Q1 2025 Galaxy Digital Holdings Ltd Earnings Call
Please stand by, your program is about to begin.
and many more. Thank you. Thank you.
Speaker Change: Good day, everyone, and welcome to the Galaxy Digital First Quarter 2025 earnings call. At this time, all participants are in and listen only mode. Later, you have the opportunity to ask questions during a question and answer session. To register, ask a question, you may press the star and one on your touchtone telephone anytime. If you find your question has been answered, you may remove yourself from the queue by pressing star two.
Speaker Change: Please note, space call may be recorded and I will be standing by if you should need any assistance. It is now my pleasure to turn the program over to Mr. Jonathan Goldowsky, Head of Investor Relations. Please go ahead.
Jonathan Goldowsky: Good morning, and welcome to Galaxy's first quarter 2025 earnings call.
Speaker Change: Before we begin, please note that our remarks, including answers to your questions, may include forward-looking statements.
Speaker Change: Actual results could differ materially from those described in these statements as a result of various factors including those identified in the disclaimers in our earnings release or other filings which have been filed with the US Securities and Exchange Commission and on Cedar Plus.
Speaker Change: Forward-looking statements speak only as of today and will not be updated.
Speaker Change: Additionally, we may discuss references to non-GAAP metrics, the reconciliations of which can also be found in our earnings release.
Speaker Change: Finally, none of the information on this call constitutes a recommendation, solicitation, or offer by Galaxy, or its affiliates to buy or sell any securities.
Speaker Change: With that, I'll turn it over to Mike Novogratz, founder and CEO of Galaxy.
Good morning everyone, it's an exciting week here at Galaxy.
Speaker Change: Three minutes after midnight last night we officially became a U.S. company.
Speaker Change: That was a long time coming. We literally looked back. It was 1,317 days ago where we first filed to try to be public here in the US.
Speaker Change: and so for all of us here and for all of you investors that have been with us, there's both a side relief and a great sense of excitement.
You know, why Nasdaq, and why am I so excited? Listen, the...
Speaker Change: The opportunity to participate in the U.S. Capitol markets is an exciting one. For the first time, we're going to be accessible to platforms like Robin Hood and E. Toro and all the retail platforms that have been driving a lot of U.S. equity performance.
Speaker Change: We're also going to come eligible for inclusion in market indices like DS&P, the Russell, MSCI.
Speaker Change: and so just with the enhanced visibility being able to actually talk about our company when I'm on CNBC.
We just think it's going to ...
to drive a lot of excitement.
Speaker Change: We're a growth company, period. We've got two vectors right now, our crypto business and our AI business, and we see huge opportunities in both.
Speaker Change: We continue to hope for clearer regulations coming out of DC. I'm a little disappointed at the gridlock right going on right there around Fripto.
Speaker Change: and so we're hoping and we're working really hard to help in that legislative process. But even without the legislative process, the regulatory process, the clarity that's coming out of the SEC and CFDC is giving the whole industry a huge boost. We haven't seen this much activity from institutions.
in a long, long time.
Speaker Change: I think I first mentioned the phrase, the herd is coming. This idea that institutions would come to crypto way back in 2000.
Speaker Change: 2016 or 2015 even. And, you know, I was really early, but I can tell you, emphatically, categorically.
Speaker Change: The institutions are here now. They are looking at ways to get involved not just in crypto space, but in the whole blockchain as infrastructure space.
Speaker Change: throughout this press conference, especially since to other names, I won't mention names. I'll just promote the art of artistic exchange through some interviews, because of the limitations that I've caused by the span of time. It's always more or less the opposite, everything is kind of going through that process. And I think it's just going to be a form
Speaker Change: We are going to tokenize real-worldly assets that you are going to see.
Speaker Change: Athletes on the blockchain and so it's the dawn of a new era that's just starting.
Speaker Change: Before I pass this to Chris and Tony to talk about the guts of the quarter, I would say two things.
Speaker Change: Q1 was not a great quarter for crypto or for Galaxy.
Thank goodness.
Speaker Change: Both the crypto markets have rebounded, and our PNL has as well, and so we're coming into this.
Speaker Change: this listing week with what we feel is great momentum and great energy.
Speaker Change: Finally, I want to thank both Dominic and Damian who are stepping down from our board. They've been a great service to Galaxy and we wish them well and I'm sure they'll still be part of the Galaxy family.
Speaker Change: At that, Tony, I'm going to pass it to you for the...
The fun stuff.
Tony: Great, thank you Mike and thanks everyone for joining our call today.
Tony: Before I walk through the Q1 results, I want to take a moment to discuss an important update to our financial reporting framework that reflects the ongoing evolution of Galaxy's business.
Tony: Beginning this quarter, we are transitioning from reporting financial results across our previous three operating business segments, global markets asset management and digital infrastructure to a new consolidated structure with two operating business segments.
Tony: Assets and Data Centers in one corporate segment called Treasury Incorporate.
Tony: This resegmentation reflects both how we operate internal and how we believe investors can best evaluate the strategic and financial performance of our business going forward.
Tony: These businesses increasingly operate in lockstep from how we engage with clients to how we deploy technology to how we manage our risk. We believe this reporting structure will provide the investment community with a more cohesive view into the breadth and performance of our client facing digital asset business.
Tony: Second we've introduced a dedicated data center segment to reflect the growth and strategic importance of our plan to transform Helios into a world class data Center.
Tony: While we do not expect to generate revenue from this segment until sometime in early 2026 Galaxy is already making investments and incurring certain expenses as we retrofit the existing facility and as we prepare for further expansion of the site.
Tony: We are currently capitalizing these expenses, including staffing equipment in certain financing costs as they directly contribute to preparing the facilities for operational readiness. These investments are capitalized costs will be depreciated over the assets useful life. Once we begin delivering.
Tony: Critical load and recognizing revenue early in 2026.
Tony: Although we expect de Minimis operating income from the datacenter segment. This year breaking it out now provides clearer visibility into how current investments are laying the foundation for future revenue and how we are allocating capital to drive to drive long term value across our operating businesses and.
Tony: In addition to the two operating segments, we have established a new treasury and corporate segment, which captures the economic impacts from our balance sheet investments along with other financial results not directly tied to our operating businesses such as non client facing activities and certain legal costs.
Tony: Due to the retirement of our mining activity at our Helios campus in Q1, which consisted of over 90% of our total mining capacity.
Tony: This segment will also include our remaining bitcoin mining operations in East, Texas, which is much smaller and is now propriety entirely proprietary in nature.
Tony: Introducing this new breakout is intended to enhance transparency and provide a clear distinction between our balance sheet activities and the performance of our core operating businesses. This new reporting framework is taking effect this quarter and we will make.
Tony: Recast historical results in this construct available for comparison purposes.
Tony: In addition, we've also moved to reporting U S. GAAP financials, beginning this quarter, reflecting our domestication is a Delaware incorporated company, which will streamline both our internal and external reporting processes going forward, we will no longer be reporting I F. R. S financials, but again, we will make U S. GAAP quarterly results available for historic.
Tony: For comparison purposes.
Tony: One thing to note on our reported results under U S. GAAP, the notional value of purchases and sales of certain digital assets with clients and exchanges are required to be reported as revenue and transaction expenses on a grossed up basis.
Tony: As you'll see on page two of our earnings release. This gross up results in a very large value for GAAP revenue and transaction expenses due to this accounting treatment. We believe that adjusted gross profit a non-GAAP measure provides a more meaningful reflection of our revenue and financial performance.
Tony: And accordingly, we will reference this metric as a primary measure for digital assets on today's call and going forward.
