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    Galaxy Digital Inc. (GLXY)

    GLXY Q4 2024: 133MW CoreWeave Deal to Drive $240M Revenue, 90% EBITDA

    Reported on May 15, 2025
    Pre-Earnings PriceN/ADate unavailable
    Post-Earnings PriceN/ADate unavailable
    Price ChangeN/A

    What went well

    • CoreWeave Partnership & Revenue Potential: The deal with CoreWeave locks in 133 MW of IT capacity, which is projected to generate approximately $240 million in revenue in the first 12 months and an average of $300 million annually over 15 years, with EBITDA margins expected to meet or exceed 90%. This strong contractual framework and expansion options (including an additional 600 MW) support a bullish outlook.
    • Regulatory Tailwinds & Technological Leadership: The call highlighted progress on critical regulatory hurdles—such as the impact of the SAB 121 repeal—and the successful advancement of the GK8 custody software licensing for stablecoin operations, providing Galaxy with a competitive position in a rapidly evolving digital asset space.
    • Robust Financing & CapEx Efficiency: Galaxy is following a disciplined capital deployment strategy with a projected CapEx of $11–$13 million per MW for the data center build-out, supported by an 80-20 debt-to-equity financing structure and strong refinancing potential upon reaching commercial operation. This efficient cost structure underpins future growth and profitability.

    What went wrong

    • High CapEx risk and execution uncertainty: The transition of the Helios campus from Bitcoin mining to an AI data center relies on significant, expensive CapEx—$11–$13 million per megawatt—with evolving design specifications and additional civil work needed for future phases, which could lead to cost overruns or delays.
    • Ongoing regulatory uncertainty for crypto and stablecoin initiatives: Despite positive moves like the SAB 121 repeal, regulatory hurdles remain—especially around stablecoin legislation and market structure—which could slow down the adoption of their GK8 custody technology and disrupt future revenue realization.
    • Short-term earnings volatility from crypto market exposure: The company expects a Q1 pretax loss between $275 million and $325 million, driven by volatile crypto asset values and a reduction in client activity, indicating potential near-term earnings pressure.

    Q&A Summary

    1. Deal Specs Impact
      Q: Impact on revenue/margin for extra 600MW?
      A: Management indicated that under future phases, additional capacity is expected to deliver a fixed annual yield with an average of $300 million in annual revenue over a 15‐year term and maintain EBITDA margins of around 90%, reflecting a collaborative partnership with CoreWeave.

    2. Margin Sustainability
      Q: Can you confirm 90% EBITDA margin targets?
      A: They confirmed that nearly all operating and maintenance expenses are passed to the tenant, so excluding Galaxy’s on‐site personnel costs, margins are targeted to meet or exceed 90% EBITDA.

    3. CapEx Funding
      Q: What are the Helios CapEx funding details?
      A: Management explained that Helios will be financed on an 80-20 debt-to-equity basis with project financing costs around 10-11% yield, establishing clear funding and future refinancing potential.

    4. Capacity Options
      Q: Is the extra 600MW exclusive to CoreWeave?
      A: They noted that while the remaining capacity is currently under option with CoreWeave in various tranches, Galaxy remains free to engage with other market participants if opportunities arise, demonstrating high confidence in contracting the space.

    5. Lease Yield
      Q: Are lease yields fixed on new capacity?
      A: The deal structure provides for a fixed yield based on CapEx costs that is expected to hold for new phases, built on a collaborative design process with CoreWeave.

    6. Construction Timeline
      Q: What’s the timeline for Phase 1 data halls?
      A: Management described a clear schedule with Phase 1 data halls expected to begin delivery in early 2026, with construction development ramping through 2025.

    7. Lease Prepayment
      Q: Was any revenue prepayment attached to the lease?
      A: They clarified that for Phase 1 of the deal, there was no revenue prepayment, with future execution expected to match CoreWeave’s rapid expansion needs.

    8. Redundant Power
      Q: How does redundant power affect CapEx costs?
      A: The CapEx estimate of $11-13 million per MW includes building true Tier 3 N+1 redundancy for all systems, ensuring robust reliability and higher upfront costs due to dual power paths.

    9. PUE Specs
      Q: Can you explain the 1.5 PUE design?
      A: The design targets a 1.5 PUE at peak conditions by leveraging excess gross power capacity (about 200 MW for 133 MW critical IT), ensuring efficiency even on high-demand days.

    10. CapEx Components
      Q: Will upfront CapEx investments recur?
      A: Management mentioned that certain investments, like long-haul fiber, are sitewide and will benefit multiple phases, reducing per-megawatt costs over time despite some initial expedited equipment expenses.

    11. Option Terms
      Q: Are the extra options on a ROFR basis?
      A: They confirmed that the additional 600 MW options are not on a ROFR basis, meaning Galaxy is free to discuss possibilities with other potential tenants while focusing on CoreWeave.

    12. Options Timeline
      Q: What is CoreWeave’s option timeframe?
      A: Although specific time frames weren’t disclosed, Galaxy is actively coordinating with CoreWeave to lock in capacity in the near term, with clarity expected well before long-term deadlines pass.

    13. Term Sheet Process
      Q: How many counterparties were involved in the term sheet?
      A: The process was robust; an adviser helped engage with several market participants, though the ultimate term sheet was signed solely with CoreWeave, reflecting a selective process.

    14. M&A Outlook
      Q: Is M&A on the radar given undervalued stock?
      A: Management stated that although private sellers are active, current stock undervaluation makes Galaxy more cautious about acquisitions until market valuation improves post-U.S. listing and data center clarity.

    15. Crypto Themes
      Q: What themes will drive 2025 crypto cycle?
      A: They emphasized stablecoins and tokenized assets will accelerate, with a focus on regulatory clarity and infrastructure enabling broader adoption, marking significant near-term opportunities.

    16. US Bitcoin Reserve
      Q: Will the US government buy more Bitcoin?
      A: Management hinted that sentiment is shifting, with indications that increased Bitcoin buying from the US could prompt other nations to follow, although execution may occur later in the year.

    17. GK8 Custody
      Q: What’s the update on GK8 post-SAB 121 repeal?
      A: Following the repeal, the outlook for GK8 custody software remains promising as management sees it as a key enabler for institutions, with ongoing progress and strong interest from international partners.

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