Galaxy Bridges Crypto and Asset Management with AI Data Centers

Galaxy is a crypto infrastructure company that is branching out to power AI data centers. Unlike the other Bitcoin miners we have covered recently, Galaxy is deeply entrenched in the crypto industry and will continue its crypto operations while expanding to build an AI campus in Texas called “Helios.”

On the crypto side, Galaxy offers trading, crypto wallet, custody staking and tokenization. They also offer investment products including a treasury for Solana and recently handled one of the largest trades in Bitcoin’s history at $9 billion. They provide infrastructure for popular Layer-1 crypto company Solana, including being a node validator and helping both Solana and Ethereum to offer liquid staking to institutions. In total across all of the funds and investment products, Galaxy has $9 billion AuM.

When it comes to data center capacity among the Miners, Galaxy is pursuing one of the largest with a planned 3.5GW of data center capacity. However, management stated they will not see a big impact on revenue until 12-24 months from now: “I do think, to highlight what Chris said, this next 12 months is really important because we go from putting out a lot of money to having an asset that starts spitting out cash. And once 12 months from now, 24 months from now, Helios becomes a big cash generator for us, it allows a lot more flexibility in how we deploy capital.”

There will be an initial impact on revenue come Q1 2026. CoreWeave is the only customer for Galaxy at this time with the company beginning to recognize revenue at the start of next year: “As a reminder, in the Data Center segment, we do not expect to report financial results until Q1 of 2026 when we begin recognizing revenue from CoreWeave under Phase 1 of our lease agreement.”

There are puts and takes to Galaxy having a successful, core operation in crypto while also expanding into AI energy. The company only recently began trading on the Nasdaq after being on the Toronto Exchange (TSX) for about five years. The operating margin of 3.4% is better than other Miners due to crypto infrastructure and investment services that offset any losses from mining. However, this may be inconsequential over time given data center deals are high margin. One could argue the lack of focus may make it difficult to compete in two highly competitive markets.

As discussed further in the call, Galaxy will become more attractive once it diversifies beyond CoreWeave and/or once we are nearer to more substantive delivery of the Helios campus.

Below, we look at what separates Galaxy and a few items we’d like to see before initiating a position.

Helios Campus is Massive, and is a Top 5 or Top 10 Data Center Site

Galaxy’s Helios offers 3.5GW of power with management stating this likely qualifies them for a Top 5 data center site: “We executed and bought another 1 gigawatt of potential capacity around the Helios site. That would make that a 3.5-gigawatt site, got to be one of the top 5 data centers in the world if we get that fully built out.”

Here is the timing for how that’s expected to come online:

CoreWeave is committed to the 800MW currently approved at the site. This is considered Phase 1, Phase 2 and Phase 3.
Of this Phase 1 is expected to deliver 133MW “throughout the first half of 2026.”
The company is moving toward breaking ground on Phase 2
Timeline is not clear on the additional GWs yet but it was stated there would be an acceleration of sorts on ERCOT approval to where the additional 1GW recently added would likely be approved on the timeline of the 1.7GW that has been under approval. Here is what was stated: “So I would think about the additional 1 gigawatt of interconnect request at the land we are acquiring to be somewhat on par with our existing 1.7 gigawatts in the backlog. And so think about 1.7 gigawatts going to 2.7 gigawatts in terms of timeline.”

When you combine the fact that management has stated Helios will become a big generator of cash in 12 to 24 months from now, it’s likely they are referring to the 1.7GW to 2.7GW being built out and energized.

One thing that stood out in Galaxy’s commentary was (at this time) they do not have other customers in the pipeline beyond CoreWeave, stating “I think our partnership with CoreWeave is going to take up the vast majority of our attention over the next few years.”

Funding Remains the Hurdle

By now, you may be noticing a theme which is that real estate is the easy part, and even access to GPUs is easing, yet powering the data centers and funding these massive projects remain the bigger hurdles.