Tony: With that let me turn to the highlights for the quarter.
Speaker Change: As Mike mentioned in Q1, we saw meaningful pressure across crypto markets with bitcoin down 12% for the quarter and aether aether enchilada down between 30 and 50% against this backdrop, we reported a net loss of 200 and $295 million for the first quarter, driven primarily by the reduced value of our balance sheet digital asset holdings.
Speaker Change: Our operating expenses, excluding grossed up transaction costs were $188 million for the quarter.
Speaker Change: And this was down.
Speaker Change: Approximately $143 million quarter over quarter, driven by a reduction in the G&A from the absence of a legal settlement in Q4, and partially offset by a onetime $57 million impairment charge tied to the wind down of mining operations at Helios <unk>.
Speaker Change: Excluding one time items total operating expenses were roughly $130 million in the first quarter.
Speaker Change: Our equity capital remains strong at $1 9 billion as at March 31, including $1 $1 billion in cash and net stable coins.
Speaker Change: We ended the quarter with roughly 740 million of non current investments on our balance sheet, consisting primarily of fund private equity and venture investments, which are marked at fair value as of March 31.
Speaker Change: In Q1, we proactively managed our risk exposure by reducing a portion of our digital asset holdings, while increasing our cash and net stable coin position.
Speaker Change: As we embark on a multiyear multibillion dollar datacenter build maintaining a disciplined approach to capital and liquidity management is paramount.
Speaker Change: We remain focused on managing our balance sheet in a way that supports the capital intensive demands of the datacenter expansion, while also ensuring we're well positioned to meet the evolving opportunities across our digital asset businesses.
Speaker Change: Our risk management framework and deliberate approach to capital deployment enable us to invest with high conviction, when we see opportunities and just as importantly, reduce risk when and where appropriate.
Speaker Change: This approach provides us the capacity to support growth across our businesses, while offering clients counterparts and investors the confidence to partner with Galaxy as we continued to grow.
Speaker Change: Now turning to our operating business results, starting with digital assets.
Speaker Change: Our digital asset segment generated approximately $65 million in adjusted gross profit and $3 $5 million in operating income in the first quarter.
Speaker Change: As previewed on our Q4 earnings call our trading business experienced strong client demand in January but faded into February leading to a slowdown in activity and a softening of trading revenue, particularly in the latter half of the quarter.
Speaker Change: On a positive note our lending business continued to be a point of stability with healthy activity throughout the quarter. We grew our average loan book modestly from Q4 to roughly $870 million in Q1 and delivered net interest revenue of roughly $23 million up 25% quarter over quarter.
Speaker Change: We continue to maintain a disciplined approach to underwriting and our lending business, which has been well received by both new and existing counterparties.
Speaker Change: On the investment banking side, we were proud to serve as a co manager on the core we've IPO in Q1, and our team continues to deepen relationships across the ecosystem as the broader market environment gains momentum.
Speaker Change: Bigger picture, we are seeing increasing interest from traditional financial institutions, particularly those particularly those seeking regulated structured access to crypto currency markets. In response, we've taken a deliberate approach to securing key licenses, notably our registration as a U S swap dealer and more recently, our U K registration.
Speaker Change: Under the approval of the U K FCA.
Speaker Change: This new FCA license enables our London based teams to execute transactions on behalf of clients further expanding our global reach and institutional capabilities.
Speaker Change: These formal regulatory registrations reflect our commitment to operating with the highest standards of compliance and governance positioning galaxy is a trusted counterparty to institutions globally.
Speaker Change: Now turning to our asset management and infrastructure solutions business. We ended the first quarter was approximately $7 billion in combined assets under management and assets under stake a 20, 29% decline quarter over quarter, reflecting the pullback in crypto prices. Despite this in Q1, our asset management and infrastructure solution.
Speaker Change: Segment delivered $22 million in adjusted gross profit, which you can think of is essentially fee based revenue down just 8% from the prior quarter.
Speaker Change: In general we continue to see healthy demand for our asset management products and I'm pleased to share that we achieved a key milestone in our venture franchise raising over $160 million and commitments to the Galaxy Crypto venture fund exceeding our initial target.
Speaker Change: We continue to see healthy momentum in fundraising reflecting growth growing institutional confidence in our long term approach to venture investing in the digital asset ecosystem on.
Speaker Change: On the distribution front, one of the largest U S wealth platforms with over two trillion dollars in client assets recently began offering BTC O R. U S spot bitcoin Etfs. This quarter. This further expands galaxies products across traditional wealth channels and reinforces the continued integration of digital assets.
Speaker Change: Into mainstream investment portfolios.
Speaker Change: Subsequent to quarter end, we launched a salon in ETF in partnership with C. I in Canada. The first of its kind to incorporate staking intuit structure.
Speaker Change: The CTF will leverage galaxies, solana validate or nodes as well.
Speaker Change: One of its taking providers and as a notable product innovation, which aligns our broader commitment to delivering differentiated institutional grade access to crypto markets.
Speaker Change: Our sticking business continues to integrate with additional platforms, including Zodiac announced last week, whose clients can now access our staking services directly through their custodial accounts with.
Speaker Change: We see these integrations as an important growth drivers over time, and we remain focused on expanding our pipeline of strategic partners.
Speaker Change: We're all excited about the opportunities ahead of us and digital assets. We see we are seeing a powerful shift into wealth landscape, where a new class of high net worth individuals is emerging one that traditional banking services have often underserved.
Speaker Change: Galaxy, We believe this presents a significant opportunity to deliver institutional grade digital asset solutions to a broader more dynamic investor base.
Speaker Change: Our seven plus years of experience building products and infrastructure to support the crypto economy positions us uniquely to bridge the digital and traditional financial ecosystems. We are still in early early in this evolution and we continue to and are innovating new products and services and look forward to sharing more with you on our.
Speaker Change: In this space in the months and quarters to come.
Speaker Change: A quick comment on our data center segment as I mentioned earlier, we do not expect material financial results from this segment until early 2026, when we begin recognizing revenue in accordance with the phase one lease.
Speaker Change: In Q1, we did recognize certain expenses prior to the lease signing leading to a modest operating loss of $3 million going forward. We expect this operating loss to be roughly flat during the remainder of the construction period.
Speaker Change: Lastly, I'll touch on our Treasury and corporate segment and Treasury and corporate we reported a first quarter loss of $392 million, primarily due to the decline in digital asset prices in Q1, along with a one time impairment charge and associated disposal costs related to the wind down of our mining operations at Helios.
Speaker Change: As part of this transition we fully unplugged, all bitcoin mining machines at our Helios campus at the end of Q1, we've made progress on the plan to reallocate to relocate our mining infrastructure and are actively exploring other strategic alternatives, including a potential sale of equipment. As noted we maintained a healthy liquidity position with cash.
Speaker Change: And stable coins up approximately 60 $60 million to $1 1 billion at Q1.
Speaker Change: And at $900 million of net digital ASIC exposure at the end of the quarter, consisting of $520 million in bitcoin $150 million and ether and $240 million in other token exposure.
Speaker Change: Before I turn it over to Chris I want to touch on our Q2 preliminary performance and provide an update on the status of our domestication and reorganization enlisting.
Speaker Change: So far Q2 has seen a marked improvement in digital asset prices and overall activity with bitcoin up 26% year to date or quarter to date and ether in salon are up roughly 40% and notably the volatility profile of bitcoin and other large crypto currencies has begun to steady in recent weeks.
Speaker Change: As of May 12th quarter to date operating income was between positive $1 60 and $170 million.
