In 2024, we generated $532 million in net income or $1 49 per share on operating revenues of more than $400 million, surpassing the generated the total generated over the previous two years combined and importantly, this marked the first year of our combined operating businesses achieving profitability is my.

Tony Putcat: Mentioned.

Tony Paquette: Turning to expenses, excluding the one-time settlement charge, operating expenses totaled $782 million in 2024. Notably, this includes roughly $240 million in staking costs and interest expenses within our global markets business, which are directly tied to increased operating activity and higher revenue throughout the year. Looking ahead, we expect certain operating expenses to decline in 2025, driven by the absence of one-time items and a meaningful reduction in mining related expenses as we transition our Bitcoin mining operations over the coming quarters. We had over 520 employees globally at year-end, with roughly 70% in the U.S. and 30% internationally.

Tony Putcat: Turning to expenses, excluding the onetime settlement charge operating expenses totaled $782 million in 2024.

Tony Putcat: Notably this includes roughly $240 million in staking costs and interest expenses within our global markets business, which are directly tied to increased operating activity and higher revenue throughout the year.

Tony Putcat: Looking ahead, we expect certain operating expenses to decline in 2025, driven by the absence of one time items and a meaningful reduction in mining relating related expenses as we transition our bitcoin mining operations over the coming quarters.

Tony Putcat: We had over 520 employees globally at year end with roughly 70% in the U S and 30% internationally, we will continue to hire in 2025 in order to one invest in the growth of our core business and to advance key strategic initiatives, including the build out of our data center.

Tony Paquette: We will continue to hire in 2025 in order to, one, invest in the growth of our core business, and two, advance key strategic initiatives, including the build-out of our data centers. We ended 2024 with approximately $7.2 billion in total assets. $2.3 billion in equity capital, over $1 billion in cash and net stable coins, and $10 billion in combined assets under management and assets under stake across the platform, which is a powerful testament to the trust we've earned from our clients. Additionally, we have roughly $809 million in non-current investments on our balance sheet, consisting of primarily of fund, private equity, and venture investments, which are marked at fair value as of the end of December 2024.

Tony Putcat: We ended 2024 with approximately $7 2 billion in total assets.

Tony Putcat: $2 $3 billion in equity capital over $1 billion in cash and net stable coins.

Tony Putcat: And $10 billion in combined assets under management and assets under stake across the platform, which is a powerful testament to the trust we've earned from our clients.

Tony Putcat: Additionally, we have roughly $809 million in non current investments on our balance sheet, consisting of primarily of fund private equity and venture investments, which are marked at fair value as of the end of December 2024.

Tony Paquette: Building and maintaining a strong balance sheet is a core principle for Galaxy, and we will continue to invest in order to fuel growth in our operating businesses and position our balance sheet to capitalize on opportunities we see in the digital asset ecosystem.

Tony Putcat: Building and maintaining maintaining a strong balance sheet is a core principle for galaxy and we will continue to invest in order to fuel growth in our operating businesses and position our balance sheet to capitalize on opportunities we see in the digital asset ecosystem.

Tony Paquette: Now turning to our Q4 and full-year operating business results. In the fourth quarter, Galaxy delivered $174 million in net income and operating revenues, on operating revenues of $117 million. Excluding the settlement charge, net income was $341 million in Q1. Within global markets, we observed a notable uptick in trading volumes in Q4 as the results of the U.S. election drove anticipation for greater regulatory clarity and provided a strong tailwind for the digital asset space. Spot and derivatives trading saw sustained momentum with increased institutional participation and heightened demand for option strategy. Additionally, crypto strong price action alongside with growing on-chain activity contributed to a robust market.

Tony Putcat: Now turning to our Q4 and full year operating business results.

Tony Putcat: In the fourth quarter Galaxy delivered $174 million and net income and operating revenues on operating revenues of $117 million. Excluding the settlement charge net income was $341 million in Q1.

Tony Putcat: Within global markets, we observed a notable uptick in trading volumes in Q4 as a result of the U S election drove anticipation for greater regulatory clarity and provided a strong tailwind for digital for the digital asset space spot.

Tony Putcat: Spot and derivatives trading saw sustained momentum with increased institutional participation and heightened demand for option strategies.

Tony Putcat: Additionally, crypto strong price action alongside with growing unchain activity continued contributed to a robust market conditions.

Tony Paquette: Against this backdrop, our markets business generated counterparty trading and advisory revenues of $68 million, a 26% increase quarter over quarter. This growth was primarily fueled by strength in derivatives trading and lending activity where we capitalized on rising institutional demand and expanding market depth. As discussed last quarter, we previously crossed the threshold for Notional Derivatives Volume Traded, which required us to register as a swap dealer in the U.S. This registration unlocked a massive opportunity for Galaxy, and in 2024, we traded over $20 billion in Notional Derivative Volume, more than twice the total in the previous year.

Against this backdrop, our markets business generated counterparty trading and advisory revenues of $68 million or 26% increase quarter over quarter.

Tony Putcat: This growth was primarily fueled by strength in derivatives trading and lending activity, where we capitalized on rising institutional demand and expanding market depth.

Tony Putcat: As discussed last quarter, we previously cross the threshold for notional derivatives volume traded which required us to register as a swap dealer in the U S. This registration unlocked a massive opportunity for galaxy and in 2024, we traded over $20 billion in notional derivative volume more than twice the total in the previous year.

Tony Paquette: This strong fourth quarter performance capped off a record year for our markets business, which saw counterparty trading and advisory revenue of $215 million, a 107% increase from 2023. This growth underscores the strength of our platform and the unique ability to serve our over 1,300 institutional clients. This business continues to gain momentum and we feel we are well positioned to build on this. success in 2025 and beyond. On the lending side, we delivered another quarter of meaningful growth with revenue net of funding costs up 19% quarter over quarter to $20 million as we saw a notable increase in demand for a variety of capital.

Tony Putcat: This strong fourth quarter performance capped off a record year for our markets business, which saw counterparty trading and advisory revenue of $215 million or 107% increase from 2023.

Tony Putcat: This growth underscores the strength of our platform and our unique ability to serve our over 300 institutional clients.

Tony Putcat: This business continues to gain momentum and we feel we are well positioned to build on this <unk>.

Tony Putcat: Success in 2025 and beyond.

Tony Putcat: On the lending side, we delivered another quarter of meaningful growth with revenue net of funding costs up 19% quarter over quarter to $20 million as we saw a notable increase in demand for a variety of capital solutions, we continue to originate loans to both new and existing clients and our average loan book grew to over $860 million in the.

Tony Paquette: We continue to originate loans to both new and existing clients. And our average loan book grew to over eight hundred and sixty million dollars in the fourth quarter, a twenty nine percent increase from Q3. For the full year 2024, the lending business delivered $60 million of net revenue or 72% year over year growth. As a reminder, we take a conservative approach to underwriting risk in the lending space, with average overcollateralization of more than 130% across the entire portfolio and a focus on underlying asset liquidity. We will continue to dedicate capital to the lending business in order to capitalize on growth and maturation in this overall market.

Tony Putcat: <unk> fourth quarter, a 29% increase from Q3.

Tony Putcat: For the full year 2020 for the lending business delivered $60 million of net revenue or 72% year over year growth.

Tony Putcat: As a reminder, we take a conservative approach to underwriting risk in the lending space with average overcollateralization of more than 130% across the entire portfolio and our focus on underlying asset liquidity, we will continue to dedicate capital to the lending business in order to capitalize on growth and maturation in this overall market.

Tony Paquette: On the advisory side, M&A picked up in 2024 as capital markets began to reopen throughout the year. In Q4, our investment banking team successfully closed three deals. And while this business is still relatively nascent, we've seen a renewed appetite for strategic transactions. So far in 2025, we've seen a modest uptick in activity as traditional finance institutions and crypto native firms are identifying strategic synergies and both are looking for opportunities to scale and expand.

Tony Putcat: On the advisory side M&A picked up in 2024 as capital markets began to reopen throughout the year in Q4, our investment banking team successfully closed three deals and while this business is still relatively nascent we've seen a renewed appetite for strategic transactions. So far in 2025, we've seen a modest uptick in <unk>.

Tony Putcat: Activity as traditional finance institutions, and crypto native firms are identifying strategic synergies and both are looking for opportunities to scale and expand.

Tony Paquette: Lastly, on the topic of stablecoins, we're very excited about the upcoming launch of AllUnity, the fully collateralized euro-denominated stablecoin that we're backing in conjunction with DWS and FlowTrader. This initiative is pending regulatory approval from the BoFN, which we expect to receive in mid-2025 and has already attracted strong interest from traditional financial institutions and corporates. Longer term, we are very optimistic about this initiative and the broader stablecoin space as adoption has clearly taken hold for this increasingly important financial product.

Tony Putcat: Lastly on the topic of stable coins were very excited about the upcoming launch of all unity.

Tony Putcat: Fully collateralized euro denominated stable coin that were backing in conjunction with dws and flow traders.

Tony Putcat: This initiative is pending regulatory approval from the Boston, which we expect to receive in mid 2025 and has already attracted strong interest from traditional financial institutions and corporates longer term. We are very optimistic about this initiative and the broader stable coin space as adoption has clearly taken hold for this increasingly.

Tony Putcat: Important financial product.

Tony Paquette: Now turning to the asset management. In 2024, we made significant progress in expanding and enhancing our investment platform, offering a comprehensive suite of solutions to meet the rising demand for digital assets and emerging technologies. A few highlights. One, we successfully launched two crypto ETFs with Invesco in the US and two ETPs with DWS in Europe. Two, we forged a strategic partnership with State Street Global Advisors and launched three active equity ETFs, expanding our investment program into emerging technologies beyond digital assets. And three, we began fundraising for a new crypto venture fund, which has raised nearly $150 million so far, garnering strong interest from the institutional LP community.

Tony Putcat: Now turning to the asset management business.

Tony Putcat: In 2024, we made significant progress in expanding and enhancing our investment platform offering a comprehensive suite of solutions to meet the rising demand for digital assets and emerging technologies a few highlights.

Tony Putcat: We successfully launched two crypto Etfs with Invesco in the U S and to Etp's with Dws in Europe.

Tony Putcat: Two we forged a strategic partnership with State Street Global Advisors and launched three active equity Etfs, expanding our investment program into emerging technologies beyond digital assets.

Tony Putcat: And three we began fundraising for our new crypto venture fund, which has raised nearly $150 million. So far garnering strong interest from the institutional LP community.

Tony Paquette: We ended the year with $5.7 billion in assets under management and generated a record $49 million in operating revenue throughout 2024.

Tony Putcat: We ended the year with $5 $7 billion in assets under management and generated a rough a record $49 million in operating revenue throughout 2024.

