Galaxy Digital : Q4 (GDH Ltd MD A 12 31 2024 vFINAL)

Published: 2025-04-04 05:54:05 ET GLXY.TO

Galaxy Digital Holdings Ltd. Management's Discussion and Analysis

For the Years Ended December 31, 2024 and December 31, 2023

March 27, 2025

Table of Contents

Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cautionary Note Regarding Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Risks and Uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

AnnualHighlights & Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Discussion of Operations and Operational Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Instruments and Other Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Off-Balance Sheet Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commitments and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transactions with Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Critical Accounting Estimates and Accounting Policies, including Initial Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disclosure Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Management's Responsibility for Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other Information and Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Appendix - GDH LP MD&A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Introduction

This Management's Discussion and Analysis ("MD&A"), dated March 27, 2025, relates to the financial condition and results of operations of Galaxy Digital Holdings Ltd. ("GDH Ltd." or together with its consolidated subsidiaries, the "Company"), is intended to supplement and complement the Company's consolidated financial statements for the year ended December 31, 2024. The Company's only significant asset is a minority interest in Galaxy Digital Holdings LP ("GDH LP" or the "Partnership"), an operating partnership that is a technology-driven diversified financial services and investment management firm that provides institutions with a full suite of scaled financial solutions spanning the digital assets ecosystem (see Overview section). GDH LP has separately filed its consolidated financial statements and MD&A for the year ended December 31, 2024, which are available on the Company's SEDAR+ profile atwww.sedarplus.ca. The Company's MD&A should be read in conjunction with GDH LP's consolidated financial statements and MD&A. The Company has included GDH LP's MD&A as an appendix to this MD&A.

This MD&A, when read in conjunction with GDH LP's MD&A, was written to comply with the requirements of National Instrument 51-102 - Continuous Disclosure Obligations. The consolidated financial statements and MD&A are presented in U.S. dollars, unless otherwise noted and have been prepared in accordance with IFRS Accounting Standards. The results presented for the year endedDecember 31, 2024are not necessarily indicative of the results that may be expected for any future period.

The Company's certifying officers, based on their knowledge and, having exercised reasonable diligence, are responsible to ensure that the financial statements and MD&A do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the periods covered by these filings, and the financial report together with the other financial information included in these filings fairly present in all material respects the financial condition, financial performance and cash flows of the Company, as of the date of and for the periods presented in these filings.

In this MD&A, a reference to "Galaxy", "we", "us", "our" and similar words refer to the Company, GDH Ltd., its subsidiaries and affiliates, or any one of them, as the context requires.