Speaker Change: Figure does not include a negative mark to market adjustment of approximately $125 million on the embedded derivatives associated with our exchangeable notes, which is driven by the Q2 to date appreciation and galaxies stock price.
Speaker Change: Note due to the reorganization and domestication Q2 will be the last quarter that our P&L will be impacted by the charge and value of these embedded derivatives.
Speaker Change: As of May 12, our total equity capital was approximately $2 2 billion. This includes a one time increase of approximately $290 million in reported U S. GAAP equity capital driven by the consolidation of our corporate structure, resulting from the reorganization.
Speaker Change: Of note due to the accounting treatment for the business combination, there's $290 million will be a onetime direct increase to equity capital in Q2, but it will not have any impact on our net income for the quarter.
Speaker Change: Lastly, as Mike mentioned earlier were pleased that Galaxy is moving forward with our planned transition to NASDAQ. This Friday may 16th this is a pivotal milestone for our firm one that we bought we believe will unlock meaningful long term value for our shareholders. NASDAQ is one of the largest and most liquid equity markets globally with deep trading volume and broad investor participation.
Speaker Change: Ah patients listing on NASDAQ will provide us a more powerful platform to strengthen our market presence expand our investor base and access capital at greater scale over time, we expect galaxy to be included in certain U S equity indices, something that will serve to broaden institutional ownership provide investors stability and improved trade.
Speaker Change: <unk> depth over time.
Speaker Change: As Mike mentioned, we expect our U S listed stocks to be added to many of the largest retail brokerage platforms significantly expanding access for individuals interested in investing in galaxy.
Speaker Change: We're excited about what's ahead and appreciate the support of our investors as we enter this next chapter Chris I'll turn it over to you.
Chris: Thank you Tony.
Chris: Let's talk data centers.
Chris: Since we reported Q4 earnings that team has been busy executing on our plan to transform our Helios campus for a bitcoin mining facility into a world class data Center campus in the Panhandle region of West Texas.
Chris: Last quarter, we announced the execution of a 15 year build to suit lease agreement with core we've to support 133 megawatts of critical load and just a few weeks prior to today's call. We shared that <unk> has executed one of their options to contract additional capacity at our Helios campus.
Chris: The exercised option will bring an additional 260 megawatts of critical load online through new Greenfield developments at our Helios campus to support core we use AI in HBC needs.
Chris: Over the course of the second 15 year lease once we have energized the full 260 megawatts of critical eye to load, we expect to generate approximately $9 billion of total incremental revenue or approximately 600 million of average annual revenue when accounting for annual escalators.
Chris: As with phase one excluding the costs associated with galaxies onsite personnel all operating expenses, we pass through to our tenants and we expect similar EBITDA margins of approximately 90% for both phases for the duration of the contract.
Chris: Unlike the phase, one retrofit, which leverages, our existing 126000 square foot data center shell phase two involves the construction of new data center buildings purpose built for AI and H P C.
Chris: While certain infrastructure elements from our phase one build such as campus fiber can be leveraged for phase two we anticipate slightly higher capex due to the added civil structural and architectural requirements associated with Greenfield development.
Chris: As a reminder, we already have power agreements in place and have secured the long lead electrical infrastructure ready to be energized that our private substation.
Chris: Our timeline to energize phase two is meaningfully faster than a typical greenfield development because of the strategic long lead infrastructure purchases.
Chris: We are still finalizing delivery timelines with core we've on phase two but expect to begin delivering critical load within the first half 2027.
Chris: To support our construction and expansion of our Helios campus. We are actively pursuing project level debt financing for both phase one and phase two.
Chris: We continue to see robust demand in the financing market for these projects and we anticipate closing financing for phase one in the coming weeks with long term refinancing optionality expected once the projects are fully operational and stabilized.
Chris: Phase one and phase two at our Helios campus represent the cornerstone of our long term data center business strategy with a combined 393 megawatts of critical I T load now contracted and underdevelopment.
Chris: Together these projects position galaxy to generate over $13 billion of revenue over the next 15 years completely uncorrelated from digital asset prices and volatility.
Chris: Core we are executing the phase II option agreement underscores the growing confidence in our Helios campus as a long term high value asset for AI and H P. C infrastructure and galaxies continued evolution into a trusted provider for one of the world's largest AI cloud service providers.
Chris: And still we are only just beginning.
Chris: As a reminder, we have ERCOT approval to scale, our Helios campus up to 800 megawatts of gross power capacity today, and we feel highly confident in our ability to contract the remaining 200 megawatts.
Chris: We also have an additional one seven gigawatts currently under various stages of study and our team is working closely with <unk> and other stakeholders to finalize these approvals.
Chris: Furthermore, the team has been hard at work building a pipeline of actionable opportunities that we have been evaluating for future potential acquisition and development.
Chris: We've evaluated close to 40 different potential sites, primarily across the United States with approximately half of them, having advanced for further analysis through our evaluation pipeline.
Chris: While we are primarily focused today on executing on phase one and now phase two for core we've at our Helios campus. We are encouraged and excited about the consistent growth in actionable pipeline opportunities that are coming across our desks.
Chris: And we intend to prudently prudently pursue expanding our forward opportunity set so that we are positioned to be a leading a leading AI H P. C infrastructure developer five years from now and beyond.
Chris: In a market, where near term AI and HBC infrastructure severely supply constrained and lead times for new utility capacity can be multiyear galaxy is positioned to not only be one of the largest early developers of large scale Nextgen data center infrastructure at Helios, but also to then leverage that platform to grow into one of the long term winners in this space.
I'll now pass it back to the operator, and we'll do questions. Thank you.
Speaker Change: Thank you as a reminder, at this time, if you would like to ask a question. It is star and one on your Touchtone telephone if there's any points you find your question has been answered you may remove yourself from the queue by pressing star two.
Chris: We'll take our first question from Greg Lewis at BTG. Please go ahead. Your line is open.
Greg Lewis: Yes, Thank you and good morning, and thank you for taking my questions.
Chris: I was hoping this.
Speaker Change: First talk a little bit about the data center opportunity can appreciate the comments around around the 40 potential sites and realizing that the immediate focus is on really getting the financing getting phase one up and ready, but just given the long lead time cycles. It does take to develop data center sites for the <unk>.
Chris: Sure.
Chris: I guess any kind of color around the timing of potential additional acquisitions and then as we think about the size.
Chris: Realizing that.
He is as has the potential to be a multi gigawatt site is there you know.
Chris: Not going to be easily replicable, what types of potential project sizes are we thinking about.
Greg Lewis: Sure Hey, Greg and good morning. Appreciate you are you joining.
Greg Lewis: Yeah. So I would say you know as I said in the remarks first and foremost.
Greg Lewis: The most important thing item number 123 and four on our priority list is executing on phase one and now phase two at Helios start with core <unk> and executing on it excellently both from a project a delivery being on time on budget from a financing perspective, getting our capital capital structure.
Greg Lewis: Right and strong to be able to continue to develop that I felt like that's priority priority number one through five for us.
Greg Lewis: Your comment is correct, though we do view this opportunity as not just a single project that were that were going to buy.
Greg Lewis: Monetize, but we view it as.
Greg Lewis: And long term business opportunity for the firm and frankly, if we given the work we've done so far and the position we have in the market, we view ourselves as one of only a handful of people who.
Greg Lewis: Have if we do well have won the right to actually win the space long term and so building building. Our pipeline is of opportunities is has been next on our list and it has been in the works in the background.
As I said, we we are looking primarily in the United States for now I think there is a very large demand here from some of the largest companies in the world.