Tony Paquette: In addition, we launched the Galaxy Absolute Return Fund in January 2025, a fundamentally driven multi-asset hedge fund designed to provide investors with thematic exposure to digital assets while maintaining an equity like volatility profile. In parallel to scaling the alternative segment of our platform, our team has been actively engaged in liquidity provisioning deals, deploying capital to new networks, and applications in need of liquidity for their protocols. With a strong balance sheet, deep market expertise, and extensive relationships across the ecosystem, Galaxy is well positioned to capitalize on these emerging investment opportunities.

Tony Putcat: In addition, we launched the Galaxy absolute return fund in January 2025, a fundamentally driven multi asset hedge fund designed to provide investors with thematic exposure to digital assets, while maintaining an equity like volatility profile.

Tony Putcat: In parallel to scaling the alternative segment of our platform. Our team has been actively engaged in liquidity provisioning deals deploying capital to new networks and applications in need of liquidity for their protocols with a strong balance sheet deep market expertise and extensive relationships across the ecosystem galaxy is well positioned to capitalize on these emerging.

Tony Putcat: <unk> investment opportunities. We're excited for the road ahead and look forward to sharing further updates as we scale our AAM business throughout 2025.

Tony Paquette: We're excited for the road ahead and look forward to sharing further updates as we scale our AM business throughout 2025.

Tony Paquette: Now turning to our digital infrastructure business, let's start with staking. In Q4, we generated $87 million in gross blockchain rewards and distributed $61 million, resulting in net blockchain rewards of $26 million, a 147% increase quarter over quarter. For the full year, the staking business generated $58 million in net rewards, underscoring our rapid growth and expanding market presence. At the start of 2024, Galaxy had approximately $240 million in assets under stake, a figure that grew by nearly 20 times to $4.2 billion at year end. Over the past few years, we've built a globally distributed, multi-cloud staking infrastructure supported by a growing team of dedicated professionals.

Tony Putcat: Now turning to our digital infrastructure business, let's start with staking.

Tony Putcat: In Q4, we generated $87 million in gross block chain rewards and distributed $61 million, resulting in net blockchain rewards of $26 million, a 147% increase quarter over quarter.

Tony Putcat: For the full year, the staking business generated $58 million and net rewards underscoring our rapid growth and expanding market presence.

Tony Putcat: At the start of 2020 for Galaxy at approximately $240 million in assets under stake a figure that grew by nearly 20 times to $4 $2 billion at year end.

Tony Putcat: Over the past few years, we've built a globally distributed multi cloud staking infrastructure supported by a growing team of dedicated professionals.

Tony Paquette: We established and maintained our position as one of the largest validators on Solana and expanded our capabilities to support an additional eight unique protocols. We've integrated with multiple custodians who collectively have more than $100 billion in assets across their platforms, and whose clients can now access our staking services directly through their custodial accounts.

Tony Putcat: We established and maintained our position as one of the largest validators on Solana and expanded our capabilities to support an additional eight unique protocols.

Tony Putcat: We've integrated with multiple custodians, who collectively have more than $100 billion in assets across their platforms and whose clients can now access our staking services directly through their custodial accounts. We expect these integrations to drive meaningful organic growth for our <unk> business.

Tony Paquette: We expect these integrations to drive meaningful organic growth for our staking For 2025, we are focused on developing new integrations and partnerships to help broaden the reach of Galaxy's staking services, and we are very excited about the opportunities to build, grow, and innovate in this space.

Tony Putcat: For 2025, we are focused on developing new integrations and partnerships to help broaden the reach of galaxies staking services and we are very excited about the opportunities to build grow and innovate in this space.

Tony Paquette: Now turning to mining. Our mining business reported revenue of approximately $22 million in the fourth quarter for a total of $95 million in 2024. In Q4, we maintained a competitive average marginal cost to mine of less than $38,000 per Bitcoin, flat quarter over quarter, and reported a marginal cost to mine of approximately $26,000 for the full year. As discussed in our Q3 earnings call, and as Mike mentioned earlier, we've made progress on the strategic shift of transforming the Bitcoin mining operation at our Helios campus into an AIHPC data center business, which Chris will talk about in more detail shortly.

Tony Putcat: Now turning to mining.

Tony Putcat: Our mining business reported revenue of approximately $22 million in the fourth quarter for a total of $95 million in 2024 in Q4, we maintained a competitive average marginal cost to mine of less than 38000 per bitcoin flat quarter over quarter and reported a marginal cost to mine of approximately $26000 for the full year.

Tony Putcat: As discussed in our Q3 earnings call and as Mike mentioned earlier, we've made progress on the strategic shift of transforming the bitcoin mining operation at our Helios campus into an AI HBC datacenter business, which Chris will talk about in more detail. Shortly as a result, we plan to discontinue mining activity at Helios and the second.

Tony Paquette: As a result, we plan to discontinue mining activity at Helios in the second quarter and expect our remaining Bitcoin mining activity to be materially smaller going forward.

Tony Putcat: Quarter, and expect our remaining bitcoin mining activity to me to be materially smaller going forward.

Tony Paquette: Before I turn it over to Chris, I want to touch on our Q1 2025 preliminary performance and provide an update on the U.S. listing process and some future enhancements to our financial reporting. As of March 27th, we expect to generate a pre-tax loss of between $275 million and $325 million in Q1. We expect our operating business net income, excluding balance sheet holdings, to be down modestly in Q1, and we anticipate ending the quarter with total equity capital of between $1.9 and $2 billion. As outlined on page five of our earnings release, we came into 2025 with approximately $1.3 billion in net digital asset exposure across Bitcoin, Ether and Solana, which together compromised the majority of our net digital assets held on our balance sheet.

Tony Putcat: Before I turn it over to Chris I want to touch on our Q1 2025 preliminary performance and provide an update on the U S listing process and some future enhancements to our financial reporting.

Tony Putcat: As of March 27, we expect to generate a pre tax loss of between $275 million and $325 million in Q1.

Tony Putcat: We expect our operating business net income excluding balance sheet holdings to be down modestly in Q1, and we anticipate ending the quarter with total equity capital of between one nine and $2 billion.

Tony Putcat: As outlined on page five of our earnings release, we came into 2025 with approximately $1 3 billion and net digital asset exposure across bitcoin ether enchilada, which together compromise the majority of our net digital assets held on our balance sheet.

Tony Paquette: Crypto market volatility has increased in Q1, as Mike mentioned, with Bitcoin down 7% and Ether down 40% year-to-date, which has led to a slowdown in client activity, lower assets under management and assets under stake, and a reduced value of the net digital assets held on our balance sheet. Importantly, Galaxy has a strong track record of successfully navigating challenging market environments and leveraging volatile periods as opportunities to expand client relationships and grow market share.

Tony Putcat: Crypto market volatility has increased in Q1, as Mike mentioned with bitcoin down, 7% and ether down 40% year to date, which has led to a slowdown in client activity lower assets under management and assets under stake and a reduced value of the net digital assets held on our balance sheet.

Tony Putcat: Importantly, galaxy has a strong track record of successfully navigating challenging market environments, and levered and leveraging volatile periods as opportunities to expand client relationships and grow market share.

Tony Paquette: On the process for our U.S. listing, earlier today we filed an amendment to our S-IV registration statement with the SEC responding to the ninth round of comments. While we can't provide specific timeline for re-domiciling and listing Galaxy publicly in the U.S., we are very encouraged by the progress we have made to date, and we're hopeful for a quick turnaround from the SEC on our latest submission.

Tony Putcat: On the process for our U S listing earlier today, we filed an amended an amendment to our S. Four registration statement with the SEC responding to the ninth round of comments, while we can't provide specific timeline for re domicile and enlisting galaxy publicly in the U S. We are very encouraged by the progress we have made to date and.

Tony Putcat: We're hopeful for a quick turnaround from the FCC on our latest submission.

Tony Paquette: And lastly, on financial reporting, in order to improve alignment of our disclosures with the changing nature of our business, we will be reviewing our financial reporting in the coming quarters and plan to update the operating business segment breakout and other financial disclosures in order to improve transparency and understanding of our company and operating performance. We look forward to sharing more with you on this in the coming quarters.

Tony Putcat: And lastly on financial reporting in order to improve alignment of our disclosures with the changing nature of our business, we will be reviewing our financial reporting in the coming quarters and plan to update the operating business segment breakout and other financial disclosures in order to improve transparency and understanding of our company and operating performance.

Chris Ferrara: We look forward to sharing more with you on this in the coming quarters with that let me turn it over to Chris.

Christopher Ferraro: With that, let me turn it over to Chris. Thanks, Tony. All right, let's talk data. Across our data center footprint, our mission has always been very clear, to monetize our electrical capacity and infrastructure in the most profitable way possible for shareholders. At the heart of this strategy is Helios, Galaxy's flagship data center campus in the Panhandle region of West Texas, where we have spent the past two years developing and operating industrial scale Bitcoin mining infrastructure and providing turnkey co-location services to other Bitcoin mining companies.

Chris Ferrara: Thanks, Tony.

Chris Ferrara: Alright, let's talk data centers.

Chris Ferrara: Across our data center footprint, our mission has always been very clear to monetize our electrical capacity and infrastructure in the most profitable way possible for shareholders.

Chris Ferrara: At the heart of this strategy is Helios Galaxy's flagship data center campus in the Panhandle region of West, Texas, where we have spent the past two years developing and operating industrial scale bitcoin mining infrastructure and providing turnkey co location services to other bitcoin mining companies.

Christopher Ferraro: Today, I'm excited to share the next phase of our digital infrastructure evolution, a strategic expansion into AI and high performance computing to meet the increasing demand for highly reliable power and data center infrastructure to support accelerated AI growth within the United States. Galaxy has entered into a transformative 15-year lease agreement with Corweave to power the next wave of artificial intelligence innovation. As part of this agreement, Galaxy will initially deliver 133 megawatts of critical IT capacity to host CoreWeave's AI and high-performance computing infrastructure at our Helios campus. Under peak design day conditions, we expect the facility to operate with a PUE of 1.5, utilizing roughly 200 megawatts of gross power capacity at our private substation.

Chris Ferrara: Today I'm excited to share the next phase of our digital infrastructure evolution, our strategic expansion into AI and high performance computing to meet the increasing demand for highly reliable power and data center infrastructure to support accelerated growth within the United States.

Chris Ferrara: Galaxy has entered into a transformative 15 year lease agreement with core we've to power. The next wave of artificial intelligence innovation.

Chris Ferrara: As part of this agreement Galaxy will initially deliver 133 megawatts of critical capacity to host <unk> AI and high performance computing infrastructure at our Helios campus.

Chris Ferrara: Under peak design day conditions, we expect the facility to operate with a <unk> of 1.5, utilizing roughly 200 megawatts of gross power capacity at our private substation.