Cautionary Note Regarding Forward-Looking Statements

This MD&A contains certain forward-looking information and forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and "forward-looking information" under Canadian securities laws (collectively referred to herein as "forward-looking statements"). These forward-looking statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans," "expects," "budget," "scheduled," "estimates," "continues," "forecasts," "projects," "predicts," "intends," "anticipates," "believes," or "seeks," or variations of, or the negatives of, such words and phrases, or state that certain actions, events or results "may," "could," "would," "should," "might," or "will" be taken, occur or be achieved. The forward-looking statements contained in this MD&A are based on our current expectations and beliefs concerning future developments and their potential effects on us taking into account information currently available to us. There can be no assurance that future developments affecting us will be those that we have anticipated. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future, including statements about Galaxy's pre-released financial information, Galaxy Asset Management's strategy to scale, Galaxy's exchange-traded funds products, Galaxy Digital Infrastructure Solutions' strategy to scale, including the Lease Agreement (as defined below) and the expansion into the artificial intelligence ("AI")/high-performance computing ("HPC") data center business, Assets Under Stake and its go-forward strategy, the focus on emerging areas of blockchain infrastructure, staking, market and industry outlook, including the adoption and utilization of blockchain technology, decentralized finance technologies, and digital asset protocols, geopolitical events, the velocity of development of new digital asset regulations, market-wide liquidity problems, prospective regulation or approvals, our ability to complete the Reorganization (as defined below), domestication and related transactions (the "Transactions"), the impact of qualified opportunity zones on future distributions, reduction in available credit or expectations regarding the industry, company performance and plans, or remediation plans. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks include, but are not limited to: (1) risks related to retrofitting our Helios campus from bitcoin mining operations to AI/HPC data center infrastructure and operations, including the timing of construction and its impact on lease revenue; (2) any inability or difficulty in obtaining financing for the expansion into the AI/HPC data center business on acceptable terms or at all; (3) changes to AI/HPC data center infrastructure needs and the impact on future plans at the Helios campus; (4) risks associated with the leasing business, including those associated with the Lease Agreement and other counterparties; the inability to complete the Transactions, due to the failure to obtain shareholder and stock exchange approvals, or otherwise; (5) changes to the proposed structure of the Transactions that may be required or appropriate as a result of applicable laws or regulations or as a condition to obtaining shareholder or stock exchange approval of the Transactions; (6) the ability to meet and maintain listing standards following the consummation of the Transactions; (7) the risk that the Transactions disrupt current plans and operations; (8) costs related to the Transactions, operations and strategy; (9) changes in applicable laws, regulations or legal proceedings; (10) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; (11) changes or events that impact the cryptocurrency industry, including potential regulation, that are outside of our control; (12) the risk that our business will not grow in line with our expectations or continue on its current trajectory; (13) the possibility that our addressable market is smaller than we have anticipated and/or that we may not gain share of it, which could impact revenue and resources; (14) the risk that revenue or expense estimates may not be met or may be materially less or more than those anticipated; (15) the possibility that Galaxy Asset Management does not achieve its goals with respect to its strategies; (16) the possibility that there is a disruption in bitcoin mining impacting our ability to achieve expected results and strategy, (17) the failure to otherwise complete the anticipated transactions with respect to the Lease Agreement, (18) the risk that lending counterparties default and risk related to digital asset platforms where our assets are maintained; (19) price and trading volume volatility with respect to the ordinary shares of Galaxy Digital Holdings Ltd.; (20) regulatory concerns, technological challenges, cyber incidents or exploits on decentralized networks; (21) any impact on our operating results and financial condition due to market-wide liquidity problems and instability in the global banking system; (22) any impact to our operations from global conflict and effect on global economic markets; and (23) those other risks contained in the Annual Information Form ("AIF") for the year ended December 31, 2024 available on the Company's profile atwww.sedarplus.caand described in this MD&A.

Factors that could cause actual results of the Company to differ materially from those described in such forward-looking statements include, but are not limited to, a decline in the digital asset market or general economic conditions; the possibility that our addressable market is smaller than we have anticipated and/or that we may not gain share of the stated addressable market; the failure or delay in the adoption of digital assets and the blockchain ecosystem; a delay or failure in developing infrastructure for our business or our businesses achieving mandates; delays or other challenges in the bitcoin mining business or the expansion into the AI/HPC data center business related to hosting, power, financing or construction, or our ability to capture potential adjacent opportunities ; any challenges faced in achieving asset management goals; any challenges faced with respect to decentralized networks or other digital asset platforms on which our assets are maintained; considerations with respect to liquidity and capital planning; the impact of new and ongoing global conflicts and their effect on global economic markets; and changes in applicable law or regulation and adverse legal and regulatory developments. Readers are cautioned that such risk factors, uncertainties and other factors are not exhaustive. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this MD&A. The forward-looking statements in this MD&A are applicable only as of the date of this MD&A or as of the date specified in the relevant forward-looking statement. The Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by applicable securities laws. Investors are cautioned that forward-looking statements are not guarantees of future performance and are inherently uncertain. Accordingly, investors are cautioned not to put undue reliance on forward-looking statements.