Galaxy ended Q2 with $2.6 billion in equity capital, up more than $700 million sequentially. This increase was fueled by the $480 million primary capital raise in May, appreciation in digital assets and balance sheet investments, and a $292 million one-time accounting adjustment from the corporate reorganization. This equity raise is allocated for Phase 1 Helios (133 MW) and project debt financing is nearly complete.

While Phase 1 is essentially de-risked from a funding standpoint, it represents just a fraction of Helios’ full 3.5GW potential. At management’s estimated capex of $11-13 million per MW, Phase 1 requires roughly $1.5 billion of total spend. Scaling Phases 2 and 3 to reach the multi-gigawatt buildout will demand tens of billions in additional capital, well beyond the cash and balance sheet equity Galaxy has today. Management has flagged private equity partnerships and refinancing strategies as potential levers, but the implied cost of capital (~10-11%) underscores the financing challenges ahead.

The takeaway is that the Phase 1 financing is locked in, but the enormity of capital required for subsequent phases remains a gating factor for realizing Helios’ 3.5GW vision.

Galaxy has secured funding only for Phase 1 thus far, leaving the far majority of the 3.5GW open in terms of how to raise the capital to expand the Helios site.

Here is what was shared on the earnings call: “As a reminder, the equity portion of Phase 1 has already been funded through our existing equity capital. Once we have secured the project level debt financing, we will have the capital necessary to fund the anticipated CapEx for Phase 1 of approximately $11 million to $13 million per megawatt. For Phase 2, we are still finalizing the design and engineering specifications, but expect the total project CapEx to be slightly higher than the Phase 1 on a per-megawatt basis. We have already commenced work on project level debt financing for the Phase 2 project. Throughout the Phase 1 financing processes, we've established strong relationships with a wide range of banks and private credit managers who are active in the space, and I have confidence in our ability to secure debt financing for Phase 2 in the coming months.”

The company called out potential private equity deals as one source of capital, with the goal of refinancing mid-project as terms become more attractive. With that said, the rates the company is seeing now were stated to be around 10%, which is quite steep.

“Yes. James, so I think our expectation on where we land on Phase 1 is in line with what we've articulated in the past. It will come out at a sub-10% stream rate. But when you take into account upfront fees and potential breakage, depending on when you assume we'd have a refinancing event or not, we'll likely end up in the 10% to 11% expected yield in terms of cost of capital, even as credit spreads are tightening in real time.”

Brief Overview of the Crypto Operations

Galaxy’s crypto offerings are multi-faceted as the company is deeply entrenched in the crypto industry. Primarily, of the many different crypto products and asset management solutions the company offers, the tokenization of assets could be the most lucrative. Galaxy is one of the largest infrastructure companies by staking weight on the Solana platform, where the tokenization of assets is expected to do quite well. Solana accounts for 46% of on-chain trading volumes compared to Ethereum’s 22%.

According to the earnings call, Galaxy saw the strongest month in the company's history in July for its digital assets business. Part of this was representing a large transaction worth 80,000 Bitcoin for a value of $9 billion.

Crypto trading desk that offers both spot trading and derivatives. The company is said to have over 1400 institutional partners that trade on its platform.
It’s OTC derivatives platform saw $20 billion in volume last year.
The company is also a large crypto lender with $1.1B in loans in Q2 2025.
The company recently integrated with Fireblocks, a digital asset security platform with 2,000 institutions to help broaden access to Galaxy’s staking solutions.
Galaxy asset management oversees $4.7B across ETFs and other alternative/venture funds. In the case of asset management, it was stated that Galaxy makes a 1% fee.
Six days ago, it was announced that Galaxy will provide the asset management and treasury service for a $1.65B Solana treasury. A primary goal of the treasury is to help integrate Solana into traditional finance markets. It’s expected that Galaxy will provide treasury services for additional assets, as well.
The company was an early investor in Solana and recently tokenized Galaxy’s stock on the Solana blockchain.
Galaxy is also partnered with Invesco as they launched a joint spot Bitcoin ETF in 2023-2024 and have filed for a Solana spot ETF.