Christopher Ferraro: Upon energization of the full 133 megawatts of critical IT, we expect to generate approximately $240 million in revenue in the first 12 months. Over the 15-year initial term of the agreement, taking into account annual escalators, we expect to generate approximately $4.5 billion of total revenue, or $300 million of average annual revenue. Note, this all excludes two five-year extension options that exist in the lease. Operating expenses, apart from expenses associated with Galaxy on-site personnel, will be passed completely through to our We therefore expect EBITDA margins for the duration of the contract to meet or exceed 90%.

Chris Ferrara: Upon energy station of the 433 megawatts of critical I T. We expect to generate approximately $240 million in revenue in the first 12 months.

Chris Ferrara: Over the 15 year initial term of the agreement taking into account annual escalators, we expect to generate approximately $4 5 billion of total revenue or $300 million of average annual revenue.

Chris Ferrara: Note. This excludes two five year extension options that exist in the lease.

Chris Ferrara: Operating expenses apart from expenses associated with Galaxy onsite personnel will be passed completely through to our tenants.

Chris Ferrara: We therefore expect EBITDA margins for the duration of the contract to meet or exceed 90%.

Christopher Ferraro: We expect go-forward cash costs, inclusive of various financing fees and capitalized fees during the construction period, to total between $11 million and $13 million per megawatt of critical IT loan. Projected CapEx is based on infrastructure design requirements to satisfy high-density, direct liquid cooling infrastructure in a true Tier 3 N plus 1 redundant environment.

Chris Ferrara: We expect go forward cash costs inclusive of various financing fees and capitalized fees during the construction period to total between $11 million and $13 million per megawatt of critical it load.

Chris Ferrara: Projected capex is based on infrastructure design requirements to satisfy high density direct liquid cooling infrastructure in a true tier three and plus one redundant environment.

Christopher Ferraro: As discussed in our last earnings call, Galaxy is responsible for financing this transition from Bitcoin mining to AI and HBC infrastructure. We are actively pursuing project-level debt financing and anticipate finalizing agreements within the next one to two months. Additionally, in November, we raised approximately $400 million through an exchangeable note offering and we expect to allocate a significant portion of these proceeds to fund the equity component of this construction, which is already underway. We have already commenced the selective demolition of our 126,000-square-foot data center shell and will begin unplugging our mining machines in the second quarter of this year while we continue to explore creative structures to monetize our remaining ASICs fleet.

Chris Ferrara: As discussed in our last earnings call Galaxy's responsible for financing this transition from bitcoin mining to AI and HBC infrastructure.

Chris Ferrara: We are actively pursuing project level debt financing and anticipate finalizing agreements within the next one to two months.

Chris Ferrara: Additionally in November we raised we raised approximately $400 million through an exchangeable note offering and we expect to allocate a significant portion of these proceeds to fund the equity component of this construction, which is already underway.

Chris Ferrara: We have already commenced the selection selective demolition of our 126000 square foot data center shell and will begin unplugging, our mining machines in the second quarter of this year, while we continue to explore creative structures to monetize our remaining a six fleet.

Christopher Ferraro: The retrofit of Helios will be completed in phases, with the first full 133 megawatts of critical IT load expected to be delivered throughout the first half of 2026.

Chris Ferrara: The retrofit of Helios will be completed in phases with the first 433 megawatts of critical load expected to be delivered throughout the first half of 2026.

Christopher Ferraro: Beyond the capacity that we currently have contracted with CoreWeave, today we have ERCOT approval for an additional 600 megawatts of gross power capacity at our... Given the immense power demand and low data center vacancy rates across the U.S., we have very high conviction in contracting this additional capacity for AIHPC. And in addition to the 800 megawatts of gross power capacity we're already approved for, we have an additional 1.7 gigawatts under various stages of load study at Helios, which we anticipate some portion to be approved of in the next several months.

Beyond the capacity that we currently have contracted with <unk> today, we have ERCOT approval for an additional 600 megawatts of gross power capacity at our campus.

Chris Ferrara: Given the immense power demand and low data center vacancy rates across the U S. We have very high conviction in contracting this additional capacity for AI H P C.

Chris Ferrara: And in addition to the 800 megawatts of gross power capacity were already approved for we have an additional one seven gigawatts under various stages of load study at Helios, which we anticipate some portion to be approved or in the next several months.

Christopher Ferraro: CoreWeave is a key player in developing scalable and efficient computing solutions for AI and other HPC computing applications. Their tenants include major investment grade hyperscalers who are deeply committed to leading in AI innovation, investing hundreds of billions of dollars in infrastructure research and strategic partnerships to drive the future of artificial intelligence and cloud-based computing. We've selected Galaxy as a partner due to Helios' unique attributes as well as Galaxy's proven ability to develop, own, and operate digital infrastructure at scale. Our ability to serve CoreWeave underscores Galaxy's evolution into a trusted provider for one of the world's fastest growing AI cloud service providers.

Chris Ferrara: Core <unk> as a key player in developing scalable and efficient computing solutions for AI and other HBC computing applications.

Chris Ferrara: Their tenants, including major investment grade hyper scaler, who are deeply committed to leading in AI innovation investing hundreds of billions of dollars in infrastructure research and strategic partnerships to drive the future of artificial intelligence and cloud based computing.

Chris Ferrara: While we've selected Galaxy is a partner due to Helios has unique attributes as well as galaxies proven ability to develop own and operate digital infrastructure at scale.

Chris Ferrara: Our ability to serve core we've underscores galaxy's evolution into a trusted provider for one of the world's fastest growing AI cloud service providers.

Operator: Now back to the operator for questions. Thank you. As a reminder, at this time, if you would like to ask a question, it is the star and 1 on your touchtone telephone. If at any point you find your question has been answered, you may remove yourself from the queue by pressing star 2.

Speaker Change: Now back to the operator for questions. Thank you.

Speaker Change: Thank you as a reminder, at this time if he would like to ask a question. It is the star and one on your Touchtone telephone if at any point you find your question has been answered you may remove yourself from the queue by pressing star too well.

Patrick Moley: We'll go first to Patrick Moley with Piper Sandler. Please go ahead. Your line is open. and congrats on the deal announcement.

Speaker Change: We'll go first to Patrick Morley with Piper Sandler. Please go ahead. Your line is open.

Speaker Change: Sure.

Speaker Change: And congrats on the deal announcement.

Christopher Ferraro: So, on the last call, you said that the hyperscaler, the term sheet that you signed, which we now know is with CoreWeave, included the option to develop all 800 megawatts of the approved power at Helios. So, just wondering how we should think about the remaining 600 megawatts. Is that still exclusive to CoreWeave, or can you kind of shop that to other folks? And you know, how confident are you, or what are your thoughts on that additional 600 being added to your agreement with CoreWeave over time, which is somewhat similar to the deal I think they struck with CoreScientific.

Speaker Change: On the last call you said that the hyperscale or the term sheet that you sign.

Speaker Change: We now know is with core we've included the option to develop all 800 megawatts of the approved.

Speaker Change: Power Helios. So just wondering how we should think about the remaining 600 megawatts is that still exclusive the core we have or can you kind of shocked that the other folks and.

Speaker Change: How confident are you or what are your thoughts on that additional 600 being added to your agreement with <unk> over time, which is somewhat similar to the deal I think they struck with <unk>.

Speaker Change: With core scientific thanks.

Christopher Ferraro: Thanks.

Christopher Ferraro: Yep, and good morning, Patrick. Appreciate it. You joining in the question. Yes, in the term sheet and currently, the remaining capacity at Helios remains under option with CoreWeave, with a couple different tranches over various timeframes. And so, you know, we are between CoreWeave's expansion plans, which we know are very significant, given the demand that they see on the client side, as well as with other market participants which we are allowed to have and continue to have. We're highly confident that that space, as it gets delivered, is going to be contracted. Okay, great.

Speaker Change: Yes.

Speaker Change: Patrick I appreciate it John in the question.

Speaker Change: Yes in the term sheet and currently the remaining capacity of Helios that.

Speaker Change: <unk> remains under option with core we've with with a couple of different tranches over various time frames.

Speaker Change: And so you know where we are between quarterly <unk> expansion plans, which we know are very significant given the demand that they see on the client side.

Speaker Change: As well as.

Speaker Change: Continuing conversations with other market participants, which we are allowed to have and continue to have we are we're highly confident that that that space as it gets delivered is going to be contracted.

Christopher Ferraro: And then, and then just looking at the deal specs. of the deal announced today, like, how would you expect, I mean, those specs to kind of change in terms of, you know, revenue, EBITDA margins on that additional 600 megawatts if CoreWeave does, in fact, you know, exercise the option to add that to their contract? Yep. So, you know, I think a couple things, right? The actual development CapEx side, let's start there. At our site, phase one, which was the first contract, at least with CoreWeave, was a retrofit of our existing shell for Bitcoin mining. And so there, whereas the rest of the campus development is a greenfield development.

Speaker Change: Okay, Great and then and then just looking at the deal specs.

Speaker Change: Of the <unk>.

Speaker Change: Deal announced today like how would you expect those to.

Speaker Change: Kind of change in terms of.

Speaker Change: Revenue EBIT margins on that additional 600 megawatts if core <unk> does in fact.

Speaker Change: Exercise the option to add that to their contract.

Speaker Change: Yeah. So.

Speaker Change: I think a couple of things right the.

Speaker Change: The actual development Capex size, let's start there the.

Speaker Change: At our site phase.

Speaker Change: Phase one which.

Speaker Change: Was the first the first contract at least with <unk> was a retrofit of our existing shell for bitcoin mining.

Speaker Change: So there, whereas the rest of the campus development is a greenfield development. So.

Christopher Ferraro: So there's some extra civil work and structural work and design planning that has to go in at a baseline for the rest of the campus, all very doable, all not significant in the grand scheme of things, but would add to a development budget for the rest of the phases. The other thing that is at play is, as technology develops, the design specs for what... future data hauls for various customers would be is likely to change, higher rack density, you know, et cetera. And so that part is still unknown. The thing I would point to though is, you know, the arrangement that we have with CoreWeave in phase one, as well as for under the options, provides for Galaxy to earn a fixed yield based on CapEx costs.

Speaker Change: There is some extra.

Speaker Change: Civil work and structure work and design planning that has to go on at a baseline for the rest of the campus.

Speaker Change: All very doable, all all not significant in the Grand scheme of things, but would add to a development budget for the rest of the phases.

Speaker Change: Other thing that is at play is as technology develops the design specs for what.

Speaker Change: Future data halls for various customers would be is likely to change higher rack density et cetera.

Speaker Change: So.

Speaker Change: That part is still unknown.

Speaker Change: I would point to though is.

Speaker Change: The arrangement that we have we have with <unk>.

Speaker Change: In phase one as well as.

Speaker Change: Four under the options provides for galaxy to earn a.

Speaker Change: A fixed deal based on Capex costs, and so it's really a collaborative.

