Galaxy Digital shares fall after $85 million loss

Galaxy Digital’s first revenue from its Helios AI data center business offered a new source of operating profit in the second quarter, even as digital asset price declines pushed the company to an $85 million net loss and sent its shares down nearly 13% in early Wednesday trading.

The company said Helios generated $20 million in adjusted gross profit and $11 million in adjusted EBITDA during its first quarter of revenue-producing operations. That contribution followed the phased delivery of 133 megawatts of IT load under a long-term lease with cloud computing company CoreWeave.

Galaxy expects Helios Phase I to produce roughly $80 million in quarterly leasing revenue from the third quarter, now that the initial phase is fully online. The forecast places the data center operation at the center of Galaxy’s effort to build recurring income that is less directly tied to daily movements in cryptocurrency prices.

The quarterly loss was largely driven by depreciation in the value of Galaxy’s digital asset holdings and investment positions. Galaxy reported that its treasury and corporate unit posted a $42 million adjusted gross loss, reflecting unrealized losses on digital assets and investments. The company also recorded $181 million in book losses connected to lower digital asset prices, according to its earnings release.

Operating units offset part of treasury losses

Galaxy’s operating businesses produced $86 million in adjusted gross profit and $1 million in adjusted EBITDA during the second quarter. Adjusted EBITDA across the company improved sharply from a $188 million loss in the first quarter to a $77 million loss in the second quarter.

The improvement came despite the reported net loss and indicates that Galaxy’s operating businesses performed more steadily than its balance-sheet portfolio. The company’s first-quarter net loss was $216 million, meaning the second-quarter loss of $85 million represented a substantial reduction even though market conditions continued to weigh on asset values.

Galaxy’s digital assets division generated $66 million in adjusted gross profit, a 34% increase from the preceding quarter. The segment includes the company’s trading, lending, derivatives and asset-management activities, which can benefit from higher institutional activity and market volatility even when token prices are falling.

The company’s second-quarter results show how a cryptocurrency-focused financial firm can post improving operating performance while still reporting a substantial accounting loss. Digital assets held on a corporate balance sheet can decline in value quickly, while trading desks, lending operations and infrastructure businesses may continue to generate revenue.

Shares later traded at about $19.79, while the broader S&P 500 index was up roughly 0.5% on the day. The market reaction suggested that traders focused on the size of Galaxy’s digital asset-related losses and the capital required for its data center buildout, rather than solely on the early contribution from Helios.

Helios becomes a larger part of Galaxy’s strategy

The Helios facility marks Galaxy’s most visible move into AI computing infrastructure. The company acquired the Texas site as a Bitcoin mining operation before repositioning it toward high-density computing and data center services.

Under its arrangement with CoreWeave, Galaxy is providing the power and physical infrastructure needed to support AI computing equipment. CoreWeave, a cloud provider focused on GPU-based computing, has become one of the largest customers for data center capacity built for artificial intelligence workloads.

Galaxy said the 133 megawatts delivered so far represent Phase I of the Helios project. The company has also secured a $3.5 billion private debt offering to finance construction of Phase II, a funding package that gives the expansion a scale far beyond a conventional mining-site conversion.

The debt financing also increases the execution pressure on the project. Data center development requires major upfront spending on power systems, buildings, cooling equipment and network infrastructure before lease revenue is fully realized. Galaxy’s projected $80 million in quarterly revenue from Phase I would provide an early test of whether the Helios model can support the company’s larger financing commitments.

Texas pipeline adds 5.7 gigawatts of potential capacity

Galaxy also expanded its AI infrastructure pipeline through three additional development sites in Texas. The company said those sites lift its potential power capacity to more than 5.7 gigawatts.

That figure reflects development potential rather than currently operating capacity, but it gives Galaxy a substantially larger footprint in a state where power availability has become a critical factor for AI data center operators. Demand for GPU-heavy computing has increased competition for sites with access to large-scale electricity supply, transmission infrastructure and fiber connectivity.

For Galaxy, the expansion would allow its data center business to grow beyond Helios if the CoreWeave deployment performs as expected. It also changes the company’s revenue mix: leasing powered data center capacity generally relies on contracted payments, while holdings of Bitcoin, Ethereum and other digital assets remain exposed to market pricing.

The shift does not remove Galaxy’s exposure to cryptocurrency markets. Its treasury and corporate losses during the second quarter showed that asset prices can still have an outsized effect on reported earnings. Yet the Helios results give the company an operating business capable of producing revenue under a long-term lease, rather than relying solely on gains in digital asset values.

Galaxy Chief Executive Officer Mike Novogratz has increasingly positioned the company around both digital asset finance and physical infrastructure. The second-quarter figures suggest that strategy is beginning to show up in reported operating income, though the company’s near-term results remain shaped by cryptocurrency market volatility and the cost of building out its Texas facilities.