Galaxy Digital’s shares surged almost 9% when US stock markets opened on Tuesday morning.
The jump came on the back of the company listing its best quarter in the company’s seven-year history. It now trades at $43.35, giving the crypto financial services firm a $16.5 billion market cap.
The company recorded an adjusted gross profit of $728 million in the third quarter, up 143% from the previous quarter, according to earnings released on Tuesday.
Net income also rose sixteenfold to $505 million.
Most of Galaxy’s success, however, comes from the treasury trade — firms that hold Bitcoin and Ethereum on their balance sheets.
Of the $9 billion in assets, more than half of that comes from treasury companies.
“Collectively, digital asset treasury mandates have added more than $4.5 billion in assets to Galaxy,” the company said. That translates to more than $40 million in annual recurring fee revenue.
Crypto treasury companies have been booming. Basically, they’re firms that buy up Bitcoin, Ethereum, or even XRP, to beef up their balance sheets — sometimes with dangerous degrees of debt and leverage.
Still, Ethereum treasuries control more than 3.5% of all Ether in circulation, while Bitcoin treasuries hold around the same amount of Bitcoin’s supply, according to Blockworks Research. These firms have tripled their holdings since July.
Galaxy is capitalising on the boom by offering staking and asset management services to these companies.
Ethereum treasuries can stake their holdings to earn a 3% yield, while Bitcoin treasuries need professional custody and portfolio management.
By June, Galaxy supported more than 15 treasury companies.
AI pivot
Galaxy is also jumping on the artificial intelligence bandwagon.
The company is on schedule to deliver power to CoreWeave, an AI computing firm. Galaxy secured $1.4 billion in financing to fund the $1.7 billion first phase of construction.
CoreWeave has committed to the full 800 megawatts of power capacity at the site — enough electricity to power a small city.
Mike Novogratz’s firm will make money by developing the data centre, while also leasing out the power and infrastructure to CoreWeave.
The AI bet is massive. Once the new power plant, dubbed Helios and being built in Texas, is completed, Galaxy predicts over $1 billion in annual revenue — comparable to the company’s entire trading operation.
Trading and lending on Galaxy brought in $295 million for the quarter, putting the firm on track to clear $1.2 billion in 2025.