Overview

The Company is a holding company and its primary asset is a minority interest in GDH LP. GDH LP is a technology-driven diversified financial services and investment management firm that provides institutions with a full suite of scaled financial solutions spanning the digital assets ecosystem. GDH LP is primarily focused on digital assets and blockchain technology, and how these technological innovations will alter the way we store and transfer value. The Company's principal address is 300 Vesey Street, New York, New York 10282.

The Partnership is a limited partnership formed under the laws of the Cayman Islands on May 11, 2018. Galaxy Digital Holdings GP LLC ("GDH GP" or the "General Partner") is a limited liability company incorporated under the laws of the Cayman Islands on July 26, 2018 and serves as the General Partner of the Partnership. Galaxy Group Investments LLC, a Delaware limited liability company owned by Michael Novogratz, the Chief Executive Officer ("CEO") of the Company, is the sole member of GDH GP and continues to be the majority owner of the Partnership as of December 31, 2024. The Partnership is headquartered in New York City, with global offices across North America, Europe, and Asia.

As at December 31, 2024, the Partnership had 528 full-time employees.

Limited Partnership Agreement

The key terms of the Limited Partnership Agreement (the "LPA") are consistent with those disclosed in the Company's audited financial statements for the year ended December 31, 2024.

The LPA allows the Partnership to make distributions, as and when determined by the General Partner, in its sole discretion so as to enable unit holders to pay anticipated taxes with respect to allocated Partnership taxable income and / or gains. Amounts distributed pursuant to the tax distribution provision are treated as an advance against, and reduce (on a dollar for dollar basis), future amounts that would otherwise be distributable to such limited partners. The LPA provides that the value of any tax distribution made shall not exceed 25% of the Partnership's market capitalization determined at the time the General Partner determines to make such distribution.

During the year ended December 31, 2024, the Partnership paid tax distributions of $55.3 million.

The foregoing summary is qualified in its entirety by the full text of the LPA which is available on GDH Ltd.'s SEDAR+ profile atwww.sedarplus.ca.

Accounting for the Investment by GDH Ltd.

GDH Ltd. is deemed to have significant influence over GDH LP as it owns more than 20% of GDH LP and it has representation on the board of the General Partner of the Partnership. As a result, the Company accounts for its investment in the Partnership under the equity method.

As the Company's interest in GDH LP is based on its proportional ownership of the Class A Units, the Company performs regular assessments to determine whether its economic and voting interests result in control of GDH LP. The Company receives additional Class A Units of the Partnership upon exchange of Class B Units of the Partnership for ordinary shares of the Company and upon issuance of new shares on exercise of options and restricted share units. Under IFRS accounting guidance, an investor controls an investee if and only if the investor has all of the following:

• power over the investee;

• exposure, or rights, to variable returns from its involvement with the investee; and

• the ability to use its power over the investee to affect the amount of the investor's returns.

While there are many factors that need to be considered for the evaluation of control, an important factor would be when GDH Ltd. obtains the ability to replace the general partner.

Description of Business

The Partnership manages and reports its activities in the following operating businesses: Global Markets, Asset Management and Digital Infrastructure Solutions. Refer to Note 22 of the Partnership's consolidated financial statements for further information on reportable segments.

Global Markets

Galaxy Global Markets ("GGM") provides comprehensive financial products and services to a diversified client base, including institutions and Qualified Individuals1 within the digital asset ecosystem. GGM offers institutional-grade expertise and access to a broad range of digital asset products, including digital asset spot and derivatives trading, financing, capital markets and M&A advisory services.

GGM currently operates as two discrete businesses - Trading and Investment Banking.

The Partnership's Trading2 business provides services to 315 global active counterparties as of December 31, 2024 and provides liquidity on a principal basis across a variety of centralized and decentralized trading platforms, and over-the-counter markets globally. Through GGM, counterparties can access digital asset spot and derivative trading, bespoke lending, and structured products. GGM also engages in proprietary quantitative, arbitrage and macro trading strategies.

