Galaxy Digital suffers $554.7m second quarter net loss

Mike Novogratz’s crypto investment firm sees year-on-year losses triple

Galaxy Digital’s second quarter losses extend from $182.9m in 2021 to $554.7m in 2022 – Photo: Shutterstock

Galaxy Digital’s losses extended in the second quarter of 2022 with the financial service firm suffering with the onset of the crypto winter. 

The company suffered a $554.7m net loss for the three months to June 30, a marked increase from the $182.9m loss experienced in the second quarter of 2021. 

The loss was primarily attributed to unrealised losses on digital assets and investments in its Trading and Principal Investments division but Galaxy Digital added that record mining revenue helped offset some of its losses. 

Liquidity holds up at $1.5bn

Galaxy’s liquidity position amounted to $1.5bn, while partner’s capital stood at $1.8bn, a 23% increase on the second quarter of 2021. 

The firm’s liquidity included $1bn in cash and a net digital asset position of $474.3m, a $436.2m decline from the end of the previous quarter. Within Galaxy’s latest net digital asset position, $256.2m was held in non-algorithmic stablecoins. 

The US company’s investments suffered a $252.2m decline from the end of the first quarter to $753.9m. 

Mike Novogratz hails firm’s performance

Galaxy founder and CEO Mike Novogratz stated: “I am proud of Galaxy’s outperformance during a challenging market and macroeconomic environment. Prudent risk management, along with our commitment to exacting credit standards, allowed us to maintain over $1.5bn in liquidity, including over $1bn in cash.”

Last month, Novogratz lamented the recent crises in the cryptocurrency sector, such as with lenders Celsius and Voyager and projects such as Terra Lab’s LUNA and UST coins, which made the industry “look like a bunch of idiots”. 

He added: “What I don’t think people expected was the magnitude of losses that would show up in professional institutions’ balance sheets and that caused the daisy chain of events. It turned into a full-fledged credit crisis with complete liquidation and huge damage on confidence in the space.”

Despite losses almost tripling year-on-year, as of 8 August 2022 Galaxy Digital stock was trading up by 15.6% at $8.66 earlier today.

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