Financials Overview:

Galaxy Digital is evolving into a hybrid model: part crypto financial services platform, part AI / HPC infrastructure developer. Unlike some of the other miners (APLD, WULF, IREN) that have pivoted hard into AI data center hosting, Galaxy is choosing to maintain its crypto roots while simultaneously building one of the largest AI campuses in the world. This dual-track approach creates both unique optionality and added complexity. This shows up most clearly in the financials, where Galaxy’s reported revenue is inflated by crypto trading inflows, unlike peers whose top lines are directly tied to contracted hosting revenue.

Revenue Optics vs. Economic Reality

Galaxy’s revenue optics differ sharply from peers, and it is critical to distinguish between reported revenue from its assets under management (AuM). Reported Q2’25 revenue was $9.1 billion, (-30% QoQ, flat YoY), but this figure primarily reflects grossed-up digital asset sales that are subsequently offset by transaction expenses. By contrast, Reported AuM of roughly $9 billion reflects capital managed or staked on behalf of clients across asset management products, staking platforms, and funds.

While fee income from this pool was just $17 million in Q2, AuM remains an important context metric because it shows the scale of Galaxy’s crypto franchise and potential fee base as markets expand. For peer context, APLD, WULF and IREN have no comparable AuM base, as their reported revenue reflects directly contracted hosting or mining economics.

As Management cautioned, “top line is overshadowed by gross principal trading, investors should focus on Adjusted Gross Profit (AGP) instead. On that basis, Q2 AGP of $299 million marked a swing from ($204) million in Q1’25. Given the hybrid model, Galaxy further bifurcates AGP at the segment level:

Digital Assets: $71 million, up 10% QoQ
Treasury & Corporate: $228 million, driven by market-to-market gains on crypto holdings and balance sheet investments.
Data Centers: No revenue yet: Phase 1 lease with Coreweave begins in Q1’26

Where Galaxy diverges from peers is that once Helios begins contributing, the step-change in recurring revenue could be massive:

Company guidance: For the first 393 MW (Phase I + II), Galaxy disclosed ~$900 million in average annual revenue over the 15-year term, with >$700 million expected in the first full year of energization.
Implied economics: $900M / 393 MW = ~$2.3 million revenue per MW per year.
Scaling up: If the 526 MW of contracted / committed IT load (Phases I – III) is built, this would imply ~$1.2 billion in annual revenue at similar economics. If the full 800 MW of gross approved power were contracted on similar terms, that could reach ~$1.8 billion per year.

Contrast this with:

APLD: Q4’25 revenue of $38 million was entirely from hosting, backed by $11 billion in contracted CoreWeave HPC lease (~15 years of ~$730 million per year, which scales to ~49x FY25 revenue)
WULF: Began recognizing AI lease revenue is Q3’25 from its Core42 partnership, with early revenue flow already diversifying away from BTC mining.

The takeaway here is that Galaxy’s reported revenue is inflated by trading flows, but its economic revenue base ($299 million) is far smaller and more volatile. Peers like APLD, WULF, and IREN are already stacking up contracted, recurring HPC revenue, whereas Galaxy’s step-change won’t show up until 2026. When it does, back-of-the-envelope math suggests $900 million to $1.2 billion annually from CoreWeave alone, making it one of the largest HPC lease arrangements in the space.

Margins Inflect but Volatility Remains

Operating income improved to $166 million vs. a ($392) million loss in Q1. By comparison, APLD and WULF are still reporting large operating losses as they front-load HPC build outs. These peers are loss-making today but will structurally expand margins as long-term leases begin flowing. Galaxy is already GAAP profitable, but primarily due to market-sensitive mark-to-market gains.

