Galaxy Digital Sees $111.7m Net Loss as Digital Asset Price Falls during Q1

Galaxy Digital Holdings Ltd, a US diversified financial services and investment management company, recorded a $111.7 million net comprehensive loss during the first quarter of 2022 that ended 31 March.

The holding company disclosed this on Monday in a release containing its financial results for the recent quarter.

According to Galaxy, the loss, which contrasts against the $858.2 million recorded in the same period last year, was caused by “large digital asset price declines within the quarter.”

Citing CoinMarketCap.com, the company said there was a total cryptocurrency market capitalization decrease of approximately 7% during the quarter.

Additionally, Galaxy said the loss was fueled by decreases in Galaxy Digital Trading (GDT) and Galaxy Digital Principal Investments (GDPI), which are its trading and private investment businesses, respectively.

For instance, GDT’s counterparty trading volumes decreased by 30% from the quarter that ended December 31, 2021 but increased over 50% year-over-year (YoY).

This is despite the fact that GDT's counterparty loan and yield portfolio grew 20% sequentially quarter-over-quarter and 100% YoY to approximately $910 million.

However, Galaxy Digital Investment Banking (GDIB) and Galaxy Digital Mining (GDM) saw their net comprehensive income grow by 775% and 433%, respectively when compared to the first quarter of 2021.

While GDIB posted a “record revenue” of $8 million and a net comprehensive income of $5.8 million, GDM hit $9.8 million in revenue and a net comprehensive income of $5.0 million in the quarter.

Following the release of the Q1 results, Galaxy's shares, which are listed as GLXY on the Toronto Stock Exchange, at first fell into a decline by about 4%, and then it further plummeted to almost 20%, Coindesk reports.

Offsetting the Loss

Galaxy said the profitability of GDIB and GDM, its investment banking and cryptocurrency-related businesses, partially helped to offset the net comprehensive loss.

Moreover, the company’s lower operating expenses contributed in this regard, Galaxy further said.

"Galaxy demonstrated yet another strong quarter against the backdrop of digital asset price declines, and I am proud to see the durability and sustained profitability of our operational business lines, including record contributions from our investment banking and mining segments," said Michael Novogratz, the Founder and CEO of Galaxy Digital.

"We continue to invest in our people, platforms and technology as we build the pre-eminent technology-driven financial services and investment management firm,” Novogratz added.

Galaxy and Digital Assets

Last year, Galaxy entered an acquisition deal to take over the digital asset custodian, BitGo, for a total sum of around $1.2 billion.

The deal was geared at positioning Galaxy as one of the leading full-service crypto companies targeting institutional clients.

Furthermore, Galaxy alongside Bloomberg launched the Bloomberg Galaxy DeFi Index in 2021 to meet the growing demand for decentralized financial products.

The benchmark is owned and administered by Bloomberg Index Services Limited and is co-branded by Galaxy.