Christopher Ferraro: And so it's really a collaborative partnership with these potential large customers, CoreWeave most significantly, to spec out what they ultimately need from a design requires perspective. And then whatever that resulting cost is, creates a function of like, of what Galaxy is going to earn from a yield perspective.

Speaker Change: Our partnership with these potential large customers quarterly most significantly to spec out what what they ultimately need from a design requires perspective, and then whatever that resulting cost is.

Speaker Change: Creates a function of like of what galaxy is going to earn from a yield perspective.

Christopher Ferraro: Okay, great. That's it for me. Thanks, guys. Thank you.

Speaker Change: Okay, Great. That's it for me thanks, guys.

Speaker Change: Yeah.

Speaker Change: Thank you and we will take our next question from.

Thomas Shinsky: And we'll take our next question from Brett Knoblochs with Cantor Fishtail. Please go ahead. Hi guys, this is Thomas Shinsky on for Brett Knoblauch. Thank you for taking my question and congrats on the quarter and deal announced. I guess maybe to start on the 90% EBITDA margins, I know you highlighted that, you know, a lot of the operational and maintenance expenses will be passed through there. Is there any additional expenses to highlight maybe being passed through there? Maybe power costs? I know that's something that's been brought up in fields across the space. And then how confident you are in reaching those 90% EBITDA margins on a go forward basis?

Speaker Change: Brett <unk>.

Speaker Change: <unk> with Cantor Fitzgerald. Please go ahead.

Speaker Change: Hi, guys. This is Thomas on for Brett Knoblauch. Thank you for taking my question and congrats on the quarter and deal announcements.

Speaker Change: I guess, maybe just start on the 90% EBIT margins I know you highlighted that a lot of the operational and maintenance expenses will be pass through there is there any additional expenses to highlight maybe being pass through there maybe power costs I know thats something thats been brought up.

Yields across the space.

Speaker Change: And then how confident you are in reaching those 90% EBIT margins on a go forward basis.

Christopher Ferraro: NASA Jet Propulsion Laboratory, California Institute of Technology Yeah, good morning. Thank you, Thomas. Thanks for joining. So the vast majority of all expenses are passed through to the tenant, in this case, CoreWeave. So that includes electricity, power costs, it includes other utility costs, it includes operations and maintenance. The only costs, in addition to the CapEx, which we are funding and financing, and the ensuing ongoing carry costs of that financing, the only costs that Galaxy incurs are Galaxy personnel who are going to remain on site. And so given that, we have pretty high visibility and pretty high confidence in the operating model and therefore the ability to achieve 90% plus EBITDA margins.

Speaker Change: Yes. Good morning, Thank you Tom and thanks for joining.

Speaker Change: So so the vast majority of all expenses are passed through to the tenant in this case quarter waves. So that includes electricity power costs includes other utility costs. It includes.

Speaker Change: Operations and maintenance.

Speaker Change: The only costs in addition to the Capex, which which we are funding and financing.

Speaker Change: The ensuing ongoing carry cost of that of that financing the only cost that galaxy incurs our galaxy personnel.

Speaker Change: Who are going to remain on site, so that given that.

Speaker Change: We have pretty high visibility and pretty high confidence in in the operating model and therefore, the ability achieve 90% plus EBITDA margins.

Christopher Ferraro: It's, it's, it's, you know, I hesitate to call it a full triple net lease, but it's it's triple net ish in structure. Perfect. Very helpful color. Thank you. And then on the additional 600 megawatt options, I guess, I know you highlighted Corweave, you know, has some options there. Are those on a ropher basis? Or, you know, is the shopping pretty free for other potential hyperscaler tenants? So I would say that, you know, we only have so much time in a team that's so large. And so we are spending a lot of our focus and time working with a great team at CoreWeave.

Speaker Change: It's I hesitate to call it a full triple net lease, but it's it's triple net ish and structure.

Speaker Change: Perfect very helpful color. Thank you.

Speaker Change: And then on the additional 600 megawatt options I guess I know you highlighted core <unk>.

Speaker Change: Some options there are those on a row for basis or.

Speaker Change: As the shopping pretty free for other hydro potential hyperscale or tenants.

Speaker Change: Ah.

Speaker Change: So I would say that.

Speaker Change: We only have so much time and a team that is so large and so we are spending a lot of our focus and time working with the great team at <unk>.

Christopher Ferraro: Those agreements are not on a ropher basis. However, we are not restricted from talking to folks in the market and understanding what their forward needs are going to be, particularly as we think about expansion beyond just our existing approved 800 megawatts. And so when you look at our expectation for our actual full campus availability is going to be, you start talking about power delivery not just in 2026 and 2027, but 28, 29, 30 and beyond through the whole additional 1.7 gigawatts. And those conversations, many people in the marketplace with very large aspirations and very large balance sheets are very interested in thinking about their forward planning for those out years.

Speaker Change: Those agreements are not on a row for basis. However.

Speaker Change: We are not restricted from talking to folks in the market and understanding what their forward needs are going to be particularly as we think about.

Speaker Change: Expansion beyond just our existing approved 800 megawatts and so when you look at our our expectation for the our actual full campus availability is going to be you start you start talking about power delivery not just in 2026, and 2027 28, 29, 30 and beyond through the whole additional one seven gigawatts.

Speaker Change: And that those conversations many people in the marketplace with very large aspirations and very large balance sheets are very interested in thinking about their forward planning for those out years and so.

Christopher Ferraro: And so, you know, our business now, in addition to executing on near term power and data center delivery, is also about business development and building a smart pipeline with great customers for like that very long term build for the entire campus. Perfect. Thank you. And then if I could just sneak in one more. On the $11 to $13 million per megawatt CapEx guide, are there any upfront investments that will need to be repeated for future deals, you know, potentially lowering the per megawatt CapEx for the remaining 600 megawatts? Yeah, so there's going to be a good mix and balance there, like, for example, the fiber investment we're making is a long-haul fiber investment to deliver data streams back and forth to Dallas, you know, at 10 milliseconds sub.

Speaker Change: Our business now in addition to executing on on near term power and data Center delivery is also about business development and building a smart pipeline with great customers for like that very long term bill for the entire campus.

Speaker Change: Perfect. Thank you and then if I could just sneak in one more on the $11 million to $13 million per megawatt Capex guide.

Speaker Change: Are there any upfront investments that will need to be repeated for future deals potentially lowering.

Speaker Change: <unk> megawatt capex for the remaining 600 megawatts.

Speaker Change: Yes.

Speaker Change: There's going to be a there's going to be a good mix and balance their like for example, the fiber investment. We're making is a is a long haul fiber investment to deliver data data streams back and forth to Dallas.

Speaker Change: 10 milliseconds stub.

Christopher Ferraro: That, for example, is a project that, you know, is going to serve the entire site, not just the first quarter that we have contracted today that we're building. The other element that's going to be at play in the CapEx on the go forward is also speed to delivery, right? And so phase one, you know, what we committed to in concert with CoreWeave was a pretty aggressive delivery schedule to meet their demand needs in 2026 for capacity. And so with that includes expediting, you know, equipment acquisition, which comes at a price. And so as we plan out forward late 26, 27, 28 delivery of data center halls, we have a lot more flexibility in terms of capital equipment acquisition from a price negotiating perspective, offset by the fact that, like I said, there's going to be technical design requirements that I think are going to change in terms of data center design for rack density as technology involves.

Speaker Change: For example is a project that is going to serve the entire site not just the first quarter that we have contracted today that we're building.

Speaker Change: The other element that's going to be at play in the Capex on the go forward is also <unk>.

Speaker Change: Speed to delivery right. So phase one what we committed to.

Tom: Tom start with core <unk> was it was a pretty aggressive delivery schedule to meet their demand needs in 2026 for capacity and so with that includes expediting.

Tom: Equipment acquisition, which comes at a price and so as we plan out forward late 'twenty six 'twenty 728 delivery.

Tom: Delivery of data center halls, we have a lot more flexibility in terms of.

Tom: Capital equipment acquisition from a price negotiating perspective, offset by the fact that like I said theres going to be technical requirements that I think are going to change in terms of data center designed for rack density as technology involved so theres a lot that goes into there, but yes. There are there are components of what we're building here that are that are.

Christopher Ferraro: So there's a lot that goes into there, but yes, there are components of what we're building here that are that are leverageable across the whole site. Awesome, thank you a lot and congrats again. Thank you.

Tom: <unk> leverages <unk> across the whole site.

Speaker Change: Awesome. Thank you a lot and congrats again.

Tom: Thank you.

Mark Palmer: We'll go next to the line of Mark Palmer with the Benchmark Company. Please go ahead. Yes, thank you. And I'll add my congratulations on the deal.

Speaker Change: Thank you well go next to the line of Mark Palmer with the Benchmark company. Please go ahead.

Mark Palmer: Yes. Thank you.

Speaker Change: And I'll add my congratulations on the deal.

Christopher Ferraro: Can you talk a bit about the process that led to the signing of the term sheet? How many other counterparties beyond CoreWeave were involved? Are those counterparties potentially in the mix for the remaining 600 megawatts that would represent the next phase? Sure. So the process prior to, and we signed the term sheet with Corweave, I don't even recall back when, in October of 24 now. The process leading up to that, I think was pretty robust. We hired an advisor, Newmark Financial, who not only worked on us on the term sheet and the lease, but also helped us tap the market and talk to all the market participants.

Speaker Change: Can you talk a bit about the process that led to.

Speaker Change: The.

Speaker Change: Signing of the term sheet.

Speaker Change: How many other counterparties beyond core we've.

Speaker Change: We're involved are those counterparties potentially.

Speaker Change: Potentially in the mix for the remaining $600 million.

Speaker Change: 600 megawatts.

Speaker Change: That.

Speaker Change: Would represent the next phase in the deal.

Speaker Change: Sure.

Speaker Change: So the the process prior to us and we signed the term sheet with core we've got I recall back when in October of 24, now the process leading up to that.

Speaker Change: I think it was pretty robust we hired an advisor newmark.

Speaker Change: Who who.

Speaker Change: Not only worked on us on the terminating the lease but also helped us.

Speaker Change: Tap the market and talk to all the market participants.

Christopher Ferraro: It was a pretty robust process. All things considered, given that the large buyer base for scale power infrastructure, when you're talking hundreds of megawatts, is not in the hundreds of potential buyers, just in terms of actual size. All of those players we are currently in contact with. And again, like I said before, we're very focused short and medium term on working with Corweave because we think they're awesome. We think they're very smart about this. They're fast moving, they're very diligent, and they have a pretty big pipeline of demand.

Speaker Change: It was a pretty robust process.

Speaker Change: All things considered given that the the large buyer base first scale power infrastructure, when you're talking hundreds of megawatts.

Speaker Change: Not in the hundreds of potential buyers just in terms of actual of actual size.

Speaker Change: All of those players we are.