Greg Lewis: And for a lot of reasons.
Greg Lewis: The U S is extremely well positioned from a cost of energy perspective.
Greg Lewis: From a land availability perspective from a workforce perspective with with a government that is now extremely focused and behind growing the industry and so were focused there.
Speaker Change: Agreed site sizes are or are not not today.
Speaker Change: Accessible at the size that Helios is that truly with the potential to be up to two five gigawatts. It is truly a a one of only a few if not one of one asset that we already have.
Speaker Change: So I would think about it as we're looking at both behind the meter opportunities with with co load with a new generation projects as well as power land opportunities.
Speaker Change: At our at either already agreed and connected to power or are applying for internet interconnect opportunities and the sizes are I think the average size in the pipeline that we looked at is close to 500 megawatts, but of course. These are sort of like projected project sizes, and so they'll vary too from a 100 megawatts to three <unk>.
Speaker Change: It's a 500 megawatts of sort of the average size we're looking at.
Speaker Change: Okay, Great and then I did want to shift gears and talk a little bit about the snaking business.
Speaker Change: I guess a couple questions here and you know as we think about the staking business and realizing it's going to grow over time, but as we kind of think about you know where it is today.
Speaker Change: We were kind of doing some numbers and you know maybe these theorems thinking market is an 85 billion dollar market.
Speaker Change: Just the rough kind of gas.
Speaker Change: Guys kind of have any views on.
Speaker Change: What size.
Speaker Change: Where does galaxy fit in in the speaking market with institutional clients on a market share basis and as we think about this is this an opportunity you.
Speaker Change: Beyond the crypto market, just growing and in theory M or salon, maybe beyond those actual.
Speaker Change: Our team's growing do we kind of have a view on what is potential for galaxy in terms of that opportunity.
Speaker Change: Yes sure.
Speaker Change: I'll take the first crack at it so the.
Staking market is rare.
Speaker Change: Relatively decently fragmented today Theres, probably a couple of dozen.
Speaker Change: Providers out in the marketplace that.
Speaker Change: On the high end have tens of billions of assets already in their stake and on the low end a couple hundred million dollars and we sort of sit somewhere in the middle with with a with a with a few billion dollars of assets under stake.
Speaker Change: The we do think the market is evolving is going to continue to evolve.
Speaker Change: We have seen it and we expected to see a long <expletive> as is what happens in most financial services.
Speaker Change:
Speaker Change: Businesses long term is fee compression, but fee compression.
Speaker Change: Offset with much higher volume coming in and so we've.
Speaker Change: We've been focused on organically building.
Speaker Change: Some of the best Staking technology that we and we attack the market today through to two main channels, one direct and so their galaxy client institutional galaxy clients.
Speaker Change: Who have their assets in various places or on platform at Galaxy, who who directly choose and contracts you stake with Galaxy Validators the other approach.
Speaker Change: <unk>, which we've had some good early traction on is because we've been focused on building that technology away from where the assets actually sit on the custodial side is to to create partnerships with custodians that include our validators set as simple point and click options for their custodial clients.
Speaker Change: And then allocate those assets to our validate our notes and so.
Speaker Change: Being independent.
Speaker Change: Unlike some of our other competitors, who have a vertical stack, where they offer custody and staking.
Speaker Change: Allows us to hit not just our clients, but clients of every other custodial offering out there in the marketplace.
Speaker Change: The other important thing and so the other strategic thing that we think is also important as clients want their assets to be.
Speaker Change: As useful as possible and so the area that where we are we have been focused on is building technology.
Speaker Change: Technology and integrating it with our own risk management and lending practices to to offer an ability for client stake staked assets, which have some various liquidity constrictions once your stake between.
Speaker Change: On bonding periods and other things like that to pledge those assets as collateral to then be able to get financing against them to make them as as active as possible and can create capital efficiency for our highest and so while while total notional dollar volume of acid Interstate we do think our.
Speaker Change: Are going to grow both from price depreciation asset adoption.
Speaker Change: The fee compression our focuses on offsetting that with additional services, which is why galaxy sort of end to end platform offering offering of all kinds of financial services on top of digital assets is the right strategy. So that we can capture the share of wallet for clients, regardless of sort of which which bucket is getting competitive or not.
Speaker Change: Okay, Great that was super helpful. Thank you very much.
Speaker Change: Thank you and we'll take our next question from.
Speaker Change: Joseph.
Safi: Safi with Canaccord Genuity. Please go ahead.
Speaker Change: Yeah.
Speaker Change: Hey, everyone. Good morning, congrats on the upcoming NASDAQ listing super exciting for sure.
Speaker Change: Maybe we can just talk about that a little bit obviously it provides access to a lot more in busters to galaxy equity, but wondering maybe how does it help the business do you think it helps bring in more counterparties with the NASDAQ listing just yeah, maybe a little bit of color there.
Speaker Change: You know how it helps you move the business forward and I'll have a quick follow up.
Speaker Change: Yes.
Speaker Change: <unk>.
Speaker Change: The profile will certainly be a lot larger and.
Speaker Change: While we think we know most institutional accounts.
And we're in touch with as many as we can be.
Speaker Change: We're just going to have a much higher profile, but the real difference is access to capital markets.
Speaker Change: We're a growth business in south sporadically, we want to access capital markets.
Speaker Change: Most of galaxy's growth over the last seven years was internally funded with investing profits are trading profits.
Speaker Change: And so there was a regulator on how fast we can grow.
Speaker Change: And depending on the environment and depending on the opportunities, we see being able to tap.
The deepest capital market in the World is a huge advantage.
Speaker Change: And so that's what we're most excited about are we've got lots of ways to tap liquidity as we get more established in.
Speaker Change: This world has always been the bigger you get the more people are willing to deal with you right. So the bigger balance sheet, you have counterparties feel more comfortable with you and so.
Speaker Change: Bigger is better in financial services, and we plan to get a lot bigger.
Greg Lewis: Thanks for that color, Mike and then kind of maybe follow.
Speaker Change: Follow up on your comments on access to capital are nice to see that loan book.
Greg Lewis: Doing well in Q1, even in the down crypto quarter.
Greg Lewis: Maybe I mean, it sounds like that's really good business. It's profitable. It's maybe one of your higher growth businesses just wondering.
Greg Lewis: Oh, you know your thoughts on how big the loan the loan business can be here and as it scales. You know how do you think about risk management relative to what looks like a pretty good big opportunity.
Greg Lewis: Yeah.
Greg Lewis: In this market.
Greg Lewis: Elisa and partially.
Greg Lewis: This comes from Chris Ferrara, DNA of being a credit guy.
Greg Lewis: And having a healthy dose of healthy dose of skepticism, but we've built in to the DNA of Galaxy.
Greg Lewis: A real credit focus and we really think it's our business to win.
Greg Lewis: And.
Greg Lewis: Again, any credit business that cheaper your access to capital faster you can grow your business and so.
Greg Lewis: I'd be disappointed if our business is significantly larger in the next few years.
Greg Lewis: We're looking at opportunities both on the asset management side, using our credit expertise and on the and on the main galaxy side of extending.
Greg Lewis: But credit to Counterparties and so stay.
Greg Lewis: Stay tuned, but there's a huge focus on that and.
Greg Lewis: We think we've built up a great track record, we have a very good muscle and DNA both from counterparty analysis.
Greg Lewis: And the direct lending side.
Speaker Change: Great. Thanks, very much Mike.
Speaker Change: Thank you and we will take our next question from Patrick <unk> with Piper Sandler. Please go ahead. Your line is open.