Net income landed at $30.7 million, compared to losses of ($295 million) QoQ and ($126 million). Its worth noting that these margins remain razor thin: GAAP net margin of 0.3% versus APLD’s recurring hosting margins in the 20 – 30% range. Drivers of the swing:

$135 million digital asset gains and $195 million investment gains, with Bitcoin up 30% QoQ and Ethereum up 36% QoQ
Offset by $127 million impairments and a $125 million loss on derivative notes.

While peers will see margin expansion as AI leases ramp, Galaxy’s profitability remains tied to crypto market cycles until Helios revenue turns on.

EPS Turns Positive on Market Gains

GAAP EPS was positive in Q2’25. Management introduced Adjusted EBITDA as a clearer profitability lens, arguing this better reflects operating trends in Digital Asset and Treasury, removing derivatives noise. Like APLD, Galaxy’s non-GAAP metrics show progress. However, investors should be aware – Galaxy’s adjusted figures are still market sensitive and not contracted.

Balance Sheet and Cash Flow

Galaxy’s balance sheet is both its strength and its complexity, as it is large in scale but more volatile than peers due to crypto exposure. As of Q2’25, Galaxy held $1.18 billion in cash / stablecoins and $2.0 billion in net digital assets, giving it more self-funding capacity than miners reliant on continuous external financing.

Q2’25 Balance Sheet Highlights:

Total Assets: $9.08B, up 43% QoQ from $6.34B
Total Equity: $2.62B, up 38% QoQ from $1.90B
Cash & Stablecoins: $1.20B, flat QoQ
Balance Sheet Net Digital Assets: $1.28B, up 40% QoQ from $908M
Balance Sheet ventures, Fund, and Other Investments: $718M, up 15% QoQ from $623M.
Net Income of $30.7M vs. ($295M) in Q1’25.
Adjusted EBITDA of $211M vs. ($290M) in Q1’25.

These figures underscore Galaxy’s liquidity advantage today, though the reliance on digital assets and investments make them inherently more sensitive than contracted revenue streams. The crux here is that crypto assets create valuation swings that peers with cleaner hosting-focused balance sheets don’t face to the same degree.

Peer Comparison:

APLD: $120.9M cash, $688.2M debt (0.18x cash/debt, improving to 0.57x post-quarter raise).
WULF: Similar leverage profile to APLD, funded via staged equity and project-level partnerships for its Core42 build-outs.
IREN: Cleaner balance sheet with low net leverage and industry-low power costs, though at a smaller absolute scale.

Conclusion:

Galaxy Digital’s Q2’25 is a case study of complexity vs. visibility. Bulls would say that GLXY provides unique optionality, allowing investors to gain exposure to both crypto financial services (trading, custody, asset management) and one of the largest AI campuses globally (Helios at 3.5GW). Compared to peers, Galaxy also has superior balance sheet flexibility (vs. APLD and WULF) and is already showing GAAP profitability.

Bears would argue that earnings quality is lower due to market sensitivity, recurring fee revenue is declining, and Coreweave remains the sole data center tenant. Execution risk associated with ERCOT approvals and multi-phase financing is material. Ultimately, Galaxy is a barbell play consisting of crypto upside coupled with AI optionality. While APLD, WULF, and IREN are purer HPC pivots, investors must decide whether Galaxy’s dual exposure should be considered a healthy form of diversification, or distraction.

In the near-term, upward price action could be driven by Solana’s price, tokenization of assets, or stablecoins. As we go along into 2026, additional positive price action could occur if Galaxy secures a larger hyperscaler or offers visibility on how they will fund the 3.3GW that are left to fund beyond Phase 1. However, there are an equal number of reasons Galaxy and other miners could see volatility as they all greatly depend on high beta being in favor in the broad market. For now, the bulk of a decision on entries and exits will be made with technicals.

Note, this is a momentum stock and if we were to enter the positions, we plan to adhere strictly to risk management.

Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.

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