1 "Qualified Individuals" are Eligible Contract Participants (as defined by the Commodities Exchange Act in the U.S.), knowledgeable employees of the Partnership and accredited investors, who are usually high net worth individuals.

2 Trading operates primarily through Galaxy Digital LLC, its subsidiaries and certain other affiliates including Galaxy Derivatives LLC ("GDL") (which has submitted to the National Futures Association ("NFA") the forms necessary to register as a CFTC-regulated swap dealer).

Our Investment Banking3 business offers expert financial and strategic advisory services for the digital assets, Web3 and blockchain technology sector. The team provides specialized crypto expertise while offering an expansive suite of financial services to public and private clients globally. In particular, Investment Banking helps clients execute transactions, including M&A transactions and divestitures, provides restructuring advisory services and offers equity and debt capital markets services, including project financing.

Asset Management

Galaxy Asset Management ("GAM")4 is a global asset management platform providing investors access to the digital asset ecosystem via a diverse suite of institutional-grade investment vehicles that span ETF and Alternative investment strategies.

GAM managed $5.7 billion5 in assets as of December 31, 2024, a 9% increase year-over-year and 22% increase quarter-over-quarter. $511.0 million of the $5.7 billion of assets under management ("AUM") represented engagements managed by GAM to unwind portfolios on behalf of the FTX estate. Excluding these opportunistic assets, GAM's AUM grew 66% year-over-year to $5.2 billion as of December 31, 2024, driven by $1.7 billion of gross inflows and $1.9 billion of net market appreciation, partially offset by $1.5 billion of gross outflows, and increased 22% quarter-over-quarter as of December 31, 2024, driven by $213.0 million of gross inflows and $1.2 billion of net market appreciation, partially offset by $435.0 million of gross outflows. The business is strategically focused on scaling its ETF and Alternative investment strategies, while leveraging a regional partnership model, with premiere local investment managers around the world, to expand our global product reach.

GAM's ETFs include a suite of passive and active products developed in partnership with leading asset managers across the U.S., Canada, Brazil and Europe. GAM's passive ETFs feature regulated, spot digital asset ETFs, while its active ETFs provide exposure to digital assets and other disruptive technologies. GAM's Alternative investment strategies encompass actively managed long-biased and long-short funds, and a venture franchise. GAM offers a Liquid Crypto Fund designed to provide access to both core and next generation digital assets and an Absolute Return Fund, launched in 2025, which employs a multi-asset strategy with long and short positions across the digital asset ecosystem and adjacent disruptive technologies. GAM's Venture franchise includes Galaxy Interactive, which invests at the intersection of content, technology and social commerce, with a focus on video games and the infrastructure powering immersive virtual worlds. Additionally, its inaugural crypto venture fund, which had an initial close of over $100 million in summer 2024, targets early-stage investments in crypto protocols, software infrastructure, and financialized applications. The venture franchise also features two global, multi-manager venture funds and a subset of Galaxy's balance sheet venture investments.

GAM utilizes third party Qualified Custodians, as defined by the U.S. Investment Advisers Act of 1940, for third party funds it manages to maintain and safeguard client assets, which are segregated from the assets of the custodians. Where possible, as a further risk mitigation tool, GAM employs a multi-custodial model for fund assets and requires insurance from our custody providers. GAM utilizes Big Four audit firms to audit our funds and utilizes independent, unaffiliated fund administrators for all our funds.

Digital Infrastructure Solutions

Galaxy Digital Infrastructure Solutions ("GDIS") focuses on developing, operating and investing in data center and digital asset infrastructure, including bitcoin mining, staking and self-custody technology.

GDIS includes our bitcoin mining operations, with a majority of our activity occurring at our flagship campus, Helios, in West Texas. As of December 31, 2024, GDIS' Hashrate Under Management6 was 6.1 exahash, with an average marginal cost to mine a bitcoin in 2024 of approximately $26,000 per coin. The Helios campus currently supports 200 megawatts ("MW") of capacity. In 2023, GDIS secured approvals to scale up to 800MW at Helios, and we expect additional approvals for a portion of an incremental 1.7 gigawatts currently under study in the first half of 2025.