Patrick: Yes. Good morning, Thanks for taking the question. So I was hoping you could update us or provide some more commentary around the one seven gigawatts of power that is currently under study at Helios. How quickly do you think that could be approved and how.
Speaker Change: How much you've made or would it come in tranches.
Speaker Change: And as we look at as we look at the scope of the entire data center business. It seems like the demand in your conversations have been going well enough to where you are looking at other sites.
Speaker Change: Sites is there the potential that we start seeing acquisitions and contracts signed with hyperscale or at other sites prior to.
Speaker Change: Your ability to contract the one seven gigawatts in Helios, how should we kind of think about that.
Speaker Change: Going forward. Thanks.
Patrick: Sure. Thanks, Thanks, Patrick and good morning.
Speaker Change: So.
Speaker Change: So.
Speaker Change: One seven Gigawatts, we have not approved yet currently under study by.
Speaker Change: By ERCOT.
Speaker Change: And they are their major focus is evaluating the ability for the grid and the infrastructure to support the additional load.
Speaker Change: And if any additional transmission.
And distribution assets need to be built and are supported.
Speaker Change: These we were actually pretty far along in the process there.
Speaker Change: There there were a number of approvals that have already come through from Arcata from wet.
Speaker Change: As well and and we do anticipate over the relatively short term will denominate that in in single digit number of months to have some additional capacity come through an approval, obviously, we don't control the timelines.
Speaker Change: And so we're in we're in pretty constant dialogue, but but all signs are pretty positive for us on that front.
Speaker Change: The to give a little more color.
Speaker Change: If you think about the $1 seven and a couple of different tranches. The first tranche, which is 800 megawatts.
Speaker Change: Actually.
Speaker Change: Slots right into our existing Helios grid timeline, which is which can handle is approved for up to one six gigawatts already and so.
Speaker Change: So at least 800 megawatts of the unapproved pipeline.
Speaker Change: We're not aware of any additional transmission assets that need to be built it's just a grid stability approval study.
Speaker Change: The rest of it.
Speaker Change: I actually would we require additional assets through built as well as additional an additional private substation on our side, but those are all those are all things that are that are easily doable and and and part of ERCOT is a long term plan. We just need to we just need to officially slotted into there there are there long term bill clients.
Speaker Change: The second question.
Speaker Change: Yes, sorry. The second question I think was you know do you anticipate that we would be.
Speaker Change: Buying acquiring and developing other sites away from Helios B for the remainder of Helios sort of gets approved and developed.
Speaker Change: The answer is it's it's hard to tell like the.
Speaker Change: I think the strategy most likely is.
Speaker Change: He is going to be.
Speaker Change: Not fully imprudently.
Speaker Change: Evaluating and then likely acquiring.
Speaker Change:
<unk> land and setting up behind the meter opportunities with potential Gen. Gen backed developers.
Speaker Change: First and then once we have line of sight to those assets.
Speaker Change: Using what we've now developed as like a pretty regular dialogue with some of the big hyperscale or to understand what their power needs are matching matching those those assets that we either sign up under LOI or have already acquired with their longer term power delivery needs.
Speaker Change: And so I think the cadence is going to be.
Speaker Change: We know we have size in the pipeline.
Speaker Change: That's far along at Helios for pretty substantial expansion, but.
Speaker Change: We also know that clients have different needs and are also trying to figure out their long term footprint with regards to.
Speaker Change: Cloud services they want to provide.
Speaker Change: Training versus inference, where it needs to sit geographically and for us as a as a portfolio management perspective.
Speaker Change: While we are Mega bullish our site in West, Texas that Helios, having diversified land bank and power plant opportunity to develop a platform that that is geographically diversified with customer diversity is a long term goal of ours anything that we're very focused on developing.
Speaker Change: Okay, that's great color and then on the 40.
Speaker Change: Potential sites that you've looked at and you said that you know the average.
Speaker Change: Despite that Youre looking at is like between 305 hundred megawatts is that like the average size of those 40 sites and on the actionable pipeline is there any way for you to quantify for us how large that actual that are actionable pipeline is today.
Speaker Change: Thanks.
Speaker Change: Yeah sure so.
Speaker Change: So the the actual math is like the average is like 540 and the median 500. So there are it's a pretty tight spread.
Speaker Change: In terms of sizes. So there arent there are like some you know five gigawatt site, starting there that that that that changes.
Speaker Change: It's a pretty good.
Speaker Change: Widespread diverse diverse set of.
Speaker Change: Power land and behind the meter options across the U S.
Speaker Change: Beyond that like I said this is not something that we are going to that we think the right strategy is to.
Start acquiring land hand over fist in hopes that.
Speaker Change: And that the market will come our way.
Speaker Change: This has to be a.
Speaker Change: A thoughtful one by one.
Speaker Change: Make sure that we identify a site that has all the right characteristics between access to power real estate.
Speaker Change: Talent connectivity with fiber water et cetera match that with with with our client demand, which as you know is a is robust, but it's also a pretty dynamic thing today in terms of.
Speaker Change: What people want when they think they're going to need power 345 years from now.
Speaker Change: And so so that's the way that's the way we're going to approach. It I think we will we will likely continue to develop helios in parallel and we will likely start to take.
Speaker Change: Take take bites at the Apple at.
Speaker Change: Buying land in setting up partnerships for development and see how demand evolves.
Speaker Change: Okay, great and congrats on the up listen guys. Thanks.
Brett Noble: Thank you. Our next question comes from Brett Noble with Center Fitzgerald. Please go ahead.
Brett Noble: Hi, guys. Thanks for taking my question and congrats on the other thing as well.
Brett Noble: Just curious how we should be thinking about galaxy today, there's a lot going on between maybe data center on the crypto side.
Speaker Change: Did you say your focus is you know at the moment more on getting the data center up and running for <unk> is it expanding assets on their platform on the crypto side growth's, taking lending trading.
Brett Noble: Broadly how should we be thinking about galaxy today.
Speaker Change: Yeah, It's a great question and why don't we think about a lot.
Speaker Change: Listen we feel like we're at the intersection of two monster trends.
Speaker Change: Right.
Speaker Change: And then the data centers that are going to be used to power AI.
Speaker Change: And crypto, which I said earlier I really think is just taking off and so.
Speaker Change: We're balancing that.
Center opportunity in some ways.
Speaker Change: It takes capital.
Speaker Change: Time and.
Speaker Change: And focus but.
Speaker Change: The potential outcomes and potential opportunities are far more limited than you know what potentially happens in crypto and so.
Speaker Change: From the management brain.
Speaker Change: <unk> spent a lot of his time focusing on it but he's got access.
Speaker Change: Hi.
Speaker Change: Excess capacity beyond that to help on the crypto side I'm spending most of my time on the crypto side and sharing them on on the data center side because.
Speaker Change: So we see great opportunities, we want to expand assets on platform.
Speaker Change: Staking asset management.
Speaker Change: We're spending a lot of time thinking about.
Speaker Change: How token as Asian really plays out in the World right and I've said this on multiple calls I think it's going to be one of the things that happens real slow and then real fast we haven't hit that inflection point, yet you see people like Apollo <unk> funds and.
Speaker Change: There's money market funds being token iced and so we're spending a tremendous amount of internal time trying to structure our business properly to take advantage of that looking at with our REIT partners are.
Speaker Change: And so I don't want you guys to think we pivoted away from from being crypto business, It's actually quite the opposite we are doubling down on our focus and our intensity.
Speaker Change: I know.
Speaker Change: You know in my core.
Speaker Change: <unk>.
Speaker Change: The crypto business will look different in 36 months than it does today.