Speaker Change: Currently in contact with and again like I said before.

Speaker Change: We're very focused short and medium term on work working with core we've because we think they're awesome, we think they have a.

Speaker Change: They're very smart about this fast moving and very diligent and they have a pretty big pipeline of demand.

Speaker Change: And but as I said sort of as we think about unlocking the incremental capacity for.

Christopher Ferraro: But as I said, as we think about unlocking the incremental capacity for the Helios campus that could make us a 2.5 gigawatt mega data center campus over the long run, the conversations with folks who would take up that size of power over longer term periods, 28, 29, 30, 31, those are the conversations that we are also having. And just one more, if you could shed some light on what the timeframes are for CoreWeave's options with regard to the remaining 600 megawatts. I think you said that that would be in a different chunk. Yeah, yeah.

Speaker Change: The Helios campus that could make us a two five gigawatt.

Speaker Change: Mega data center campus over the long run the conversations with folks who would take up that size of power over longer term periods 28, 29 30 31.

Speaker Change: Those are the conversations that we are we are also having today.

Speaker Change: And just one more if you could.

Speaker Change: Can you shed some light on what the time frames are four core weaves auctions with regard to the remaining.

Speaker Change: 600 megawatts I think you said that that would be in.

Speaker Change: Different chunks.

Speaker Change: Yes, yes.

Christopher Ferraro: So we're, that's not something we're going to disclose right now. But I would say that demand for Locking up our capacity is pretty high and it's important to us to have clarity on the timelines that we're going to develop the sites because we have a lot of work on our end, not just planning and building, but raising financing and staging out our own balance sheet appropriately so that we can responsibly develop the site. There's not long-term options past 2025 to have the capacity locked up. We will be pursuing it diligently and working with CoreWeave and if not other people in the marketplace to know that we have what the forward plan is for the existing capacity.

Speaker Change: Sure.

Speaker Change: That's not something we're going to disclose right now but.

Speaker Change: I would say that.

Speaker Change: Demand for <unk>.

Speaker Change: Walking up our capacity is pretty high and the it's important to us to have clarity on the timelines that we're going to develop the sites because we have a lot of work on our end not just planning and building, but raising financing and staging out.

Speaker Change: Our own balance sheet appropriately so that we can we can responsibly.

Speaker Change: Develop a site and so you know that the we're very like Theres not theres not long term options past 2025.

Speaker Change: To add the capacity locked up like we will be we will be pursuing are diligently working with quarterly and if not other people in the marketplace.

Speaker Change: To know that we have what the forward plan is for this existing capacity.

Speaker Change: Thank you.

Joseph Vafi: Thank you.

Speaker Change: Thank you and we will go next to the line of Joseph <unk> with Canaccord. Please go ahead.

Michael Novogratz: And we will go next to the line of Joseph Vafi with Kennecourt. Please go ahead. Hey, guys. Good morning and nice to see the Helios announcement and strong performance across the business. Just maybe one for Mike real quick. Spot prices are down a little bit, but the medium-term outlook is looking pretty bright, I think, given maybe a better regulatory backdrop and other things. Just wondering how you're looking at the M&A market now for Galaxy. Is this an interesting time to be looking at things? And are there any areas of the business that you think that would benefit from some additions?

Joseph: Hey, guys, good morning, and nice to see.

Joseph: The Helios announcement and strong performance across the business just maybe one for Mike real quick spot.

Speaker Change: Spot prices are down a little bit but.

Joseph: The medium term outlook.

Joseph: Looking pretty bright I think giving up maybe a better regulatory backdrop and other things I'm just wondering how youre looking at the M&A market now for Galaxy is an interesting time to be looking at things and is there any are there any areas of the business that you think that would benefit from.

Joseph: From some additions and then I'll have a quick follow up.

Michael Novogratz: And then I'll have a quick follow-up. Yeah, listen, it's a great question. I would tell you that for us, what has stopped us from M&A in the past, is that our stock always felt very undervalued to us. I'm still of that belief when I do a sum of the parts balance sheet, plus what I think the value of our crypto company is, plus the value of what our data center company is becoming. I just think our stock's too cheap to use it at this point to buy crypto companies.

Joseph: Yes, it's a great question I would tell you that for US what has stopped us from any M&A in the past is that our stock always felt very undervalued to us.

Joseph: I'm still of that belief when I do a <unk>.

Joseph: Some of the parts balance sheet, plus what I think the value of our crypto company is plus the value of what our data Center company is becoming.

Joseph: I, just think our stock's too cheap to to use it at this point to by crypto companies I'm, hoping that once we get public in the United States and once this data center Buildout has more clarity to the market.

Michael Novogratz: I'm hoping that once we get public in the United States, and once this data center buildout has more clarity to the market, we trade at a value that will allow us to gobble up some really talented groups of people out there. I would tell you a lot of private crypto companies probably want to sell because they see trade by companies coming in with big balance sheets. you know, most crypto businesses. Fortunately, or unfortunately are tied to the the overall index of crypto prices. And so if you're a staking company, when the price of Solana and Ethereum goes down, your revenue goes down.

Joseph: We trade at a value that will allow us to gobble up.

Joseph: Some really talented groups of people out there I would tell you a lot of private crypto companies <unk>.

Joseph: <unk> want to sell because they see trade Phi companies coming in with big balance sheets.

Joseph: And.

Joseph: Most crypto businesses.

Joseph: Fortunately or unfortunately are tied to the the overall index of crypto prices and so if you're staking company when the price of Salon and a theory of them goes down your revenue goes down and so.

Michael Novogratz: And so I think there's probably a lot of sellers in the private company space. We're not a buyer at this point of anything significant because of the level of our currency, i.e. our equity. But that doesn't mean we're not looking and turning over a lot of stones and coming up with plans for when our currency gets to a level that we think it's worth trading. Sure. Thanks for that, Mike.

Joseph: I think there's probably a lot of sellers.

Joseph: The private company space.

Joseph: We're not a buyer at this point of anything significant because of.

Joseph: The level of our currency <unk> equity.

Joseph: But that doesn't mean, we're not looking and turning over a lot of stones and coming up with plans.

Joseph: For when our currency.

Joseph: It gets to a level that we think it's worth trading.

Mike Novogratz: Sure Thanks for that Mike and then.

Michael Novogratz: And then we just kind of drill down a little bit on funding the CapEx for Helios. Sounds like it's coming along pretty nicely, but, you know, any other details there, kind of, you know, what the cost of capital might be, and, you know, are those kind of baked up financing arrangements yet, or you're still shopping it? Thanks a lot. Yeah, so we've had the benefit and luxury of a pretty robust financing market, in particular, focused on this space, which is great. We have spent a lot of time running a pretty robust process with dozens of lending groups who we know very well from past lives and current.

Joseph: It was just kind of drill down a little bit on <unk>.

Mike Novogratz: And the Capex.

Mike Novogratz: For Helios.

Mike Novogratz: It sounds like it's coming along pretty nicely, but any other details there kind of what the cost of capital might be.

Mike Novogratz: And how are those kind of baked up.

Mike Novogratz: Financing arrangements, yet or you're still shopping thanks a lot.

Mike Novogratz: Yes so.

Mike Novogratz: We've had we've had the benefit in luxury of a pretty robust financing market in particular focused on this space, which is great.

Mike Novogratz: We have spent a lot of time running a pretty robust process.

Mike Novogratz: With with dozens of lending groups, who we know very well from past lives and current.

Michael Novogratz: We are already past the phase of sorting through them. We've selected a very strong lending group who have great reputations, who are highly confident in they understand the asset, they understand us, and we're moving forward together on finalizing the financing. I think we've talked about this a little bit in the past. The financing market for these assets is pretty well known and pretty straightforward on the project side. We'll see where it lands, but you should think about it as like 80-20 debt-to-equity financing, roughly, and the cost of capital for project financing is sort of 10-11% yield.

Mike Novogratz: We we are already past the phase of sorting through them. We have selected a very strong lending group, who were or have great reputations, who were highly confident and they understand the asset they understand us.

Mike Novogratz: And we're moving forward together.

Mike Novogratz: Finalizing the financing.

Speaker Change: I think we've talked about this a little bit in the past.

Mike Novogratz: The financing market for these assets.

Mike Novogratz: It's pretty pretty well known and pretty straightforward on the project side.

Mike Novogratz: We'll see where it lands, but you should think about it is like 80 20 debt to equity financing roughly and the cost of capital for project financing is sort of 10% to 11%.

Mike Novogratz: Yield the mats.

Michael Novogratz: Now, that's really for the construction phase, which for us in phase one, really, really is a 12-month expected process or less. So, the way we think about how Galaxy is going to finance this asset on a go-forward basis is, you know, think about it, 80-20 debt-to-equity, you know, is what we've currently circled for the project financing part, and then once we reach COD, commercial operating date, and rent starts flowing, then there's a whole new market open to companies like us that have stabilized assets that are paying rent, which our expectation is going to allow us to refinance the project debt for lower cost, likely higher quantum debt, which should unlock a lot of equity for Galaxy to then reinvest in building the campus.

Mike Novogratz: No. That's that's that's really for the construction phase, which for us in phase one really really is a 12 month.

Mike Novogratz: Expected process or less and so.

Mike Novogratz: The way we think about.

Mike Novogratz: How galaxy is going to finance this asset on a go forward basis as you know think about it 80 20 debt to equity.

Mike Novogratz: What we've currently circled for the project financing part and then once we reach C. O D. Commercial operating date and rent starts flowing then theres a whole new Ah ha.

Mike Novogratz: Whole new market open to companies like us that have stabilized assets that are that are paying rent, which our expectation is going to allow us to.

Mike Novogratz: To refinance the project debt for lower lower costs likely higher quantum of debt, which should unlock a lot of equity for galaxy to then reinvest in building the campus and so.

Michael Novogratz: And so, you know, matching up timing and having capital markets be open and vibrant for all that to happen is, you know, what we're looking at and, like, what we do really well and what we're focused on nailing, but that's how I would think about the evolution over time of Phase 1, Phase 2, Phase 3, and sort of debt-equity mixes and how we're going to That helpful? Yes, that's great. Thanks a lot, Chris.

Mike Novogratz: Timing and having capital markets be be open and vibrant for all that to happen is is what we're looking at and like what we do really well and what we're focused on nailing, but that's how I would think about the evolution over time of phase one phase two phase III and sort of that equity mixes and and how we're going to finance it.

Is that helpful.

Speaker Change: Yes, that's great. Thanks, a lot Chris.

Mike Novogratz: Yes.

Michael Novogratz: Thank you and we will take our next question from Mike Colonies with HC Wainwright. Please go ahead. Yeah, that's a great question. I think the first obvious answer is stablecoins. right, both here and abroad. Stablecoins for payments, stablecoins for Internet of Things, stablecoins for, you know, cross-border transactions and remittances are only going to accelerate. And so there is a lot of activity in D.C. right now on this stablecoin bill that is being worked on. On our venture side, we're investing, and Chris could go into some of the companies, in plenty of businesses that operate in and around that area.