As our bitcoin mining operations have expanded, so have the opportunities before us. There is growing demand for highly reliable power and data center infrastructure capacity to support accelerated artificial intelligence growth. To meet this increasing demand, subsequent to year end, Galaxy entered a 15-year lease agreement (the "Lease Agreement") with CoreWeave. As part of the agreement, Galaxy will deliver 133 MW of Critical IT Load to host CoreWeave's HPC

3 Galaxy Investment Banking operates through Galaxy Digital Partners LLC, a FINRA registered broker-dealer, and Galaxy Digital Labs LLC.

4 Galaxy Asset Management includes Galaxy Digital Capital Management LP, a Securities & Exchange Commission ("SEC") registered investment adviser.

5 AUM data is unaudited. AUM is inclusive of sub-advised funds, committed capital closed-end vehicles, seed investments by affiliates, affiliated and unaffiliated separately managed accounts, and fund of fund products. Changes in AUM are generally the result of performance, contributions, withdrawals, liquidations, and opportunistic mandate wins. AUM for committed capital closed-end vehicles that have completed their investment period is reported as NAV plus unfunded commitments. AUM for closed-end vehicles is reported as of the most recent quarter available for the applicable period. AUM for affiliated separately managed accounts, the balance sheet venture investments, is reported as NAV as of the most recently available estimate for the applicable period.

6 Hashrate Under Management is defined as the total combined hashrate of active proprietary and hosted mining capacity managed by Galaxy.

infrastructure at our Helios data center campus in the panhandle region of West Texas. Over the 15-year term, Galaxy is contractually entitled to an estimated $4.5 billion of total revenue pursuant to the Lease Agreement.

In addition to mining and high-performance computing, the Partnership is also focused on emerging areas of blockchain infrastructure, including supporting the integrity of protocols and projects by operating validator nodes to secure blockchain networks, by supporting the development of emerging blockchain technologies and by offering self-custody technology solutions to institutional customers through GK8. Galaxy operates public mainnet infrastructure providing transaction validation services for the Ethereum, Solana, Celestia, Avalanche and SUI blockchain networks, among others, which allows holders of certain digital assets to participate in securing Proof of Stake networks and the consensus validation process, as well as earn staking rewards.

Risks and Uncertainties

In addition to the risks contained herein, the disclosures in this MD&A are subject to, and should be read in conjunction with, the risk factors outlined in the AIF, filed on the Company's SEDAR+ profile atwww.sedarplus.ca, and in the Partnership's MD&A Risks and Uncertainties section.

Annual Highlights & Results

The following represents selected financial data and a discussion of significant changes.

(in millions)

December 31, 2024

December 31, 2023

December 31, 2022

Cash

1.8

0.8 $ 10.0

95.8

66.0 45.2

Investment in associate Receivable from associate Total assets

1,004.9

763.9 257.8

1,121.3

875.2 394.3

98.2

94.2 9.5

Total liabilities Shareholders' equity

1,023.1

781.0 299.3

Year ended

(in millions)

December 31, 2024

December 31, 2023

December 31, 2022

Operating expenses

(Impairment) reversal of impairment on investment in associate

- $

122.2

97.2

(334.0)

390.9

(252.5)

Income (loss) and comprehensive income (loss) for the

period before taxes

130.7

493.2

(578.6)

Equity income (loss) from associate

• As the only significant assets of GDH Ltd. relate to its minority interest in and associated receivable from GDH LP, the Company's results are driven by the results of GDH LP. For additional information on the results of GDH LP, see Annual Highlights & Results, Performance by Reportable Segment, and the Financial Instruments, Digital Assets and Risk sections of GDH LP's MD&A, which is filed as an appendix to this MD&A. GDH Ltd. accounts for its investment in this associate, GDH LP, using the equity method. The investment, initially recorded at cost, is increased or decreased to recognize GDH Ltd.'s share of the earnings and losses of GDH LP. As of December 31, 2024, the investment in associate was $1,004.9 million, an increase of $241.0 million for the year ended primarily as a result of an additional investment in GDH LP, concurrent with the capital raise, and the Company's share of income from its investment in associate.