Speaker Change: Nobody new participants and so if we don't.
Speaker Change: Paul with those with those changes we won't be as happy.
Speaker Change: We have right now we've got a great credit business, a great derivative business growing staking business.
Speaker Change: We know they're going to be competition that comes into those businesses and so.
Speaker Change: What's kept us.
Speaker Change: Alive and thriving since we started was our ability to sense opportunities to staff them and to go after them and Thats continues to be our plan.
Speaker Change: Perfect and then on the.
Speaker Change: Go ahead I'm sorry.
Speaker Change: Yeah I guess this is just on the competition front I think you know over the past few weeks and even this morning, we've seen kind of M&A across the crypto space pick up.
Speaker Change: To what extent are you interested in going out and participating in that or are you more of a build versus acquire.
Speaker Change: Yeah.
Speaker Change: Yeah listen we.
Speaker Change: One of the reasons, we're so excited about going in the NASDAQ as as you get more liquidity as you get a stock that is more fairly valued.
Speaker Change: You can start looking at those opportunities more seriously.
Speaker Change: We spent most of our history with the stock trading below book and so it may acquisition really are difficult on any kind of scale.
Speaker Change: And so excited that that will open up.
Speaker Change: Yes, there are some businesses that makes sense to grow organically and some that makes sense to to add on and so I think you're going to see a little of both in the in the coming 36 months.
But we're excited we certainly are our staffing and building up our business development and strategy team.
Speaker Change: Formalizing it we are putting good human capital into that bucket.
Speaker Change: Because like I said youre going to have to be bigger.
Speaker Change: The first thing has to be really good to win in the next 36 months.
Speaker Change: Alright. Thank you guys really appreciate it.
Speaker Change: Thank you and our next question comes from Mike <unk> from H C. Wainwright. Please go ahead.
Speaker Change: Hey, good morning, guys. Thanks for taking my questions and congrats on the upcoming NASDAQ listing here first one for me maybe for you Mike How do you envision trade financing space now that we're seeing less restrictions for them to go ahead and offer digital asset products and services to their end clients and what are the implications for galaxy business.
Speaker Change: Yeah listen they are there.
Speaker Change: Certainly moving into the space, they're going to kind of crawl walk run.
Speaker Change: Yeah, the space is big but it's not that big yet.
Relative to most of their businesses and so they're seeing it as a future I think we're trying to buy as most nervous.
Speaker Change: Is around token is Asian.
Speaker Change: Right every asset manager thinks that my goodness, if our assets move.
Speaker Change: From accounts to wallets.
Speaker Change: From.
Speaker Change: Physical form to token is form they need to be in that game and so theres a lot of R&D going on in partnership is being created.
Speaker Change: Around that space.
Speaker Change: People are offering simpler products and starting to get into the credit markets.
Speaker Change: We think we need to stay one step ahead of them.
Speaker Change: US really moving more and more unchain and trying to be able to.
Speaker Change: Deliver kind of unchanged.
Speaker Change: Variance to trade Fi clients broker to us as is certainly a direction of travel.
Speaker Change: But we're not we're not naive at one point you know.
Speaker Change: Citibank and Goldman Sachs will have.
Speaker Change: Crypto desks alongside their currency business and their customers have felt really comfortable dealing with them for long periods of time and so we are trying to build a moat through domain expertise through better customer relationships and through kind of staying one step ahead of those guys.
Speaker Change: Okay. Thanks for that.
Speaker Change: <unk> set of digital assets recently came out and said that he has seen a notable uptick in institutional investor interest in bitcoin really when it started a couple from equities here in recent weeks is galaxy is seeing the same dynamics, taking place and do you expect this decoupling to persist.
Speaker Change: Yes.
Speaker Change: Bitcoin as a spec.
Speaker Change: Spectacularly interesting asset in a story in that.
Speaker Change: There are two vectors that drive.
Speaker Change: One is the macro outlook.
Speaker Change: Outlet outlook and the other is adoption and the macro outlook.
Speaker Change: Looks like a big tailwind for forbid plane for a long time.
Speaker Change: But I I have a feeling that the budget deficit with all the trying that Scot Benson and color are trying to do to to lower it is going to be higher this year than it was last year not lower.
Speaker Change: And so the stream of getting 3% bus budget deficit and 3% growth.
Speaker Change: Looks further away than I thought.
Speaker Change: The administration had hoped.
Speaker Change: That's good for for crypto prices, but the far bigger story as adoption.
Speaker Change: And we are just seeing it slowly eat the world.
Speaker Change: Right more and more sovereign wealth funds are participating.
Speaker Change: More and more.
Speaker Change: And in every country are starting to see micro strategy like.
Speaker Change: <unk>.
Speaker Change: Setups.
Speaker Change: There have been two more launched recently where companies are using bitcoin treasury.
Speaker Change: Schemes I'll call them.
Speaker Change: To attract retail money through the equity market that goes right into bitcoin and so the.
Speaker Change: The orange pulling of the world seems to be accelerating.
Speaker Change: And has that adoption increases prices go up that fuels the entire industry quite frankly and so.
Speaker Change: The industry is not mature enough yet to really thrive without bitcoin price going higher.
Speaker Change: I think that will change in the next few years right when we actually do see.
Speaker Change: Yeah.
Speaker Change: Stable coin is being used to buy your hamburger at Mcdonalds when you see <unk> of of Galaxy stock and Apple stock in and in other People's equities. When you see tokenism mission of hedge funds and private equity funds.
Speaker Change: It will be less reliant on bitcoin price, but right now that.
Speaker Change: Quaint price drives in liquidity and drives in energy in the space and so it's still the most important asset.
Speaker Change: That I focus on while running this company.
Speaker Change: We appreciate your insight.
Speaker Change: Thank you.
Bill: And our next question comes from Bill pop on Juicy with K B W.
Bill: Good morning, gentlemen, thanks for taking my questions and congrats on all the progress recently, including the uplifting and securing a phase two of Helios.
Bill: Wanted to touch on the remaining capacity in the load study.
Bill: So if that first tranche of 800 megawatts is approved in the near term just curious on your thoughts of whether core re with scoop up that capacity has any of that incremental load study capacity.
Bill: Been allocated to them as part of the expansion options and.
Bill: Or do you think it would be more strategic to diversify the tenant base at that point.
Bill: Yes.
Bill: Bill.
Speaker Change: The simple answer to one of the questions and there is no.
Speaker Change: None of that of that incremental capacity is allocated to anybody yet as of today.
Speaker Change: The core we've has been an unbelievably good partner.
Speaker Change: To us so far and they've been a great team to work with we've got we've got nothing nothing but positive things to say about senior management team and the senior manager team and that the underground development team there.
Speaker Change: We'd love to grow our relationship and partner with them.
Speaker Change: Is the honest answer the other side of that equation like I said before though is for us to build a.
Speaker Change: What we think is the highest value view business for shareholders and for the market is to create a portfolio approach, both geographically and within and tenants and so I think.
Speaker Change: We will be focused on both maintaining and growing relationship with <unk> as well as diversifying the.
Speaker Change: The growth with other clients. So that we have a nice balanced portfolio and balanced earnings stream from a credit risk perspective.
Speaker Change: And from it from a source of revenue and EBITDA perspective, and so you know that asset that capacity is is once approved is available.
And and we're working every day to to meet with different potential clients and sort out how we want to allocate it.
Speaker Change: I appreciate that color for the second question, we've seen clear strong appreciation in the tape in recent months.
With the upcoming uplifting curious if you could share your level of appetite to raise additional capital outside the project level financing.
