Galaxy Digital's latest earnings report revealed smaller losses thanks to a resurgent cryptocurrency market, which saw the price of Bitcoin jump roughly 80% since the start of the year.
The report suggests a noteworthy financial turnaround, with the New York-based firm helmed by the billionaire investor and Bitcoin bull Michael Novogratz reporting a net loss of $46 million for the second quarter, a remarkable contrast to the nearly $555 million loss recorded during the same period a year ago.
"Galaxy's operating businesses performed well in the second quarter against a backdrop of continued uncertainty and regulatory pressure, as we continue to manage the company to meet the evolving needs of our clients," Novogratz said in a statement.
Galaxy Digital operates through a diversified approach across five distinct business segments: trading, asset management, principal investments, investment banking, and crypto mining.
The company's trading revenue for the quarter stood at $59.5 million, reflecting a 54% decrease compared to the previous quarter.
Galaxy has attributed the decrease to lower net realized gains on digital assets and net derivatives gains, as well as a broader industry-wide slowdown in trading activity, leading to reduced counterparty trading volume across the board.
Galaxy’s asset management and mining revenue soar
In contrast, Galaxy Digital's asset management revenue experienced a staggering increase, reaching $33.8 million for the quarter. This figure represents a remarkable 619% surge from the previous quarter.
According to the firm, the substantial growth in asset management revenue can be attributed to stronger net realized gains on investments stemming from the company's venture platform.
Galaxy’s Bitcoin mining revenue also witnessed a notable uptick, amounting to $15.4 million in the three-month period. This figure accounts for a 51% increase from the first quarter of the year.
The surge in mining is attributed to higher income generated from the company's proprietary mining activities, conducted by Galaxy Digital Infrastructure Solutions (GDIS).
Galaxy kicked off its mining operations in 2020, providing hosting services in addition to managing its proprietary mining facilities. In December 2022, the firm acquired Argo Blockchain’s Helios Bitcoin mining facility in Dickens County, Texas in a $65 million deal.
"The investments we've made in our business, prudent risk management practices, and strong balance sheet are driving long-term growth for Galaxy and our stakeholders,” said Novogratz. “We continue to operate the Company from a position of strength and are confident in our ability to grow our Global Markets, Asset Management, and Digital Infrastructure Solutions operating businesses."
Earlier this summer, Novogratz revealed Galaxy was seeking to move its operations offshore in the wake of the SEC's crackdown on the crypto industry, stating that the U.S. has found itself in a "legislative stalemate."