• As of December 31, 2024, total assets stood at $1,121.3 million (December 31, 2023 - $875.2 million), an increase of $246.1 million for the year ended, driven by an additional investment in GDH LP, concurrent with the capital raise, and the Company's recognition of its share of income for the period from its investment in associate.

• The Company had no net and minimal gross operating expenses for the year ended December 31, 2024 and 2023. Gross operating expenses incurred for the year ended December 31, 2024 of $3.2 million (December 31, 2023 - $2.2 million) were reimbursed by GDH LP.

• The comprehensive income for the year ended December 31, 2024 was $78.9 million (December 31, 2023 - $454.8 million), a decrease of $375.9 million for the year ended, primarily due to the reversal of impairment of investment

in associate during the year ended December 31, 2023, partially offset by an increase in the Company's recognition of its share of income (loss) from its investment in GDH LP.

• As indicated in the Liquidity and Capital Resources section, the Company is dependent on financial support from GDH LP, which has the obligation to reimburse the Company for all reasonable operational expenses per the LPA.

Other

The following table summarizes Net income (loss) and comprehensive income (loss) for the past eight quarters:

(in millions)

Three months ended

December 31,

September 30,

March 31,

December 31,

September 30,

March 31,

2024

2023

June 30, 2024

June 30, 2023

34.8 $

(16.4) $

(49.4) $

110.0 $

371.6 $

(68.8) $

60.4 $

91.6

Discussion of Operations and Operational Highlights

The Company is a holding company and its primary investment is a minority interest in GDH LP. As the Company accounts for its investment under the equity method (i.e. initially recognizing the investment at cost and then subsequently increasing or decreasing the investment carrying value to recognize the Company's share of earnings and losses of GDH LP and for impairment losses, if any), the results of GDH LP significantly impact the Company's performance. For additional information on the operations and operational highlights and financial results of GDH LP, see Discussion of Operations and Operational Highlights and Results, and Annual Highlights & Results sections of GDH LP's MD&A, which is filed as an appendix to this MD&A.

• Helios

Subsequent to year end, further to the term sheet announced in November 2024, Galaxy entered into the Lease Agreement with CoreWeave, one of the world's leading providers of artificial intelligence and next-generation cloud services. As part of this agreement, Galaxy will deliver 133 MW of Critical IT Load to host CoreWeave's AI infrastructure and HPC services.

• Capital Raise and Debt Issuance

In April 2024, GDH Ltd. raised C$169.4 million from a syndicate of underwriters (the "Equity Raise"), led by Canaccord Genuity Corp. GDH Ltd. issued 12,100,000 ordinary shares pursuant to the Equity Raise. Galaxy is utilizing the net proceeds as intended for working capital and general corporate purposes.

In November 2024, Galaxy issued $402.5 million, aggregate principal amount, of 2.500% exchangeable senior notes (the "2029 Exchangeable Notes"). The 2029 Exchangeable Notes will mature in 2029, unless earlier exchanged, redeemed, or repurchased. Interest on the 2029 Exchangeable Notes is payable semi-annually. The 2029 Exchangeable Notes had an initial exchange rate of 10,497.5856 ordinary shares of GDH Ltd. per US$250,000 principal amount.

• Acquisitions

On July 18, 2024, the Partnership acquired the assets of Cryptomanufaktur LLC ("CMF") for approximately $12.4 million of cash and equity, inclusive of contingent consideration of approximately $5.5 million payable by the Partnership if CMF achieves certain financial and operating targets by the end of 2026. CMF provides staking infrastructure, primarily on the Ethereum blockchain, as well as data oracle services. 359,919 ordinary shares were issued as initial consideration in connection with this acquisition. Subsequent to year end an additional 76,573 ordinary shares were issued for milestone consideration. An equivalent number of Class A Units of the Partnership were issued to the Company.

