Galaxy Digital Posts $482M Q4 Loss as Crypto Portfolio Value Drops

The fourth quarter of 2023 proved challenging for Galaxy Digital, as detailed in its recent press release. The company reported a net loss of $482 million, a figure that stemmed primarily from a $449 million decrease in the value of its investment portfolio. This 22% decline brought the total portfolio value down to $1.7 billion. The loss before interest and taxes (EBIT) reached $557 million, starkly exceeding the $278 million loss anticipated by Wall Street analysts. This performance triggered a sharp market reaction, with Galaxy shares (GLXY) falling approximately 16% to trade at $22.13, their lowest price point since July and a stark contrast to the all-time high of $45.92 reached in October.

The composition of Galaxy’s digital asset holdings at the quarter’s end provides context for the losses. The firm held $557 million in Bitcoin (BTC) and $124 million in Ethereum (ETH), alongside $220 million in other altcoins. These holdings faced a brutal market environment; according to data from CoinGlass, Bitcoin and Ethereum fell 23% and 28%, respectively, during Q4. This broad market decline directly impacted the value of assets on Galaxy’s platform, which dropped 26% to $11.4 billion. Furthermore, assets under management fell 27% to $6.4 billion from $8.8 billion in the prior quarter, while the value of digital assets staked through Galaxy’s platform declined 24% to $5 billion.

Beyond its investment portfolio, Galaxy’s operational metrics reflected the crypto winter’s chill. Trading volumes, a core activity for the firm known for bridging institutional finance with crypto, plummeted 62% quarter-over-quarter to $10.6 billion. The company noted this sharp drop followed an unusually large $9 billion Bitcoin sale it facilitated in the third quarter. Despite this volatility in trading, one area showed notable resilience: Galaxy’s loan book. As one of the top three centralized lenders in crypto, the company disclosed that its loan book value remained essentially unchanged at $1.8 billion. Galaxy attributed this stability to “resilience and sustained client demand, despite lower digital asset prices,” suggesting institutional engagement persisted even as asset values fell.

The company’s competitive landscape includes giants like Coinbase (COIN) and Robinhood (HOOD), particularly through its GalaxyOne platform launched late last year. However, the quarterly report did not detail specific performance metrics for this new consumer-facing initiative amidst the broader downturn. A critical bright spot in the financials was Galaxy’s liquidity position. Despite the portfolio losses, the company reported holding $2.6 billion in cash and stablecoins, providing a substantial buffer against market instability and capital for strategic initiatives.

Amid the quarterly losses, management and analysts are directing significant attention to Galaxy’s foray into data centers. Analysts at investment bank Compass Point emphasized that “The data center business remains the key driver of GLXY’s investment thesis.” The firm’s Helios project is central to this strategy. Compass Point noted that the first phase of the Helios data center remains on schedule for completion in the first half of 2026, a significant point given “concerns of project delays among peers.”

Under an agreement with AI cloud provider CoreWeave, Galaxy expects to deliver 133 megawatts of critical IT load from the facility. The analysts highlighted that the Helios site has approved capacity for 830MW, suggesting substantial long-term potential. They posited that negotiations with hyperscale cloud providers could serve as a near-term catalyst for the stock, especially if disclosed soon. Reflecting this long-term optimism in the infrastructure play, Compass Point maintained a price target of $46 per Galaxy share—more than double its post-earnings trading price—indicating a belief that the data center venture could ultimately outweigh the cyclical pains of the crypto trading and investment business.