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Odaily Translator | Nian Yin Si Tang
Summary:
Summary:
- Galaxy Digital reported a loss of more than $554 million in the second quarter, more than three times its loss a year earlier.
- The company maintains a $1.5 billion liquidity position, including $1.0 billion in cash.
- Galaxy Digital hopes to grow through M&A, especially in the field of tokenization.
- CEO Novogratz: "The next six months will be very interesting for us."
Galaxy Digital posted a second-quarter loss of more than $554 million, compared with a loss of $182.9 million a year earlier, as crypto asset prices plummeted.
The digital-asset-focused financial services firm said the wider losses were related to unrealized impairments in digital assets as well as its trading and proprietary investing businesses. Some of this is offset by the profitability of the mining industry.
Additionally, partner capital fell 27% quarter-over-quarter, from $2.5 billion to $1.8 billion, while the total cryptocurrency market capitalization fell about 56% this quarter.
The firm maintains a $1.5 billion liquidity position consisting of $1 billion in cash and a net digital asset position of $474.3 million, of which $256.2 million is in non-algorithmic stablecoins.
As of June 30, the digital net worth was $474 million, compared to $910 million on March 31. The decrease in net digital asset position was mainly due to the sale of certain liquid positions to increase its cash position, as well as the overall decline in digital asset prices.
"We remain in a strong position to weather prolonged turbulence and capitalize on strategic opportunities to grow Galaxy in a sustainable manner," said Michael Novogratz, founder and CEO of Galaxy Digital.
Galaxy Digital Asset Management reportedly had preliminary assets under management of nearly $1.7 billion as of June 30, a 40% decrease from the quarter ended March 31, 2022.
Despite posting a loss of more than $554 million in the second quarter, Galaxy Digital is still considering acquisitions aimed at adding new areas to its core business.
Novogratz noted that the company has $1 billion in cash to spend and will continue to raise funds with an eye toward closing deals.
"I would like to be more aggressive and we are looking at (potential acquisition targets)," Novogratz said on a conference call with analysts.
Galaxy Digital will follow in the footsteps of FTX founder and CEO SBF, whose recent acquisition spree includes lender BlockFi, clearing firm Embed and Canadian crypto-asset trading platform Bitvo.
"Tokenization, this area is very attractive to me personally," he said. "It is one of my goals, but I think we can be more patient."
Galaxy Digital is still waiting to complete the acquisition of BitGo, which was announced in May 2021.
In April, Novogratz announced on an earnings call that the terms of the acquisition of cryptocurrency custody company BitGo had changed. BitGo shareholders will now receive 44.8 million newly issued Galaxy shares, up from 33.8 million previously, giving BitGo holders 12 percent of the combined company, up from 10 percent in the original deal. The $265 million cash consideration remains unchanged.
In addition, Galaxy Digital postponed the acquisition of BitGo until the second quarter to the fourth quarter of 2022.
Novogratz said he expects traditional financial firms to step up their involvement in mergers and acquisitions in the cryptocurrency industry later this year. "We don't have a lot of money this year, but I still feel like time and money is going to our space," he said.
Novogratz pointed out that crypto mining is an area that requires more capital investment. “We think we have a role to play both in terms of borrowing and potential consolidation in this space,” he said.