Speaker Change: Thank you and we will take our next question from Mike <unk> with H C. Wainwright. Please go ahead.

Speaker Change: Hi, Good morning, guys. Congrats on the quarter, we deal today and taking the questions.

Speaker Change: Look across the ecosystem and regulatory challenges that are expected to come from legislation in the U S. This year based on Mikes comments.

Speaker Change: Major themes do you see playing out as we progress through the rest of the strip dose cycle, and where we will galaxy be focusing our resources in 2025 to best capitalize on some of these things.

Speaker Change: Yes, it's a great question.

Speaker Change: I think the first obvious answer is stable coins.

Speaker Change: Right, both here and abroad stable coins for payments stable coins for Internet of things are stable coins for.

Speaker Change: Cross border transactions and remittances.

Speaker Change: Our only going to accelerate and so yeah. There is a a lot of activity in D. C. Right now on this stable coin a bill that is being.

Speaker Change: That work done.

Chris Ferrara: R&R venture side, we're investing and Chris could go into some of the companies.

Speaker Change: And plenty of.

Speaker Change: Businesses that.

Speaker Change: Operate in and around that that area.

Michael Novogratz: The second kind of obvious one is And what everyone's kind of waiting for, you know, stablecoin is really the first real world asset that's been tokenized, if you want to think about RWA, but the tokenization of other stuff, if it's mortgages, or um you know the collectibles uh you know equities is coming and I keep saying it's going to be like bankruptcy it happens real slow then real fast um it hasn't happened fast yet but every single trade five participant is gearing up for that and I think the crypto world is working on that and so what's interesting um it's a it's a um It's really an infrastructure play.

Speaker Change: The second kind of obvious one is.

Speaker Change: And what everyone's kind of waiting for stable point is really the first real world asset.

Speaker Change: It's been token ice if you want to think about <unk>, but the token as Asian of other stuff.

Speaker Change: If it's mortgages or.

Speaker Change: Our collectibles.

Speaker Change: Equities is coming and I keep saying, it's going to be like bankruptcy. It happens real slow then real fast.

Speaker Change: It Hasnt happened fast yet, but every single trade five participant is gearing up for that and I think the crypto world is working on that and so what's been interesting.

Speaker Change: It's a it's a.

Speaker Change: It's really an infrastructure play.

Michael Novogratz: And, you know, one of the early promises of crypto was it was going to make things more efficient, more equitable, and more transparent. And A lot of that was held back by by the lack of regulatory clarity that we had for the last, you know, four years, certainly, but really eight years. And as that's changing, I think you're going to see the acceleration. Like, we are close with our euro stablecoin called AllUnity, which we're doing with DWS, the Deutsche Bank subsidiary, and FlowTraders, which is going to be both approved and regulated. And so that'll be our first actual stablecoin play.

Speaker Change: And one of the early promises of crypto was it was going to make things more efficient more equitable.

Speaker Change: And more transparent and a.

Speaker Change: Lot of that was held back by the.

Speaker Change: By the lack of regulatory clarity that we had for the last you know.

Speaker Change: Four years, certainly, but really eight years.

Speaker Change: And as that is changing I think youre going to see the acceleration there like we are close with our euro stable coin all unity.

Speaker Change: Which we're doing with dws, the Deutsche Bank subsidiary and flow traders.

Speaker Change: Which is going to be Boston approved and regulated and so that'll be our first actual.

Michael Novogratz: But in every other stablecoin, we are you know, market making in them, we are promoting. And so we're very much from our trading business in the heart of the stablecoin ecosystem.

Speaker Change: Stable coin play, but but in every other stable point we are.

Speaker Change: Market, making in them, we are promoting and so we're very much from our trading business in the heart of the stable coin.

Speaker Change: Ecosystem.

Michael Novogratz: Yeah, the only thing I'll add to that for a little bit of color is, you know, the I agree with Mike wholly on the focus for 2025 in the US from a regulatory perspective on stable coins and other tokenized assets and market structure. The rather than us just being a an investor market participant as a trader, maybe an issuer. And rather than just do that, I'll highlight the GK investment we made back in late 2022. It was actually early 2023 when it closed, was a way for us to not just be a participant, but actually be a infrastructure technology provider underneath what we thought was gonna be this wave coming.

Speaker Change: Yes, the only thing I'll add to that for a little bit of color is.

Speaker Change: The.

Speaker Change: I agree with Mike wholly on the focus for 2025 in the U S from a regulatory perspective on stable coins and other token i's assets and market structure.

Speaker Change: The rather than us just being a an investor.

Speaker Change: Market participants.

Speaker Change: Trader, maybe an issuer.

Speaker Change: Rather than us just do that.

Speaker Change: The the GK investment we made back in late 2022.

Speaker Change: We've actually early 'twenty 'twenty through when it closed.

Speaker Change: Was a.

Speaker Change: A way for us to not just be a participant but actually be a infrastructure technology provider underneath what we thought was going to be this wave coming now it's been it's been a couple of years.

Michael Novogratz: Now, it's been a couple of years. since it's actually come here to the U.S. Luckily, that business has been able to make real inroads. I think we have 30 clients now in the book, mostly internationally. But the U.S. is gonna be a C-shift change in terms of customer size and adoption for the technologies, both on the custody side, as well as the tokenization side, that we've been able to build and enhance since we bought GKE here. So I think while it's taken a while for it to really catch on, I wouldn't underplay how excited we are about the opportunity set for our actual infrastructure technology to be a real part of.

Speaker Change: <unk> actually come here to the U S. Luckily that business has been able to make real inroads I think we have 30 clients now.

Speaker Change: In the book, mostly internationally, but the U S is ashish is going to be a sea shift change in terms of customer size in adoption for for the technologies, both on the customer side as well as a token ization side.

Speaker Change: What we've been able to build an enhanced since we bought G. K here.

Speaker Change: Here, So I think the the while it's taken a while.

Speaker Change: It's a really catch on I wouldn't underplay, how excited we are about the opportunity set for our actual infrastructure technology to be a real part of of.

Michael Novogratz: Financial Infrastructure as it changes here in the U.S. going forward. So we're pretty excited about that. Really, really interesting. Thanks for that.

Speaker Change: The financial infrastructure as it changes here in the U S going forward. So we're pretty excited about that.

Speaker Change: Really really interesting color.

Michael Novogratz: And just curious to get your guys' views on a US strategic Bitcoin reserve, you know, what's really the probability you see in the US to start to actively acquire more Bitcoin this year? And what the implications could be if that were to happen with other nation states adopting similar strategies? Yeah, I listen, I think It's higher than You might think, solely based on... the spectacular enthusiasm of many people around that Trump cabinet. Howard Letnik, who is one of the major voices in that cabinet, has been a vocal proponent of both stablecoins and Bitcoin. And he already has the ability, given the executive order, within his...

Speaker Change: Just curious to get your guys' views on strategic Big Queen Reserve, what's really the probability you see in the U S to start to actively acquire more bitcoin this year and what the implications could be if that would happen with other nation states adopting similar strategies.

Speaker Change: Yeah listen I think.

Speaker Change: It's higher than.

Speaker Change: You might think solely based on.

Speaker Change: The spectacular enthusiasm of many people around that Trump cabinet.

Speaker Change: Right Howard Lutnick, who is one of the major voices and that cabinet.

Speaker Change: <unk> has been a vocal proponent of both stable coins in bitcoin.

Speaker Change: He already has the ability given the executive order within his.

Michael Novogratz: within his perch to a revenue neutral basis, you know, buy more You know, I think you're going to continue to see some of that. I don't think that happens until the third quarter if it happens, because just getting the plumbing set up and the buy in. But I tell you, there's a lot of people in D.C. focused on it, and so. It's quite frankly why even in a world where crypto assets are heavy, it's dangerous to be short. And, you know, this gap between crypto price action and all the exciting things we're seeing, it's somewhat explainable in that a lot of the exciting things are around infrastructure.

Speaker Change: With his perch.

Speaker Change: Two two and a revenue neutral basis.

Speaker Change: By more bitcoin.

Speaker Change: And so I think theres, a shot higher than like I would've thought six months ago.

Speaker Change: That the government actually ends up buying some bitcoin and that's it.

Speaker Change: Really significant statement if it happens because its certainly will force other governments to think hey, we should do that too.

Speaker Change: I think I said this on the last earnings call.

Speaker Change: <unk> had direct conversations with with one of the larger sovereign wealth funds.

Speaker Change: Now that the U S is buying we're buying.

Speaker Change: And.

Speaker Change: I think youre going to continue to see some of that.

Speaker Change: I don't think that happens until the third quarter, if it happens because just getting the plumbing setup and the buy in.

Speaker Change: But I would tell you theres a lot of people in D C focused on it and so.

Speaker Change: It's it's it's quite frankly why even in.

Speaker Change: A world where crypto assets are heavy it's dangerous to be short.

Speaker Change:

Speaker Change: And this gap between crypto price action and all of the exciting things. We're seeing is somewhat explainable and not a lot of the exciting things are around infrastructure.

Michael Novogratz: And Connecting that infrastructure back to building on blockchains and using those blockchains so they start getting more activity and then hence And more support from the market is just going to take time. And so we're in this gap between the promise of what could happen and You know people people's enthusiasm in a risk-off Environment for aetherium or any of the other, you know, l1 or l2 blockchains In time, they will be used a lot more than they're being used today. And so that's just the gap and figuring out fair valuation versus future use is going to be the calculus and the science.

Speaker Change: And.

Speaker Change: Connecting that infrastructure back to building on block chain and using those blocks change so they start getting more activity and then hence.

Speaker Change: And more support from the market is just going to take time and so we're in this gap between the promise of what could happen and people people's enthusiasm in a risk off.

Speaker Change: The environment for a theory or any of the other.

Speaker Change: L. One L two block chains.

Speaker Change: In time, they will be used a lot more than they are being used today and so that's just the gap and figuring out fair valuation versus future use is going to be the calculus and the science maybe.

Michael Novogratz: Maybe it's art. Maybe it's science to getting the markets right. Thank you.

Speaker Change: Maybe its art maybe its science.

Speaker Change: Getting the markets right.

Speaker Change: Yeah.

Speaker Change: Thank you.

Joe Flynn: And we'll go next to the line of Joe Flynn with Compass Point Research. Hi, thanks for the question. I was wondering, in relation to the construction CapEx and timelines, it's expected to roll on in stages in 2026. Can you maybe walk us through what that ultimately looks like? And then from the, you mentioned the fixed cost on CapEx, is that more a function of the initial deal? Or is that kind of a level called 15-70% that we should expect on a go forward basis for the additional Hey, Joe, good morning.