On December 9, 2024, the Partnership acquired all the shares of Fierce Technology, Inc. ("Fierce") for $12.5 million of cash and equity. Fierce provides financial application software to enable users' trading and banking services. 427,723 ordinary shares were issued in connection with this acquisition. An equivalent number of Class A Units of the Partnership were issued to the Company.

Corporate Overview

GDH Ltd. Reorganization and Domestication: On May 5, 2021, Galaxy announced that its board of directors approved a proposed reorganization and domestication (the "Reorganization") of GDH Ltd. and the Partnership. Under the proposed terms of the Reorganization: GDH Ltd. and the Partnership will change their jurisdiction of incorporation from the Cayman Islands to the state of Delaware. Galaxy's corporate and capital structure will be reorganized so as to normalize it on the basis of frequently used Up-C structures in the U.S. The Reorganization is subject to ongoing SEC review and stock exchange approval and will include the following steps:

◦

Galaxy Digital Inc. ("PubCo"), a new Delaware holding company, has been established and will become the successor public company of GDH Ltd., with all outstanding Galaxy ordinary shares becoming Class A shares of PubCo.

◦

Michael Novogratz, the Chief Executive Officer (the "CEO") and founder of Galaxy, who currently controls the General Partner of the Partnership, will transfer control of the Partnership's General Partner to PubCo.

◦

PubCo will issue new voting securities to the CEO and other holders of Class B Units of the Partnership that will entitle them to vote (but not hold any economic rights) at the PubCo level, as though they had converted their existing Class B Units of the Partnership for shares of PubCo.

◦

The "variable voting rights" attached to the ordinary shares of Galaxy that currently restrict the aggregate votes that may be cast by U.S. shareholders will be eliminated.

◦ PubCo intends to apply to list its Class A common stock on Nasdaq under the symbol "GLXY." The purpose and business reasons for the Reorganization include:

◦

Expectation of enhanced shareholder value through increased access to U.S. capital markets, improved flexibility for future equity and debt capital market needs, and an increased profile for Galaxy in the U.S.

◦ ◦ ◦

Normalization of Galaxy's corporate and capital structure.

Facilitation of any future acquisitions.

Simplification of the equity structure and alignment of all stakeholders' interests at the PubCo level.

Financial Instruments and Other Risk

The Company is directly exposed to minimal financial instrument related risks. The board of directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into, causing the other party to incur a financial loss. The Company's primary exposure to credit risk is on its cash and the Promissory Note ("as defined below") due from the Partnership. Credit risk on its cash exposure is managed by using a major bank that is a high credit quality financial institution as determined by rating agencies. As at December 31, 2024, the Company's credit risk exposure was not deemed to be significant.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they become due, as well as the risk of not being able to liquidate assets at reasonable prices. The Company's ability to continue as a going concern is dependent on management's ability to raise required funding through future equity issuances, as well as the liquidity of and financial support from GDH LP. The Company manages its liquidity risk by anticipating any operating, investing and financing activities, as applicable. Management and the board of directors are actively involved in the review, planning and approval of significant expenditures and commitments. Furthermore, under the LPA, GDH LP is responsible for reimbursing the Company for all reasonable operating expenses, excluding taxes. GDH Intermediate LLC ("GDHI LLC"), the Company's consolidated subsidiary, may recall the Promissory Note from GDH LP at any time during the term of the note as obligations of the consolidated GDH Ltd. group come due, including taxes. The Company is not currently exposed to significant liquidity risk.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry, or the financial services industry generally, or concerns or rumors about any such events or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, in March 2023, Silvergate Capital Corp. announced it would wind down operations and liquidate Silvergate Bank. Soon after, the FDIC was appointed receiver of Silicon Valley Bank and Signature Bank. In connection with these issues and issues with other financial institutions, the prices of fiat-backed stablecoins, including USDC, were temporarily impacted and may be similarly impacted again in the future. Although Galaxy did not experience any losses or other material negative impacts from our banking relationships with Silvergate Bank and Signature Bank, if there were instability in the global banking system, there could be negative ramifications, such as additional market-wide liquidity problems or impacted access to deposits and investments for customers of affected banks and certain banking partners, and our business, operating results and financial condition could be adversely affected.

