An anonymous director reports

GALAXY ANNOUNCES THIRD QUARTER 2023 FINANCIAL RESULTS AND OCTOBER UPDATE

Galaxy Digital Holdings Ltd. has released its financial results for the three and nine months ended Sept. 30, 2023, for both itself and Galaxy Digital Holdings LP (the partnership or GDH LP).

All figures are in United States dollars unless otherwise noted.

Preliminary financial highlights, through Oct. 31, 2023

Since the end of the third quarter, digital asset prices materially changed and the company's business has benefited from heightened market volatility and increased trading volumes. Galaxy's income before tax was approximately $124-million in the month of October, driven primarily by the company's market positioning and the appreciation of digital asset prices. Equity capital increased to approximately $1.6-billion over the same period.

Corporate updates

U.S. listing and reorganization: Galaxy continues to work on completing its proposed reorganization and domestication to become a Delaware-incorporated company, and subsequently list on the Nasdaq, upon completion of continuing SEC (Securities and Exchange Commission) review, and subject to stock exchange, shareholder and applicable regulatory approvals of such transactions.

Share buyback program: As announced on May 26, 2023, the company commenced a new normal course issuer bid (NCIB) on May 31, 2023, and is eligible to purchase up to 10 million ordinary shares. For the period between July 1, 2023, and Oct. 31, 2023, Galaxy repurchased approximately 1.2 million shares at an average price of $4.69 (Canadian).

Galaxy global markets

Galaxy global markets (GGM) offers institutional-grade expertise and access to a broad range of digital asset products, including digital asset spot and derivatives trading, structured products, and financing, as well as capital markets and M&A (merger and acquisition) advisory services for corporate clients. GGM operates in two discrete business units -- trading and investment banking.

Trading

Trading reported counterparty trading revenue of $14-million, down $6-million quarter-over-quarter (QoQ). The decrease was primarily due to record low volatility and market positioning. Subsequent to quarter-end, the company's counterparty trading desk's market positioning benefited from the favourable asset price movements and significant uptick in volatility, and has generated $24-million of revenue in October. Despite the decline in revenue QoQ, counterparty trading volumes increased 70 per cent versus the second quarter and its average loan book size expanded to $553-million.

Investment banking

Investment banking successfully closed two deals in the quarter, serving as adviser to Gamercraft on its latest investment round and serving as the exclusive financial adviser to Securitize in its acquisition of Onramp Invest, both of which the company expects to realize as revenue at a later date. Notably, the team was also selected to represent Prime Trust in Nevada receivership as part of a continuing restructuring mandate. Galaxy continues to execute against a pipeline of mandates representing $2.2-billion in potential deal value.

Galaxy asset management

Galaxy asset management (GAM) provides investors access to the digital asset ecosystem via a diverse suite of institutional-grade investment vehicles that span passive, active and venture strategies.

GAM management and performance fees were $4.7-million in the quarter, representing an 11-per-cent increase QoQ. GAM reported preliminary assets under management (AUM) of approximately $3.9-billion as of Sept. 30, 2023, a 58-per-cent increase QoQ. The increase in AUM was primarily driven by net inflows from new actively managed client mandates that came in at the end of the quarter. AUM consisted of $768-million in passive strategies, $1,704-million in active strategies and $1,456-million in venture strategies.

Galaxy digital infrastructure solutions

Galaxy digital infrastructure solutions (GDIS) consists of proprietary and hosted bitcoin mining services, GK8 self-custody technology solutions, and validator services.

Mining

Mining revenue was $14.3-million in the quarter, relative to power purchase agreement and external hosting expenses, net of curtailment credits, of negative $2.2-million. Galaxy reached 3.9 exahashes per second (EH/s) of hashrate under management across the company's proprietary and hosted footprint, as it continued to scale its Helios facility in West Texas. Galaxy's effective power management strategy led to a negative average marginal cost to mine in the quarter. The company expects its average marginal cost to mine to increase in the fourth quarter relative to the third and second quarters, in anticipation of fewer opportunities to economically curtail its mining operations and a higher network hashrate.

Self-custody and validator solutions

Self-custody and validator solutions are focus areas in the company's continued commitment to the future of decentralized networks. This includes supporting the integrity of protocols and ecosystem projects by operating validator nodes to secure blockchains, and by offering self-custody technology solutions to institutions through GK8.

GDH Ltd.'s financial highlights

As the only significant asset of GDH Ltd. is its minority interest in GDH LP, its results are driven by the results of GDH LP. GDH Ltd. accounts for its investment in this associate (GDH LP) using the equity method. The investment, initially recorded at cost, is increased or decreased to recognize GDH Ltd.'s share of the earnings and losses of GDH LP. During the three months ended Sept. 30, 2023, an impairment assessment was required under international financial reporting standards (IFRS) and GDH Ltd.'s minority interest in GDH LP was marked down based on the Toronto Stock Exchange quarter-end closing share price. An impairment expense of $44.9-million was recognized during the three months ended Sept. 30, 2023. During the first and second quarters of 2023, the company had recognized reversal of impairment of $128.1-million, resulting in net impairment reversal of $83.2-million for the nine months ended Sept. 30, 2023.

The net comprehensive loss of GDH Ltd. was $68.8-million and net income was $83.2-million for the three and nine months ended Sept. 30, 2023, respectively.

Earnings conference call

An investor conference call will be held today, Nov. 9, 2023, at 8:30 a.m. ET. A live webcast with the ability to ask questions will be available at the company's website. The conference call can also be accessed by investors in the United States or Canada by dialling 1-844-746-0741, or 1-412-317-5107 outside the U.S. and Canada. A replay of the webcast will be available and can be accessed in the same manner as the live webcast on the company's investor relations website. Through Dec. 9, 2023, the recording will also be available by dialling 1-844-512-2921, or 1-412-317-6671 (outside the U.S. and Canada) and using the passcode: 10183468.

About Galaxy Digital Holdings Ltd.

Galaxy Digital Holdings is a digital asset and blockchain leader providing access to the growing digital economy. It serves a diversified client base, including institutions, start-ups and qualified individuals. Since 2018, Galaxy Digital has been building a holistic financial platform spanning three complementary operating businesses: global markets, asset management and digital infrastructure solutions. Its offerings include, amongst others, trading, lending, strategic advisory services, institutional-grade investment solutions, proprietary bitcoin mining and hosting services, network validator services, and the development of enterprise custodial technology. The company is headquartered in New York with global offices across North America, Europe and Asia.

This press release should be read in conjunction with: (i) GDH LP's management's discussion and analysis, and consolidated financial statements for the three and nine months ended Sept. 30, 2023; and (ii) GDH Ltd.'s management's discussion and analysis, and consolidated financial statements for the three and nine months ended Sept. 30, 2023, which have been filed on SEDAR+.

Reportable segments (unaudited)

Income and expenses by each reportable segment of GDH LP for the three months ended Sept. 30, 2023, are shown in the associated table.

Income and expenses by each reportable segment of GDH LP for the three months ended Sept. 30, 2022, are shown in the associated table.

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