An anonymous director reports

GALAXY ANNOUNCES FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL RESULTS

Galaxy Digital Holdings Ltd. has released its financial results for the three and 12 months ended Dec. 31, 2023, for both itself and Galaxy Digital Holdings LP (the partnership or GDH LP).

Preliminary financial highlights through Feb. 29, 2024

Since the end of the fourth quarter 2023, digital asset prices materially changed and Galaxy's business has benefited from heightened market volatility and increased trading volumes. For the year-to-date period ending Feb. 29, 2024, Galaxy Digital Holdings LP's income before tax is estimated to be approximately $300-million, driven primarily by the appreciation of digital asset prices and growth in its operating businesses. Galaxy Digital Holdings LP's equity capital increased to approximately $2.1-billion over the same period.

Corporate updates

United States 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 10.1 million ordinary shares. For the period between July 1, 2023, and Dec. 31, 2023, Galaxy repurchased approximately 1.2 million shares at an average price of $4.69.

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, 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 $115-million for the full year 2023 and $44-million in the fourth quarter. Counterparty trading revenue increased 210 per cent quarter-over-quarter (QoQ), primarily driven by increased revenue from derivatives and favourable asset price movements. Counterparty trading volumes increased 3 per cent versus the third quarter, and the company's average loan book size expanded to $635-million. Galaxy continues to onboard new counterparties and ended 2023 with 1,052 total trading counterparties.

Investment banking

Investment banking successfully closed five deals in 2023, despite the backdrop for deal execution remaining challenging. In the fourth quarter, the team completed a restructuring mandate with Prime Trust. Galaxy also realized revenue associated with both advising on-line gaming platform, Gamercraft, on its seed financing round, and for serving as the exclusive financial adviser to Securitize on its acquisition of Onramp Invest. Galaxy is executing 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 fees were $22.2-million for the full year 2023 and $8.4-million in the fourth quarter. GAM reported assets under management (AUM) of approximately $5.2-billion as of Dec. 31, 2023, a 203-per-cent increase year-over-year (YoY), driven primarily by net inflows from newly managed opportunistic mandates. Subsequent to quarter-end, GAM reported a record preliminary AUM of $10.1-billion as of Feb. 29, 2024, as a result of market appreciation and net inflows from newly managed opportunistic assets. On Jan. 11, 2024, GAM, in partnership with Invesco, announced the launch of the Invesco Galaxy Bitcoin ETF (exchange-traded funds) (ticker: BTCO).

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 $58.5-million for the full year 2023 and $18.7-million in the fourth quarter. The company reached 4.1 exahashes per second (EH/s) of hashrate under management (HUM) across its proprietary and hosted footprint, exceeding Galaxy's 2023 year-end target HUM. As of Feb. 29, 2024, Galaxy reached 5.4 EH/s in HUM. As anticipated, the company's average marginal cost to mine in the fourth quarter increased relative to prior quarters due to fewer opportunities to economically curtail its mining operations and a higher network hashrate. For the full year 2023, Galaxy mined 1,077 bitcoin from its proprietary mining operations at an average marginal cost to mine of less than $8,000.

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. As of Dec. 31, 2023, a reversal of a previously recognized impairment assessment was required under international financial reporting standards and GDH Ltd.'s minority interest in GDH LP was marked up based on the Toronto Stock Exchange year-end closing share price. An impairment expense reversal of $307.7-million and $390.9-million was recognized during the three and 12 months ended Dec. 31, 2023, respectively.

The net comprehensive income (loss) of GDH Ltd. was $371.6-million and $454.8-million for the three and 12 months ended Dec. 31, 2023, respectively.

Important United States tax information -- action required by U.S. shareholders

Galaxy shareholders who are U.S. taxpayers should be aware that there may be significant and adverse U.S. federal income tax consequences relating to Galaxy's PFIC (passive foreign investment company) status for 2023 and prior years, and in connection with Galaxy's domestication from Cayman to Delaware, unless they make certain elections on their originally filed U.S. federal income tax returns for 2023, which are generally due on April 18, 2024 (subject to allowable extensions). These consequences and, therefore, the need to take action, apply to both direct and indirect holdings of Galaxy shares. These elections are described in the notice posted by Galaxy in March, 2024, on its website. Before filing their U.S. federal income tax returns for 2023, direct and indirect Galaxy shareholders who are, or who have investors who are, U.S. taxpayers, are urged to review the notice and to consult their tax advisers regarding the advisability of making these elections on their U.S. federal income tax returns for 2023.

Earnings conference call

An investor conference call will be held today, March 26, 2023, at 8:30 a.m. Eastern Time. 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 April 26, 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 10186798.

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 year ended Dec. 31, 2023; and (ii) GDH Ltd.'s management's discussion and analysis, and consolidated financial statements for the year ended Dec. 31, 2023, which have been filed on SEDAR+.

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