Interest rate risk

The Company's only interest-bearing instrument is its Promissory Note with the Partnership. The Promissory Note has a fixed interest rate that is updated from time to time to reflect the market rates. There are no scheduled changes to the interest rate. The Company's financial results, therefore, are not sensitive to changes in interest rates.

Foreign exchange risk

The Company's functional currency and the reporting currency is the U.S. dollar. Periodically the Company incurs charges on its operations for settlement in currencies other than its functional currency. Any gain or loss arising on such transactions is recorded in operations for the period. The Company is not currently exposed to significant foreign exchange risk.

Digital assets and market risks

The Company's investment in GDH LP is impacted by GDH LP's investments in digital assets as well as private companies, both of which may be subject to significant changes in value. The Company seeks to minimize potential adverse effects of these risks on performance by ensuring that GDH LP risk management appropriately addresses these risks by, for example, employing experienced personnel, daily monitoring of the Partnership's investments and digital assets and review of the Partnership's investment objectives.

For additional information on GDH LP's exposure to financial instruments and other risks, see Financial Instruments, Digital Assets and Risk section of GDH LP's MD&A, which is filed as an appendix to this MD&A.

Liquidity and Capital Resources

Financial support

As the Company is a holding company, it is dependent on GDH LP to fund its operating expenses. In accordance with the LPA, GDH LP will pay for all reimbursable expenses of GDH Ltd. or its subsidiary, GDH Intermediate LLC including all expenses reasonably incurred in the conduct of its business such as fees paid to professional advisors, required or advisable licenses and filing fees, and directors fees. For the year ended December 31, 2024, GDH LP paid or accrued $3.2 million (December 31, 2023 - $2.2 million) for the reimbursable expenses on behalf of GDH Ltd.

GDH LP issued $500 million, aggregate principal amount, of 3.00% exchangeable senior notes (the "2026 Exchangeable Notes") on December 9, 2021 and $402.5 million, aggregate principal amount, of 2.500% exchangeable senior notes on November 25, 2024 (the "2029 Exchangeable Notes" and, together with the 2026 Exchangeable Notes, the "Exchangeable Notes"). Outstanding 2026 Exchangeable Notes and 2029 Exchangeable Notes will mature and the aggregate principal amount is due in 2026 and 2029, respectively, unless earlier exchanged, redeemed or repurchased. Interest on the Exchangeable Notes is payable semi-annually. There were no origination discounts or premiums associated with the notes. The 2026 Exchangeable Notes had an initial exchange rate of 7,498.2210 ordinary shares per US$250,000 principal amount and the 2029 Exchangeable Notes had an initial exchange rate of 10,497.5856 ordinary shares per US$250,000 principal amount. All Exchangeable Notes issued are subject to certain selling and transfer restrictions set forth in each investor's note purchase agreement and as set forth in the indenture that governs the Exchangeable Notes. As of December 31, 2024 the total amount for Notes payable was $845.2 million (December 31, 2023 - $408.1 million), net of repurchases ($847.5 million and $445 million in principal outstanding as of December 31, 2024 and December 31, 2023, respectively).

Disclaimer

Galaxy Digital Holdings Ltd. published this content on April 04, 2025, and is solely responsible for the information contained herein. Distributed via , unedited and unaltered, on April 04, 2025 at 09:53 UTC.