Speaker Change: And well go next to the line of Joe Flynn with Compass point research.

Joe Flynn: Hi, Thanks for the question I was wondering in relation to the construction capex and timelines as expected to roll on in stages of 26 can you maybe walk us through what that ultimately looks like and then from the you mentioned the fixed costs.

Joe Flynn: On Capex, so that more of a function of the initial deal.

Joe Flynn: Should we is that kind of levels call it 50% to 70%. So should we we should expect on a go forward basis for the additional capacity.

Joe Flynn: Hey, Joe Good morning.

Christopher Ferraro: Yeah, so let me hit timeline first. So the we're already underway on on a number of different subprojects in the development and Spending Cap X and building. Right now, the anticipated delivery date for the individual data hauls for Phase 1 begins in early 2026 and should be completed into Q2 2026. And so think of 2025 as as construction development and very quickly in 2026 delivering operating data hauls and then flowing rent for the next 15 to 25 years, depending on options. And from an actual use of proceeds and Cap X perspective, you know, it's fairly straight lined over the year.

Joe Flynn: Yeah. So let me hit timeline first so the we're already underway on.

Joe Flynn: On a number of different.

Joe Flynn:

Joe Flynn: Projects.

Joe Flynn: In the development.

Joe Flynn: And and spending Capex and in building the right now the anticipated delivery date for.

Joe Flynn: The individual data hauls for phase one begins in early 2026 and should be should be completed.

Joe Flynn: Q2 2026.

Joe Flynn: And so think of 2025 as as developed construction development and very quickly in 2026, delivering operating data halls and then.

Joe Flynn: Following rent.

Joe Flynn: For the next 15 to 25 years, depending on how.

Joe Flynn: On options.

Joe Flynn: That's that and from a from a actual use of proceeds and Capex perspective.

Christopher Ferraro: Like, you know, if you think about equipment procurement, they tend to be 10 to 20% down deposits and then delivery over a number of weeks and then final payments, schedules, and once you take delivery and then installation. Same thing with the EPC contractor. And so that's really timing for Phase 1. Phase 2 and Phase 3, just to be specific about that, electrification of Phase 2 is expected late this summer. So that means Phase 2 will be able to flow power late this summer. But when we think about development time for the actual data center that will be Phase 2, you should think about that sort of layering in towards the later stage of Phase 1 project and then for 2026 basically having like rolling delivery of data hauls all the way up through basically 600 megawatts of gross capacity as currently planned.

It's it's fairly straight lined over the year like if you think about equipment procurement they tend to be 10% to 20% down deposits and then delivery over a number of weeks and then final payments schedules and once you take delivery and installation.

Joe Flynn: Same thing with the with the EPC contractor and so.

Joe Flynn: That's really timing for phase one.

Joe Flynn: Phase two and phase III just to be specific about that.

Joe Flynn: Electrification of phase two is expected late this summer so.

Joe Flynn: So that means phase II will be will be.

Joe Flynn: Able to flow power late this summer, but when we think about development time for the actual data center that will be phase two.

Joe Flynn: Think about that sort of layering in towards the later stage of Phase One project and then and then for 2026 basically having like rolling delivery of data halls, all the way up through through.

Joe Flynn: 600 megawatts of gross capacity as currently planned.

Christopher Ferraro: And then Phase 3 which is the final 200 megawatts of gross capacity currently approved today, that's an early 27 electronification of the substation. And so you should think about a similarly overlaid project timeline from a CapEx and delivery standpoint knowing that you can't actually flow power until early 2027 anyway for the last phase. Your second question, can you just clarify what you meant on the CapEx side so I can answer appropriately? I might have lost you, Joe. I'm not sure what the second question was on CapEx. I'm happy to hit it if you want to clarify it.

Joe Flynn: And then phase III, which is the final 200 megawatts of gross capacity currently approved today that's it.

In early 'twenty seven electronic vacation.

Joe Flynn: Of the substation.

Joe Flynn: So you should think about a similarly overlaid project timeline from a capex and delivery standpoint.

Joe Flynn: Knowing that that you can actually flow power until early 2027 any way for the last phase.

Speaker Change: Your second question can you just clarify what you meant on the Capex side, So I can answer appropriately.

Speaker Change: I might have lost Joe.

Speaker Change: I'm not sure what the second question was on Capex I'm happy to hit it. If you are if you can if you want to clarify.

Christopher Ferraro: Sorry. Yeah, sorry. It was more so related to the lease. So, you know, the percentage yield on CapEx structure, is that something we should expect going forward? Is that more of a... you know, the first deal. And like with that, like, is there any escalator or anything over time? Um, yeah, so yeah, I think, you know, these deals historically in data center world have gotten done in two different ways, either sort of an open book percentage yield on CapEx, where, you know, you're working in concert with an end tenant to purpose build a data center design spec with a CapEx that kind of falls out of it, and then you have an agreed upon, you know, gross yield based on that.

Speaker Change: Yes, sorry.

Speaker Change: So related to the lease so.

Speaker Change: The percentage of the yield on Capex structure.

Speaker Change: So maybe we should expect going forward is that more of a function of.

Speaker Change: The first deal and like what's that like is there any escalator or anything overtime.

Or is it you expect it to be largely fixed.

Speaker Change: Yes, so I.

Speaker Change: I think.

Speaker Change: These deals historically in data center world have gotten done in two different ways, either sort of an open book percentage yield on Capex, where youre working youre working in concert with with a developed with a.

Speaker Change: Turning to purpose build a data center design spec with the Capex that kind of falls out of it and then you have an agreed upon.

Speaker Change: Gross yield based on that that's the construct that we that we've used largely here with with core we've I would expect given that.

Christopher Ferraro: That's the construct that we've used largely here with CoreWeave. I would expect, given that Given that these end use cases are relatively new to be that to be the construct going forward for for our business, because these really have these aren't These have not been replicated multiple times before, such that a developer like ourselves would, or probably should, on spec say, you know, we'll agree to a rent number with an unknown CapEx budget and unknown design spec. And so, where the market is today for developing these new data centers, they really need to be a collaborative design process with a resulting sort of agreed economic yield as a result.

Speaker Change: Given that these end use cases are relatively new.

Speaker Change: To be that to be the construct going forward four for our business because these really these arent.

Speaker Change: These have not been replicated multiple times before such that a developer like ourselves.

Speaker Change: Wood or probably should on spec say will agree to a rent number with an unknown capex budget and unknown design stuck and so were.

Speaker Change: Where the market is today for developing these new data centers, they really need to be a a collaborative design.

Speaker Change: Process with a resulting sort of agreed economic yield as a result, so I would expect that to be very similar.

Christopher Ferraro: So, I would expect that to be very similar, at least for the foreseeable future as we develop the site. Thanks, that's a good call.

Speaker Change: For the foreseeable future as we develop the site.

Speaker Change: Thanks, that's good color and then just real quick maybe digging in a little bit on that.

Christopher Ferraro: And then, real quick, maybe dig in a little bit on that. I guess, you know, going back to the initial, you know, term sheet, and then ultimately the signing, were, you know, CoreWeave and, like, and customers involved in You know, overall design of the project, was it something that they had to sign off on and ultimately kind of how the deal came about or is there like a bit of separation between You know, you guys are the best. agreements, the core wave, and up there, whatever. Yeah, so our client is CoreWeave. CoreWeave is our main partner in all things economic, developing the site, specs, etc.

Speaker Change: Yes.

Speaker Change: Going back to the initial term sheet and then ultimately signing.

Speaker Change: <unk> and <unk> customers involved in the.

Speaker Change: Overall design of the project was this something that they had to sign off on it.

Speaker Change: And ultimately kind of how the deal came about or.

Speaker Change: Is there like a bit of a separation between.

Speaker Change: You guys have agreements with <unk> and <unk>.

Speaker Change: I will tell you whatever.

Syed: Thanks Syed.

Speaker Change: Yes, so our so our client this quarter, we've core we've as our as our main partner in.

Syed: <unk>.

Syed: All things economic developing the site specs et cetera, obviously like on the other end of side of that one of <unk> expertise is knowing who their clients are and what their clients want today and what their clients want tomorrow and so the design spec.

Christopher Ferraro: Obviously, like on the other end of side of that, one of CoreWeave's expertise is knowing who their clients are and what their clients want today and what their clients want tomorrow. And so the design spec, you know, that we ultimately land on for Phase 1, Phase 2, Phase 3, it's a direct collaboration with us in CoreWeave, but it is definitely the result of demands both from CoreWeave, to the extent that they're running their own proprietary cloud, as well as what they know evolving spec needs are for other large hyperscalers in the world. Great, thanks.

Syed: Now that we ultimately land on for Phase one phase two phase III is a it's a direct collaboration with us and accordingly, but it is it is definitely the result of.

Syed: Of demand both from <unk> to the extent that they're running their own proprietary cloud as well as what they know evolving spec needs are for other large hyperscale or is in the world.

Syed: Great. Thanks.

Syed: Thank you.

Bill Papanastasiou: And we'll go next to the line of Bill Papanastasiou with KBW. Good morning, gentlemen, and congrats on the strong quarter to close off the year. For my first question, with the repeal of SAB 121 following the election, Can you provide an update on how the team is progressing with the TKA custody software licensing? What's the reception been? Seems like that's a bit of a low hanging fruit given the tech. Curious how you guys are looking at this. Thanks.

Speaker Change: And we'll go next to the line of Bill Popper now Dr. Lucy with BW.

Bill Popper: Good morning, gentlemen, and congrats on the strong quarter to close off the year.

Speaker Change: For my first question.

With the repeal of SAB 121, following the election.

Speaker Change: Can you provide an update on how the team is progressing with the GTA custody software licensing what's the reception been it seems like that's a bit of a low hanging fruit given the attack.

Speaker Change: Curious how you guys are looking at this.

Bill Papanastasiou: Yeah, hey Bill. very excited about the opportunities that are in front of us on that front. I would characterize Saab 121 repeal rescission as a major step, but not the only step necessary to allow tradfi institutions to custody and touch crypto. So Saab 121 was a surprising hurdle that was put in place that has now come down. But there are other things being worked through on the market structure side on capital charges, you know, with a number of other government organizations that You know, the biggest financial institutions in the world are actively working to today in Washington to sort out and figure out, but need to get sorted out first.

Speaker Change: Yeah, Hey, Bill.

Speaker Change: Very excited about the opportunity set in front of us on that front.

Speaker Change: I would characterize.

Speaker Change: <unk> hundred 21.

Speaker Change: Repeal decision as a major step, but not not the only step necessary to allow tried fi institutions too costly and touch crypto. So.

Speaker Change: <unk> hundred 21 was it was it was a surprising and hurdle that was put in place that has now come down.

Speaker Change: But the there are other things being worked through on the market structure side on capital charges.