Speaker Change: Because we're good at.
Speaker Change: We're going to look at all the various.
Speaker Change: Avenues, we have to raise capital.
Speaker Change: We're a growth company and so it would be naive for you guys to think we're not going to raise capital at one point, but we've got lots of different ways to do it.
Speaker Change: Debt markets convert markets.
Speaker Change: Project level financing around the big Helios built.
Speaker Change: In public equity markets, and so marine evaluate those really.
Speaker Change: Carefully and get back to you.
Speaker Change: I appreciate the color. Thank you.
Speaker Change: Thank you and our next question comes from Joe Flynn with Compass Point Research and trading. Please go ahead. Your line is open.
Joe Flynn: Hi, Thanks for the question I was wondering if you could provide an update on.
The project financing that year.
Joe Flynn: Ultimately.
Joe Flynn: I had read out first with the construction and ultimately in conversations like.
Joe Flynn: What does the 17% fixed NOI yield that you guys were able to secure what kind of.
Like the bad does that unlock.
Joe Flynn: Where is the primary appetite would you characterize the bank debt versus private credit and then it's.
Joe Flynn: And baby structures would be very helpful.
Speaker Change: Sure Good morning, Joe Thanks.
Joe Flynn: Yeah. So on the on the project financing we've been hard at work on it.
Joe Flynn: We have we expect that we will close that in the coming weeks and so we will likely be back out to the market to you guys and investors and provide an update on exactly what that looks like.
Joe Flynn: Say, it's pretty consistent with what we've talked about and announced in the past the the way we think about it so the demand for that has come from a lot of different sources.
Joe Flynn: There is there are a number of big.
Joe Flynn: Big Bank platforms that have have smart focused infrastructure project finance groups that look to either solely underwrite or joint underwrite.
Joe Flynn: Financings of this size.
Joe Flynn: That tends to be the best execution in the best and the best.
Joe Flynn: That way for us to access the most the most efficient process and and frankly economics. There has been a pretty strong demand from outside the banking platform for direct lenders as well.
Joe Flynn: Who either think about coming in directly in competing taking parts of the syndications that that the banks ultimately first will step into an underwrite or looking at the capital structure and and saying you know.
Joe Flynn: We can also offer you a solution that you know.
Joe Flynn: Increases the leverage reduces the equity check need on the galaxy side and it is accretive from an economic perspective and so.
Joe Flynn: I think there are the there are a lot of different options that we have been evaluating and we think are going to be available on the go forward. This first financing like I said, we'd expect to to to put that to a close the next couple of weeks and and really the there is two parts two to each of the data Center development.
Joe Flynn: <unk> cycles.
Joe Flynn: Simplify it from a financing perspective, there's the project financing, which.
Joe Flynn: Which.
Joe Flynn: Next to our equity, which we've already set aside for example in phase one and is already funded helps finance the build.
Joe Flynn: We really think about that as relatively short term financing.
Joe Flynn: Because once the asset is built and stabilized stabilized being when the tenant starts paying rent. It actually opens up opens up a wholly new market for financing, where rather than thinking about loan to cost and budget and timelines youre thinking more about loan to value and NOI NOI leverage multiples and we highlight we saw.
Joe Flynn: Strongly expect once there you know there'll be a lot of take out opportunities for us to.
Joe Flynn: To refinance the project financing debt likely take out a decent amount of equity to be able to recycle back into further project development. So.
Joe Flynn: Hopefully that's helpful color.
Joe Flynn: Yes, that's very helpful. And then just maybe on it looks like the ability to get 80% loan to cost on initial construction has been talked about loan to value on cap rates.
Joe Flynn: On stabilized that alive, but.
Joe Flynn: Can you maybe talk.
Joe Flynn: Like.
Joe Flynn: Right.
Joe Flynn: Maybe just inside on spreads do they ultimately you know factor in Coreys offtake or add.
Joe Flynn: Like do you see maybe the improvement from built in credit enhancements that.
Joe Flynn: Maybe.
Joe Flynn: Exists within your site contract that the market might not be aware of.
Joe Flynn: Sure Yeah. So.
Joe Flynn: I definitely agree with you the entire economic package has a lot of factors into that go into it in terms of.
Joe Flynn: Ultimately what the markets will look at as a stabilized cap rate, which which includes the the underlying economics of the lease and so that's why one of our big focuses when restructuring the lease was making it making a tradeoff on economics.
Joe Flynn: Either headliner lease rate our requirements to fund capex versus getting.
Joe Flynn: A structure that is going to operate extremely high EBITDA margins and it looks as close to triple net as possible because the finance ability of those of those cash flow streams improved quite dramatically versus an asset that is highly reliant on an operator that operates at lower EBITDA margins. So.
Joe Flynn: That's a factor obviously the underlying credit I agree with you is definitely a factor.
Joe Flynn: One of our candidly one of our big bets.
Joe Flynn: We spent a lot of time with the <unk> team understanding their business their pipeline, where they stood pre IPO.
Joe Flynn: And we're close to them on an ongoing basis is that in core we have success.
Joe Flynn: That should create a re rating for themselves and therefore as a derivative for our asset in terms of cap.
Joe Flynn: Cap rate compression I evaluation increase and so.
Joe Flynn: That is a factor we do see.
Joe Flynn: A pretty pretty clear path for <unk>.
Joe Flynn: Core we've as our first anchor tenant to improve their own credit quality and therefore.
Joe Flynn: Create uplift for us long term in terms of the value of the asset that is for sure part of the equation.
Joe Flynn: So as we as we look at.
Joe Flynn: Building, our portfolio of tenants and real estate assets over time, having a good mix of different credit qualities and therefore.
Joe Flynn: Identifiable exit cap rates is a big part of the equation is something that's very top of mind every time, we look at land acquisition or think about and talk about a tenant and how we would finance it ultimately how we would crystallize value.
Joe Flynn: And then maybe just one more on the equity component of the Capex.
Joe Flynn: I guess beyond the initial convert raise.
Joe Flynn: I guess what are you what are you guys approaches to ultimately funny that call it $600 million on the signed contracts or potentially up to a delay in it.
Joe Flynn: Is there any call it takes the full 800 megawatts.
Joe Flynn: Like as of now are you looking primarily fund it yourself or if its still exploring potential.
Joe Flynn: Partnership opportunities.
Joe Flynn: Originally that would be helpful.
Joe Flynn: Yes.
Joe Flynn: Look I think.
Joe Flynn: The good news is.
Joe Flynn: With the trajectory of the company and our successful.
Joe Flynn: Move to the U S.
Joe Flynn: And having signed long term off take contracts, we have a lot of options in front of us and so it's really going to come down to two us ultimately on cost of capital like our cost of capital and certainty of capital and so our goal is to maximize return on equity for the assets, we are building and in order to.
Joe Flynn: Do that and we're gonna so today alone we see a number of different ways. We can do that obviously non dilutive pure debt financing at the asset level, which include both project financing as well as potential takeout financing of Securitizations.
Joe Flynn: Project level equity financing.
Joe Flynn: Which there theres a whole pallet of different options and fund complexes that are specifically set up just to fund this kind of long term equity program at the asset level debt.
Joe Flynn: That looks that looks a lot more like structured equity and structured returns, which allows for are actually accretive equity returns and accretive capital to galaxy's equity return at doing it at that level.
Joe Flynn: And then obviously the corporate parent and the court parents access to capital is is something that we're also excited about given given.
Joe Flynn: Where we sit today and sort of the new listing and everything and so I think all options on the table. The good news is.
