Galaxy Digital Turns $1.7b Net Income from 2021 to $1b Loss in 2022

Wednesday, 29/03/2023 | 09:47 GMT by Damian Chmiel
  • The drop in Bitcoin's price has taken its toll on financial results.
  • However, 2023 began with positive changes in the market dynamics.
Galaxy Digital Sees $111.7m Net Loss as Digital Asset Price Falls within Q1
Galaxy Digital's logo

The publicly-listed cryptocurrency company founded by an American investor Michael Novogratz, Galaxy Digital Holdings (TSX:GLXY) has published its full-year results for 2022. Galaxy showed a massive net loss due to the prolonged crypto winter dominating the previous year.

Crypto Winter Hits Galaxy Digital Hard

In Wednesday's press release, Galaxy announced the fourth quarter, the full year and preliminary first quarter-to-date results. The company showed a massive net loss of $1.0 billion for the year ended 31 December 2022, compared to a net income of $1.7 billion for the same period a year earlier. In the meantime, the fourth quarter ended with a net loss of $287.8 million compared to $521.3 million reached in Q4 2021.

Galaxy explains the poorer performance primarily by the 64% drop in the price of Bitcoin (BTC) over 2022. In January, BTC cost $46,500, ending the year at $16,500. Ethereum (ETH) also saw a similar depreciation, falling from $3,700 to $1,200. The crypto winter negatively affected the performance of other companies in the sector, including digital asset miners.

"2022 was a formative year for Galaxy, and while we and our industry faced unprecedented macroeconomic events, we succeeded in staying the course and were able to opportunistically take advantage of strategic opportunities to build our operating businesses for the future. I have never been more confident in our go-forward strategy, businesses, and team," Michael Novogratz, the Founder and CEO of Galaxy Digital, commented in a press release.

Galaxy Digital's shares saw a sharp decline in 2022. Source: Tradingview.com
Galaxy Digital's shares saw a sharp decline in 2022. Source: Tradingview.com

At the end of 2022, Galaxy had 104 portfolio companies, in which it holds 145 investments. In Q4 2022, it invested in Veridise, a verification platform that conducts security audits for DeFi applications. Novogratz's company is still exploring other opportunities in the investment space.

2023 Paints Brighter Future for Galaxy Digital

The beginning of 2023, in which cryptocurrencies saw a rebound after the severe declines of 2022, started off decidedly better. Between early January and 24 March 2023, the company generated income before tax of $150 million. In the months ahead, Galaxy will focus on organically building its platform during the bear market and scaling and integrating recent strategic acquisitions.

Galaxy anticipates earning net profits in its operating businesses and positive gains from its liquid coin and investment holdings on its balance sheet for the entire Q1 2023. The increased market volatility and volumes from existing counterparties positively impacted the company's operating business.

"The Company continues to lead from a position of strength, remaining open for business for our clients and counterparties. And as the market has improved year to date, we have generated approximately $150 million of income before tax while retaining a strong liquidity position through 24 March 2023," Novogratz added.

Galaxy Mining has increased its capacity by 100% since the start of 2022 by integrating the Helios site, which was acquired at the end of last year. The company aims to have over 4 EH/s of Hashrate Under Management by the end of 2023, with self-mining accounting for about 50% of the total.

The publicly-listed cryptocurrency company founded by an American investor Michael Novogratz, Galaxy Digital Holdings (TSX:GLXY) has published its full-year results for 2022. Galaxy showed a massive net loss due to the prolonged crypto winter dominating the previous year.

Crypto Winter Hits Galaxy Digital Hard

In Wednesday's press release, Galaxy announced the fourth quarter, the full year and preliminary first quarter-to-date results. The company showed a massive net loss of $1.0 billion for the year ended 31 December 2022, compared to a net income of $1.7 billion for the same period a year earlier. In the meantime, the fourth quarter ended with a net loss of $287.8 million compared to $521.3 million reached in Q4 2021.

Galaxy explains the poorer performance primarily by the 64% drop in the price of Bitcoin (BTC) over 2022. In January, BTC cost $46,500, ending the year at $16,500. Ethereum (ETH) also saw a similar depreciation, falling from $3,700 to $1,200. The crypto winter negatively affected the performance of other companies in the sector, including digital asset miners.

"2022 was a formative year for Galaxy, and while we and our industry faced unprecedented macroeconomic events, we succeeded in staying the course and were able to opportunistically take advantage of strategic opportunities to build our operating businesses for the future. I have never been more confident in our go-forward strategy, businesses, and team," Michael Novogratz, the Founder and CEO of Galaxy Digital, commented in a press release.

Galaxy Digital's shares saw a sharp decline in 2022. Source: Tradingview.com
Galaxy Digital's shares saw a sharp decline in 2022. Source: Tradingview.com

At the end of 2022, Galaxy had 104 portfolio companies, in which it holds 145 investments. In Q4 2022, it invested in Veridise, a verification platform that conducts security audits for DeFi applications. Novogratz's company is still exploring other opportunities in the investment space.

2023 Paints Brighter Future for Galaxy Digital

The beginning of 2023, in which cryptocurrencies saw a rebound after the severe declines of 2022, started off decidedly better. Between early January and 24 March 2023, the company generated income before tax of $150 million. In the months ahead, Galaxy will focus on organically building its platform during the bear market and scaling and integrating recent strategic acquisitions.

Galaxy anticipates earning net profits in its operating businesses and positive gains from its liquid coin and investment holdings on its balance sheet for the entire Q1 2023. The increased market volatility and volumes from existing counterparties positively impacted the company's operating business.

"The Company continues to lead from a position of strength, remaining open for business for our clients and counterparties. And as the market has improved year to date, we have generated approximately $150 million of income before tax while retaining a strong liquidity position through 24 March 2023," Novogratz added.

Galaxy Mining has increased its capacity by 100% since the start of 2022 by integrating the Helios site, which was acquired at the end of last year. The company aims to have over 4 EH/s of Hashrate Under Management by the end of 2023, with self-mining accounting for about 50% of the total.

About the Author: Damian Chmiel
Damian Chmiel
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About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
  • 1588 Articles
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