Speaker Change: Number of other.

Speaker Change: Government organizations that debt.

Speaker Change: The biggest financial institution in the World are actively working to two day in Washington to sort out and figure out.

Speaker Change: But need to get sorted out first so there's there's there's there's more work that has to get done throughout 2025 on market structure and unstable coins.

Bill Papanastasiou: So there's there's there's there's more work that has to get done throughout 2025 on market structure and on stable coins from a regulatory perspective than just SAB 121. But that I would say that is a major hurdle that that came down. So the the timeline is still elongated in terms of figuring out when these institutions are coming in and how and what they're going to offer. But all that is fair game for for GKE outside the U.S.. You know, I'll keep pointing back to as we think about getting approval this year, which we're very confident in, given our our partner in Deutsche Bank and DWS, Baffin approval for the first regulated euro stable coin.

Speaker Change: From a regulatory perspective than just have one single one but that that is a major hurdle that that came down so.

Speaker Change: The timeline is still elongated in terms of figuring out.

Speaker Change: When these institutions are coming in and how and what theyre going to offer but all of that is fair game for four G. K outside the U S.

Speaker Change: Ill keep pointing back to as we think about getting approval this year, which we're very confident and given our our partner and Deutsche Bank and dws.

Speaker Change: Boston approval for the first regulated euro stable coin.

Bill Papanastasiou: that company, even though we're a minority owner, ran a pretty robust process and ultimately selected GKE from a technology perspective to be the technology backbone for issuing and maintaining smart contracts around stablecoin issuance, MintBurn, etc. And so that's a thing I would point to as a tangible example of once the regulatory window gets clear, and there's an opportunity, like GKE provides a technological infrastructure solution that is a clear product market fit. So there's still a little work to be done in the U.S.

Speaker Change: That company, even though we're a minority owner ran a pretty robust process and ultimately selected GK from a technology perspective, two to be the technology backbone for issuing and maintaining smart contracts around stable coin issuance meant burn.

Speaker Change: Et cetera, and so.

Speaker Change: That's the thing I would point to is a tangible example of once once the regulatory.

Speaker Change: Window gets clear and there is opportunity like.

Speaker Change: GK provides a technological and a fresher solution that that is a clear product market fit.

Speaker Change: So there's still a little work to be done in the U S.

Speaker Change: I appreciate that color and then I'm curious was there any revenue prepayment attached to the announced lease agreement.

Speaker Change: And in.

Bill Papanastasiou: In addition to that, how quickly do you think it would take Coral Reef to execute on the remaining 600-megawatt option? So, so. For phase one, there was no prepayment for phase one. I'll say that much. And if I know the CoreWeave team, which I think we do really well at this point, they have a very large pipeline and are growing very fast. And one of the key choke points for them is ensuring that they have the adequate forward data center capacity to fulfill the demand that they have on the other side. And so my expectation is that we are gonna continue to move pretty quickly at figuring out.

Speaker Change: In addition to that how quickly do you think it would take core where you have to execute on the remaining 600 megawatt auction things.

Speaker Change: So so.

Speaker Change: For phase one there was no prepayment for phase one.

Speaker Change: I'll say that much.

Speaker Change: And if.

Speaker Change: If I know the quarter, we've team, which which I think we do really well at this point.

Speaker Change: They.

Speaker Change: Although very large pump pipeline on are growing very fast and.

Speaker Change: One of the key one of the key Chokepoints for them is ensuring that they have the adequate forward data center capacity to fulfill the demand that they have on the other side and so my expectation is.

Speaker Change: That we're going to continuing to move pretty quickly.

Speaker Change: Hi.

Speaker Change: Figuring out.

Bill Papanastasiou: Forward partnership and development of the of the camp.

Speaker Change: Forward partnership and development of the campus.

Bill Papanastasiou: Thanks. And just one last question, if I may. How would you benchmark the latency specs between the Helios site in West Texas to the municipality of Dallas? So I would say we... We purposefully spec'd the fiber project to ensure that we had between 10 and 15 milliseconds travel path back to Dallas, and we have two redundant paths, that to maintain N plus one connectivity, and that benchmarking was meant to be speed that can service both not just but also inference loads. And so the idea there was to ensure that even though Helios is in a relatively remote area, that it actually can service and is a good fit for what we think the forward on actually AI load use cases are going to be so that it's in play for many years to come.

Speaker Change: Thanks, and just one last question if I may how would you benchmark the latency specs between the Helios site in West, Texas too.

Speaker Change: The municipality of Dallas.

Speaker Change: So.

Speaker Change: I would say we.

Speaker Change: We purposefully spec the.

Speaker Change: The fiber project to ensure that we had between 10 and 15 milliseconds travelled path back to Dallas.

Speaker Change: We have two redundant paths.

Speaker Change: But to maintain and plus one connectivity and that.

Speaker Change: That benchmarking was meant to be.

Speaker Change: Speeds that can service, both not just training, but also influence loads and so.

Speaker Change: The idea there was to ensure that even though helios is in a relatively remote area that it actually can can service and is a good fit for what we think the forward on actually AI load use cases are going to be.

Speaker Change: It's in play for many years to come.

Martin Toner: Thank you.

Christopher Ferraro: And we'll go next to the line of Martin Toner. Please go ahead with ATB Capital. Good morning. Thanks for taking my call and congrats on this deal. How much CapEx, like what type of redundant power will you use at site and how did that figure into the CapEx number if you can give us some detail there? Um, yeah, so I think the short answer is, um, we're, we're, we're, we're building, um, phase one and future phases to a true tier three n plus one redundancy across really all systems. And so that that is a big component of of why the CapEx estimated between 11 and 13 million per critical IT megawatt.

Speaker Change: Thank you.

Speaker Change: And we'll go next to the line of Martin Toner. Please go ahead with ATP capital markets.

Martin Toner: Good morning, Thanks for taking my call and congrats on this deal.

Martin Toner: How much capex like what type of redundant power will you use at site and how does that figure into the Capex number if you can give us.

Martin Toner: Some detail there.

Martin Toner: Yes.

Martin Toner: I think the short answer is.

Martin Toner: We're building.

Phase, one and future phases to a true tier three and plus one redundancy across really all systems and so.

Martin Toner: That is a big component of of why the Capex.

Martin Toner: Estimated between 11 and $13 million for her critical high teen megawatts, it's because.

Christopher Ferraro: It's because every system from cooling to key critical IT, even down to the substation and fiber has redundancy. And so that, you know, this is the big difference from going from Bitcoin mining to two or three AI data center capacity.

Martin Toner: Every system from cooling.

Martin Toner: Two key critical.

Martin Toner: Even down to the substation in fiber has.

Martin Toner: Has redundancy so that.

Martin Toner: This is this.

Martin Toner: This is a big difference from going from bitcoin mining to a two tier three AI data center capacity. So yes that is the major driver.

Christopher Ferraro: So, yes, that is the major driver. Great, thank you. And I think at the beginning of the call, you mentioned that the 1.5 PUE was like a peak PUE. Just wondering if you'd kind of talk us through any dynamics there. And hopefully I didn't mishear that. Yeah, so no, no, you didn't mishear that. I think the idea is just that we need to ensure that there is enough gross power available at peak times. And so whether that's at extremely hot days in the peak of the summer in Texas or not, that we have, and depending on expected workloads of the underlying critical IT, which is a function of expectation of CoreWeave's usage and their ultimate end client's usage, the design takes all that work into consideration to ensure that we can effectively power 133 megawatts of critical IT with N plus one redundancy without having any downtime.

Speaker Change: Great. Thank you and I think at the beginning of the call you mentioned.

Speaker Change: The one five <unk> was like a peak <unk>.

Speaker Change: Just wondering if you could talk us through any dynamics, there and hopefully I didn't mishear that.

Speaker Change: Yeah. So no no you didn't miss here that I think the idea is just that we need to we need to ensure that.

Speaker Change: But there is enough gross power.

Speaker Change: Available at peak.

Speaker Change: Peak times and so whether that's at extremely hot days in the in the peak of the summer in Texas.

Speaker Change: Or not that we have we have and depending on unexpected workloads of the underlying critical I T, which is which is a function of an expectation of <unk> usage in there their ultimate end clients usage.

Speaker Change: Design takes all of that work into consideration to ensure that we.

Speaker Change: We can effectively power 133 megawatts of critical it with N plus one redundancy.

Speaker Change: Without without having any any downtime and so that's that's the net output is.

Michael Novogratz: And so that's the net output is we expect to have up to 200 megawatts of gross power effectively ring-fenced and dedicated to power the 133 at peak workload, peak time of day, et cetera. Excellent. Thanks. Thanks very much. Thank you for me. Yep.

Speaker Change: We expect to have up to 200 megawatts of gross power effectively ring fenced and dedicated to to power of the 133.

Speaker Change: Our peak workload peak time of day et cetera.

Speaker Change: Excellent thanks very much.

Speaker Change: For me.

Michael Novogratz: And we would like to turn the call back over to Mike Novogratz.

Speaker Change: And we would like to turn the call back over to Mike Novogratz. Please go ahead for closing remarks.

Michael Novogratz: Please go ahead for closing remarks. Guys, thanks for all the questions. As you can see, we're very excited about the the opportunities both in the data center world and in the crypto world. We're happy to have the AG thing put behind us.

Mike Novogratz: Hey, guys. Thanks for all the questions.

Mike Novogratz: As you can see we're very excited about the opportunities both in the data center world and in the Crypto World, We're happy to have the.

Mike Novogratz: G thing put behind us.

Operator: Listen, I think, you know, the next couple earnings calls, you're going to start seeing a company that feels more mature with two strong business lines, and we look forward to it. That's all I got. Have a great day.

Mike Novogratz: Listen I think.

Mike Novogratz: The next couple.

Mike Novogratz: Earnings calls you're going to start seeing a company that.

Mike Novogratz: That feels more mature.

Mike Novogratz: With two strong business lines and.

Mike Novogratz: And we look forward to it.

Mike Novogratz: That's all I got to have a great day.

Operator: We would like to thank everybody for their participation on today's conference. Please feel free to disconnect your line at any time and have a wonderful day. Goodbye. and much more...

Speaker Change: We would like to thank everybody for their participation on today's conference. Please feel free to disconnect. Your line at any time and have a wonderful day.

Mike Novogratz: Yeah.

Mike Novogratz: Goodbye.

Mike Novogratz: Yeah.

Mike Novogratz: Yeah.

Mike Novogratz: Yeah.

Mike Novogratz: Hum.

Mike Novogratz: Hum.

Mike Novogratz: Hmm.

Mike Novogratz: Mhm.

Mike Novogratz: [music].

Mike Novogratz: Hum.

Mike Novogratz: [music].

Mike Novogratz: Hum.

Mike Novogratz: Hum.

Mike Novogratz: Hum.

Mike Novogratz: [music].