Joe Flynn: As long as we execute and the fact that we have signed long term contracts that are highly valuable puts us in a position to look at a whole plethora of options to be able to optimize our cost of capital.
Joe Flynn: Okay. Thanks.
Speaker Change: Thank you and we will take our final question from Owen Lau with Oppenheimer. Please go ahead.
Speaker Change: Hello, Congratulations on the long overdue uplifting to NASDAQ and welcome home. Mike You just highlighted took in isolation could you. Please a little bit more color on how galaxy can play into that.
Speaker Change: And then on AI and Quito, San intersection point between these two and.
Speaker Change: Is there any way got a seat I can try to figure out a good business and go there. Thanks a lot.
Speaker Change: Yeah, let me start with the crypto.
Speaker Change: Our venture portfolio, we have a few investments that are.
You know, we're trying to play that theme.
Speaker Change: Right, if you think about.
Speaker Change: In the future when you have an AI agents that are going to be buying and selling your groceries, they're going to be doing so.
Speaker Change: Over digital rails, using some form of crypto.
Speaker Change: Will it be stable claim will it be its own coin will see and so we've invested a few companies in that space and I think one of the things the venture business has always done for us it's given us some road map of what might be working what could be coming in so we're going to continue to.
Speaker Change: To push more venture.
Speaker Change: Investments into that that intersection.
Speaker Change: Sure.
Speaker Change: You know the the basic data center business becomes a really sophisticated real estate business and that it doesn't have a direct synergy with crypto other than.
Speaker Change: The smartest companies in the world are contracting.
Speaker Change: Contracting out your space and that intersection with them.
Speaker Change: And why either.
Speaker Change: Contract their space I do think will give us some edge.
Speaker Change: There are some kind of straightforward ideas that people have been talking about it again, where we're looking at adventure when you think about authentication.
Right from deep fakes.
I think at one point and see a lot of photographs in speeches and IP.
Speaker Change: Living on block change, because you're going to authenticate that it's real.
Speaker Change: And so.
Speaker Change: There is there is a natural synergy that shouldn't come here.
Speaker Change: And it's not necessarily showed up yet with with you know with.
Speaker Change: Great companies.
Speaker Change: Got it that's helpful.
Speaker Change: I'm sorry go ahead.
Speaker Change: I'm just going to add.
Speaker Change: On the <unk> side just.
Speaker Change: Your first point, just pretty succinctly like.
Speaker Change: We think theres a lot of opportunities for Galaxy two play a real role in that process. The market structure is still developing and so and so how it all crystallizes is an open question for the whole industry for us today.
Speaker Change: We with our with our custodial technology platform, we have wallet infrastructure, both cold and hot wallets.
Speaker Change: That we think has real strong differentiated technology that that.
Speaker Change: That will play a role in some of them in some of the major bank.
Speaker Change: Banks and investment houses long term in terms of securing and transferring digital key material, which is foundational in the version of the World where you have digital bearer instruments that are that are represented.
Speaker Change: Real world assets.
Speaker Change: On top of that that that platform also has token innovation capabilities, where we write and maintained.
Speaker Change: Smart contracts for mid burn redeem which is also a critical component to to wrapping real world assets in digital form and then and then maintaining them unchanged.
Speaker Change: And then are our advisory business.
Speaker Change: In terms of helping to structure.
Speaker Change: Those issuances is something that that group is very focused on as well. So I think we have a number of the pieces of the puzzle today already inside the house. The Galaxy, we will need to develop some more and we will also need to partner with with our other institutions that have different elements, including distribution and other line.
Speaker Change: <unk> to the extent, we don't get them ourselves to really deliver an end to end product as the market structure comes together.
Speaker Change: Got it that's Super helpful. And then maybe finally on the regulations. There was a hiccup last week with a genius egg I'm. Just wondering do you think there is still enough support for the appeals to get past this year or we have to kind of like we go into next year. Thanks a lot.
Speaker Change: Yeah.
Speaker Change: Ironically I I have spent a lot of time on the last two weekends on the phone with various senators in D C.
Speaker Change: And I would tell you it.
Speaker Change: This has been frustrating for both of them.
Speaker Change: The space and for them because I think on the both on the Republican side and on the Democratic side.
Speaker Change: There was a real desire to get something done.
Speaker Change: Yeah, We got you.
Speaker Change: Making making laws in Washington, and getting stuff done.
Speaker Change: As an art form that I'm on learning, but by no means an expert at because it is very tricky. It felt like it was done both the Democrats and Republicans told me it was getting done.
Speaker Change: Got sidetracked a little bit.
Speaker Change: If something is going to change it's got to happen in the next week or so or I think we're going to miss this window of opportunity.
Speaker Change: To get good crypto legislation done.
Speaker Change: I know we ran into.
New York Congressman last night, who wants to help Democrats and so I don't think there is a lack of desire. The politics are tricky right. The precedent launched MIM coin as children are very engaged in the space. They are doing some productive things and some things that that the Democrats are saying hey, this doesn't seem.
Speaker Change: Right and that is given the Democrats and angle to say well wait a minute and it's not the whole Democratic party by any stretch, but it is.
Speaker Change: The far left side of the party is starting to Scream and yell again.
Speaker Change: And.
Speaker Change: The core our core group of crypto enthusiast, so the Democratic Party I'm trying to get this thing done.
Speaker Change: And it's not easy.
Speaker Change: The Republicans don't have full support on their side either there is there is national security issues there is issues around AR.
Speaker Change: The the.
Speaker Change: The dominance of our Big Tech players got like Josh Holly says enough is enough and so when you.
Speaker Change: You hear that better wants to get into the stable coin business. Some Republicans are getting nervous and so these are these should be bipartisan issues. They are unbelievably nuanced.
Speaker Change: And complicated.
And they don't make for great.
Speaker Change: Political.
Speaker Change: One side because.
Speaker Change: Each each each team can point fingers and so long answer we're very engaged.
Speaker Change: Matter of fact, probably too engaged.
Speaker Change: Given that you know, we're not a U S stable coin issuer and so I can't keep thinking that Galaxy comes from our point of view of a fair judge here.
Speaker Change: Want something good for the industry and good for America.
Speaker Change: We are launching a stable point in Europe.
Speaker Change: With dws and flow traders, which is pretty exciting it'll be bath and regulated and so it's not like we're not participating in that in that business.
Speaker Change: And I'd say theres, probably a 30% chance at this point, that's something gets done.
Speaker Change: <unk>, which is a shame because I would've told you that two and a half weeks ago, there was at 85% chance.
Speaker Change: Alright, Thank you for the color thanks, a lot.
Mike Novogratz: Thank you and I'd like to now turn it back to Mike Novogratz.
Speaker Change: Hello, guys.
Mike Novogratz: Sure long call appreciate all the questions.
Mike Novogratz: We are.
Mike Novogratz: 72 hours away from.
Mike Novogratz: Ringing the bell to Bell is actually a button at the NASDAQ, but it actually sounds like a bell Ah.
Speaker Change: We really appreciate you guys havent been the ride with us.
Speaker Change: I don't feel like this is the end of a race I feel like it's really the this is the starting bell and so are locked in and stay tuned. Thank you.
Speaker Change: Yes.
Speaker Change: I'd like to thank everybody for their participation on today's conference. Please feel free to disconnect. Your line at any time and have a great day.
Speaker Change:
Speaker Change: Mhm.
Speaker Change:
Speaker Change: Hum.
Speaker Change: Oh.
Speaker Change: [music].
Speaker Change: Oh.
Speaker Change: [music].
Speaker Change: Hum.
Speaker Change: