Galaxy Digital Inc. (GLXY) Earnings Call Transcript & Summary

All right. Good morning, everyone. Welcome to our next session here at Barclays Financial Services Conference. I'm Ben Budish, our analyst covering the brokers, asset managers and exchanges. And for this talk, I'm delighted to have from Galaxy Digital, Founder and CEO, Mike Novogratz. Mike, thanks so much.

Thank you.

Maybe just to kick it off, can you give a bit of background on Galaxy. How did you come to start the firm? What does the business look like today? And then we'll dive into some more kind of crypto-specific topics?

Sure. So I was a Hedge Fund Manager at Fortress Investments for 12 years, trading macro. And while I was there, I invested in bitcoin when it was like [ 100 ]. And it's more of an interesting side hustle. I left Fortress and when you leave the Wall Street company here, what do you do next? I started a family office -- is a very nice gig. People come and pitch you ideas. And I had a bunch of crypto and crypto investment, since I kind of sort of paid more attention. And the more I would dig in, the more excited I got so by 2017, it was dominating the volatility of my net worth and decided -- I always thought I was not going to go back to work unless I could do something, where I work with young people, where I was learning something new and I had something to contribute. And crypto was mostly young people in lots of ways venture business, and I've not done venture before. It's kind of a cross between venture and macro. And I thought I had something to contribute because I actually understood legacy finance and how Wall Street worked and most of these crypto kids didn't. And so that was the genesis of Galaxy. I took a bunch of assets that I had ended them into a Canadian [ Shell ] company that raised a couple of $250 million. And we had this idea of 4 businesses that we would build, an Asset Management business, a Trading business, an Advisory business and a Merchant Bank, where we can invest our own capital. And for the first couple of years, it was just the Merchant Bank, like crypto collapse to 96% in 2018, literally 96%. And so the idea of the robust asset management, robust trading, it was kind of just an idea. But we did a really, really good job of managing firm capital, right, in a market that was down at 96%. We were down like 27%. And so when crypto balanced, we had the resources to invest in these businesses. And as you fast forward now, what, 6 years, another boom-bust cycle in between, we are 511 people offices in New York, London, Hong Kong, Tel Aviv and a couple of small offices. We still have basically believe that footprint with some. We have 3 main business lines now. One is we call the markets business, which is like a sales and trading business at an investment bank, derivatives, lending, OTC trading. We're doing more and more OnChain, which is kind of the pure crypto DeFi trading, so DeFi lending, DeFi trading. We have an infrastructure business, which probably is the most exciting part. Now we have a big mine -- Bitcoin mine down in Texas called Helios. And we do a lot of banking as a service, which is running the infrastructure for these crypto blockchains. What's most exciting about Galaxy right now is that this Bitcoin mine, which we bought to put our machines in the mine happens to be perfectly suited to be a data center for AI. And so we are deep in discussions with the hyperscalers to try to figure out our plan to become a data center business. And I think we have one of the best sites in America. It's big, it's green, it's 800 megawatts, permissioned already, another 800 megawatts coming in a few months, 300 megawatts built out another 200, which will -- another 300 megawatts, which we've been built out by April next year. We've got a lot of power now. And so that is, I think, keeping our stock price buoyant when Bitcoin doesn't do as well, but it's probably the most exciting thing going for a company because it will be diversified income stream relative to -- one of the problems with crypto is that when bitcoin goes up, your asset management goes up, your staking fees go up, all the crypto service fees goes up, but when it goes down, they go down. And so having a business that's not correlated to that will, I think will be a big positive. And our third business is Asset Management. We were picked by the FDX estate. We took their assets and we gave them back $8 billion in cash 9 months later. And so I think did a spectacular job there. That allowed us to -- to accelerate the growth of some other businesses. We announced a partnership with State Street just a few days ago or launched our funds yesterday where we're doing equity-based ETFs in and around new innovation. So Bitcoin AI and other things or crypto AI and other things. We have a partnership with Invesco and ETF, a partnership with Itau. And so we've seen our role to partner with Legacy guys who have huge distribution efforts as crypto and bitcoin become a State Street asset. And so put it all together, it's a pretty diverse business. Our operating businesses should do-ish $400 million of revenue on less cost than that. But unfortunately, there's not a lot less. Our -- the cost of doing business in America because of this administration's anti-crypto stance has been brutal. And so we are working on getting that down. But it's a good business, and we have a balance sheet still partners equity over $2 billion, that operating cash we used to run the business. That's $1 billion of crypto. It's some venture in private equity bets. So, right now, I'm probably more bullish about the company than I've ever been. And that's because Larry Fink was here, I'd give him a hug. We went from being kind of a [ bring ] asset class to credentialize this year, right? As much as Gary Gensler hated to do it by approving both big client and the third ETF, the government said, crypto is here to stay. And we will see rapid change in DCs, legislative process after this election. If Trump wins, which looks less likely after his fiasco last night, it's going to be wildly bullish for crypto. But if he doesn't win, it's not going to be horrible. Harris has already said she will not be a anti-crypto president. She will be pro-crypto president. The Democrats have learned painfully in lots of ways that this is a really passionate voting block. I told people, there are more crypto owners than dog owners in America. And right now, the Democratic party is the party that doesn't really like dogs. Like it's just stupid politics to say, I don't like crypto. And it all came really from Elizabeth Warren, who made a deal with Biden to get Bernie to drop out. And so it really has stunted our industry for 4 years or 3.5 years. But the bright news is that era is coming to an end. And I have spent a ton of time in D.C. with both the Senate and the House Democrats are ready for legislation. A matter of it, we'd have by part of some legislation right now other than the fact that J.D. Vance has said, "No, no, no, no." Don't give -- don't give the Democrats to win until the elections is over. Sumo was ready to push through a market infrastructure bill. And so we're going to get regulatory clarity. We have institutional adoption. And the real piece of regulatory clarity isn't just the SEC, CFTC, market infrastructure and StablePoint Bill. It's the OCC being -- it's a direction from the administration to the OCC and the Fed that it's okay to let Barclays and JPMorgan and State Street and Bank of New York into the crypto space, right? What has kept lots of legacy big players away is the banking regulators, they no, no, no, no, don't do that. And it's not a big enough opportunity to really piss off your bank regulator to flight them. And so Bank of New York should be the biggest custodian in crypto and they're not, because of everything else. I think that will flip in the next 12 months, no matter who wins. And that's going to unleash a tremendous amount of capital into our space. In some ways, it will make my job far more exciting and more difficult, right? The phone's got to ring and city banks will be trying to hire my traders, but the amount of capital that will move in our space will go up quantum. Long answer, sorry about that.

No, no. Great. You answered a few of my next questions here on what the environment looks like in D.C. But maybe could you unpack a little bit more of what could be unleashed when we get the sort of new regulatory framework? So it sounds like maybe low hanging fruit as banks are going to hire more traders, we're going to become more active custodians? What are the other like innovations that could be coming -- or could be so unlocked?

Crypto is a big word. There's a lot of stuff that goes in it, right? We -- first people think about Bitcoin, which is going to become just digital gold, right, the store value that's literally based on a social contract. I think it has value you think of value, and therefore, it has value. Well, now they're far over 100 million people around the world that have decided to take some of their hard earned worth, net worth and stored in this community. So that is only going one way, right? It is a story of adoption. And it was interesting. We kicked off the ETF, but the big platforms, the big RIA platforms like Morgan Stanley's and many others didn't even get started until like the last week or 2, selling it. And Bitcoin has always been sold, not bought. What I mean by that is, if you're sitting out there, you have a business, it's the responsibility of somebody to orange pill you, to explain it to you, to get you comfortable with it, right? Larry think did not like Bitcoin and then a concerted effort of really smart guys got around him over and over and he finally said,"Oh,I get it." And now it's a huge part of Blackstone's business -- BlackRock's business. And so we're unleashing these sales forces who are now talking to their clients to say, "Hey, you should put a little bit of this in your portfolio. And no matter what day you look at it, it has been a diversifier and positive alpha to any single portfolio, right? And one of the best performing assets in the last 15 years against anything. And so you're, well, put a little bit in, and that's happening over and over. Forget what's happening overseas. So -- but that's only one section of what crypto's promises. Payments, and I saw you had a payment question before I walked in, in the U.S., we don't see a lot of great innovation around crypto payments because our payment system works pretty darn well, ApplePay, you hit the [ tax ] a ton. But overseas, stable coin usage is exploding. -- there was more stable coin transaction volume last year that Visa plus Mastercard combined. And so this isn't a small scale operation anymore. Everyone low income in the Mid-East, setting remittances back over, they're setting Tether on Tron. Tether is a dollar-based stable coin kept outside of the U.S. and in Tron is a blockchain. And so you're going to continue to see payments. And we're seeing all kinds of innovation. And then there's the rest of crypto. The rest of crypto really is a series of databases, blockchains, that promise to increase in speed and in privacy and have things built on top of them. We're not one person controls the blockchain. And that allows for peer-to-peer everything. And so I was with one of the legends of the music business yesterday. And so far, Web3 hasn't really hit the music business. And she was saying, it's so easy to see where it will, but it hasn't yet. And so people have gotten into the space because they think it will. It will disintermediate banks, it will disintermediate the music business. It will disintermediate so many of these businesses. The technology is ready. It wasn't ready 2 years ago. It's not 100% or anybody is getting there. When I say ready, it's got to be fast and reliable, right? And so blockchains like Ethereum, have all these level 2s built on them. Blockchain like Solana are working really quickly. And so you're seeing more and more projects. And so up until now, most of these other projects have almost been like a giant casino, where the crypto community is moving money around based on narrative. And listen, the casino business has always been a great business. And it is a very passionate group of people that have their money in crypto. But we're at that inflection point when you're going to start seeing more and more use cases in gaming in all kinds of areas. And so that's the most exciting part. And last but not least, I'll talk about tokenization. Tokenization is going to be one of these things that happens real slow and then it happens real fast. And so companies like Apollo are spending lots of time trying to tokenize some of their funds to understand it. When I talk to the people at places like Citibank and Goldman, they already have big, big teams because in all the asset managers are worried that once we start tokenizing these, we better be on the gid -- a gig. And so I don't know when it actually hits that inflection point. I just know a lot of infrastructure is being laid. And the only place right now you're seeing tokenization scale as stable coins, right? Where we tokenize a dollar, where Galaxy is going to tokenize the Euro with Deutsche Bank and DWS, and it's going to be regulated by Boston. And why is that important? Well, it's important because we're moving from a paperwork to a digital world, but we're also moving into a computer world. With the advent of AI, we're finally going to get Internet of Things, money transfers, so the Boeing engine jet when it's running efficiently is worth more money then when it runs inefficiently. And you'll be able to literally have micro payments between these leaser and provider. And so we've talked to some of the -- Siemens came up to us, and they were like, "Wow, as soon as there's a regulated European stable, we've got all kinds of use cases. " And so I really do think we're at the inflection point, and it might not be this year, might be next year, where crypto goes from beyond stable coins and Bitcoin to actually being used in society.

Great. I want to ask you maybe 2 follow-ups on tokenization and stable coins. So maybe first on stable coins, not to pick on Tether, but there was a fairly negative article in the Wall Street Journal a couple of days ago. Maybe like a broader crypto question, but it seems to be maybe in that context, relevant to stable coins, how do you think about like the risk in the system right now? It feels like a couple of years ago, a lot of risk was flushed out. Do you think the worries around Tether or wherever you're seeing overblown or...

I think Tether has one of the best businesses on the planet. And God there was a time in 2016, '17, where they were having trouble and they had a senior partner there who wanted to sell it because it was impacting their other business, and I was dying to try to buy it. And now that business kicks off about $6.5 billion of EBITDA a year.

[ 100 ] Employees, right?

With [ 100 ] of the best. Right? They have a $120 billion interest rate arbitrage, right? They borrow at 0 and they lend at whatever the Fed fund trade is. And they are wildly overcapitalized not because they made so much money. The group of people, they are very sharp have gone out and said, "Okay, we've got all this money now, let's see what we're going to do." So they bought some Bitcoin. They've invested in other businesses. They are a big infrastructure player now. But that's what their profits. And so Tether is back to [ 1 to 1 ]. Why would people leave money in a security that doesn't pay them interest when they can take it out and put it in the bank? Well, a lot of it is money that has fled regimes that they didn't want them to flee, right? So if you're a hot Chinese money and you left China and you put it in Tether, you don't care that you're paying a negative 5% carry, that you're using it do other things, right? There are 8 billion people on this planet and only 330 million live in America. And so they had a very stable and growing. Now are there innovations that could knock their perch? Of course, there are now interest-bearing stable coins. There's one that right on mind CHAD has [indiscernible] has launched out of Abu Dhabi regulatory regime. That scares every banker, [indiscernible] with every central banker because think about this, if you have a tokenized dollar that pays interest, why would you leave your money at a bank? It's safer than a bank, it's treasury bills, and it pays interest, right? JPMorgan or Barclays, I'm guessing if I look at my savings again probably pays me 11 basis point. Last I look at JPMorgan, it was literally like 2 and your checking account, nothing, right? And so, when I talk about crypto being progressive, having a digitalized dollar that pays interest is shockingly good for the consumer. Now who is it bad for, that's for the Central Bank, that's why the government is not going to let it happen, right? Reaching your pocket, I think I have [ $1,000 ] of hundreds, they don't pay interest. And so the U.S. makes a huge amount of money just on the float on our cash. But this is where the tension -- this is where the regulatory tension and the technological tension is going to come, right? Crypto is building better products than we have. And the legacy world doesn't like it, right? We don't have blockchain-based ticketing now because Ticketmaster is holding on for dear life and they're very tough. But intuitively, blockchain-based ticketing makes 100% sense. Like you wouldn't design a system like Ticketmaster, you would design on the blockchain-based ticketing, right? But the blockchain gave us, what's private property on the Internet for the first time. That was Satoshi's radical breakthrough. It deserves a Nobel prize because before Satoshi, there was no private property on the Internet. And if you think about it, before private property, there was no capitalism, before private property -- George Washington famously said, without private property, there's no freedom. But you look at emerging markets at the moment they get property rights, the emerging market does better. And for the first time, the Internet has a private property. It hasn't sprouted as fast as I would have liked, but it will.

Very interesting. Maybe one other follow-up to your prior comments on tokenization, just about like the sort of process of going from where we are now to broader use. It seems like beyond the stable coins when we look at like BlackRock's BUIDL fund or the Franklin Templeton tokenized mutual money market fund seems like a lot of those are ways for like crypto-native firms to access yield vehicles in treasuries, but on a blockchain. And so, that how do you think about -- is it going to be crypto-native adoption? Or what's the kind of tipping point where a traditional institution says, we'll take some of that too?

Well, listen. So there is no difference between buying a tokenized money market fund and buying a money market fund, right? And so if you're a money market, an investor, why wouldn't you buy the tokenized money market fund? You can move it faster, you can [ loose ] it -- so it's one of those things I said it's going to go slow until it goes fast. What enough people actually think of it as the same and it's more convenient to use the tokenized form because it is, you'll see a huge flip. That's why I keep saying it's going to go slowly until it goes quickly. And I don't know what that turning point is. I do know that every major asset manager we speak to is frantically working on this stuff, right? They see this will happen. Why should it happen? Let's say we're going to tokenize a Fortress credit fund, which I still have a huge amount of my net worth in. Unless I want to get it, I need to sell for liquidity. I've now got to go to Fortress find forms and they got to find a buyer, and it's a really inefficient process. Why would they care if I'm taking my 1% share of their fund and selling into the guy across the street. And so you're going to end up seeing private investment vehicles tokenized. It makes all the sense in the world. It hasn't happened in the scale yet. It's happened on plenty of them, but not in scale. And until you get scale, you don't get liquidity. And so again, there's a problem of when. But everything I see or all these guys are making investments just as insurance that, they never pay off, they'll be happy. And that there's certainly -- I would be less confident, if I didn't see what was happening overseas and how fast things are moving.

Got it. So in terms of kind of unlocking these things, there are probably more innovations that need to happen to make it easier for banks to engage.

So there's a regulatory thing that needs to happen. The government has to say, "Guys, it's okay for you to engage." I mean, give a small example, the SEC jammed some stupid accounting rule in -- on the Legacy banks let's say, well, you need to hold all this stuff like it's a -- even though you're a custodian as a custodian, you need to hold the stuff on your balance sheet. It's the stupidest thing I've ever heard. And so finally, the Senate [indiscernible] the House over rode, there is bill and then -- and it voted, so this is a stupid law, as soon as the stupid law end [indiscernible] foolishly because he had told the congressional caucus, "Hey, to vote against it, and they didn't." And then -- but he didn't want to let it go through because of the guys that didn't vote against it. And I mean, stupid politics. But like Gary Gensler and his cohorts have thrown up these stupid blocks to stop the growth of this business solely because of loose of [indiscernible] it. It has driven me crazy because I'm a democrat and I have consistently thought this is one of the most progressive movements I've seen, progressive technologies has the potential to be more progressive technologies. And I think that's why half the democrats are now like, of course, we shouldn't pro crypto. I had Richard Torres in my house 2 nights ago. He's an amazing advocate for our space, as a [indiscernible] and even Hakeem Jeffries. And so we are slowly winning the intellectual argument with both Dems and Republicans. But remember, we're kind of flying out [indiscernible] a few years ago. And it was only recently people are like, wait a minute. This year, crypto companies are the single largest corporate donors to presidential campaigns. Think about that. Not banks, not tech companies, crypto company. It is a very passionate community of people that really think they're doing something right for the society.

Interesting. I wanted to ask you a broader question about innovation. You run the investment banking business at Galaxy, kind of talk about what you're seeing. But maybe one more kind of follow-up just in terms of the regulation versus like the technology. So thinking about like tokenization, how does it solve for like the regulatory legal aspects of like private property? So like you guys, I think earlier in the year, you tokenized like a 300-year-old violin. I thought that was super cool. How do you translate like the ownership price, say, Mortgage has always come up. Like my -- I bought a house in New Jersey. My -- there's a piece of paper to lawyers office saying, Ben owns this house. How do you tie in like that with [ marketing ] section? How do we get there?

It's interesting. So blockchain works best in a digital world. right? And more and more our lives are going to be digital. Where we cross from physical to digital, right, we tokenize the Stradivarius. Why would you do that? Well, it was supposed to show we could. And now we're lending against those -- that ownership. And so basically, it was taking the contract on paper and putting it into a blockchain. What blockchains are unique at is you can't change them, right? And so one of the first ideas was we should put all titles, property titles on blockchain. And the story is to say is when Tadaki took over Libya. He literally in the town square, took all the titles of people's property and throw it at a fire, that it's all mine. And your family had owned this piece of land for a long time and this was your proof of it and disappeared. On a blockchain, it doesn't disappear. It's there for time memorial. A way blockchain block stack on top of each other. It makes it statistical impossible to actually change the database, right? Data has become so much more important in our lives, right? Why? Because we can manipulate it, right? Give me your Uber and I can tell you exactly what your life is like -- he lives here, but he goes to this address all the time, what's going on there, right? It's shocking how powerful that is, especially when you put large language models behind it. And so something as simple as your DNA data isn't that simple anymore -- tells you a lot about somebody. And so what blockchain allows us to do is protect our data. And again, we didn't need to protect it. But now as you saw there in COVID, the Canadian government decided if you were protesting COVID, and you're one of those truckers, we were going to freeze your bank accounts, right? In India, right, who has the biggest single nationwide ID program, which is a huge success. Modi decided he didn't like the guys up in Kashmir and he literally erased 11 million people, erased them, from the national roles. And therefore, you have no ID you can't get no services. Don't like them. And so when power is concentrated, and data is so manipulatable. It's a really toxic mess. We have a country where half the people believe one set of news and half the people don't believe the other. And so trusting our government doesn't feel so good to half the people. And so if it's like, oh, just give us your DNA, and we're going to do good things with it. We'd be like I don't want that. If you're democratic, I don't want Donald Trump to know that I'm gay and there's a gay genes, right? Bolsonaro was the President of Brazil, they were pitching to have a stable coin, where the government had complete transparency into it. And again, if you were a gay, you'd say they're going to know all my shopping patterns. And he just said gays don't -- just don't deserve to exist, like the President. There's 11 pages on Google about it. And so you'd be scared. And so we're at this world where trust is broken down. And so this idea of using blockchains to protect yourself from data is an idea whose time has come, and it is coming -- listen, there'll be a grand 10-year experiment to see if it actually can work, right? Because what AI does is the most amazingly centralizing technology. And the yang to that AI has to be or at least should be something that keeps it in check. And so I think that's the real use case that's coming. Now how that gets built in is probably by guys smarter than me.

So we can see this we're at an investor conference. For U.S. investors, it's sort of this interesting dynamic where in the U.S., there's a -- there's going to be unlocks around banks acting custodians, banks becoming more like trading partners, prime brokers. A lot of these use cases, protecting your private that sort of thing really relevant outside the U.S., the ability to move money with Tether rather than the bank, ACH and Mastercard ecosystem. How do U.S. investors where maybe the use case isn't quite as strong because we have a more developed banking systems where are like the investment opportunities besides coin-based Galaxy Digital buying Bitcoin? How should we think about that sort of...

Let's start with what has always been true about our industry is bitcoin related. And if bitcoin goes up money flows into the rest of the industry, it goes into the other ecosystems. And I don't think that's going away for the next few years. And so it's hard to be bullish crypto, even though there's plenty of things that should be uncorrelated to Bitcoin, and I have a business that's really diversified. If I'm really honest, it's hard to be bullish crypto, if you're not bullish bitcoin. Because we're still only a 10-year-old industry. Why am I bullish Bitcoin? We saw a presidential debate last night, we saw one the old President, 2 months ago, we've seen countless press conferences in rallies. Not one candidate on either side has talked about the fact that we're adding $1 trillion of debt every 100 days, right? I worked at the office management budget in 1984, tells you how old I am. I learned the federal government is supposed to spend 20% of GDP and tax 20% of GDP. And pretty much, we did that until about Trump, other than price should go above, it's come back below it, but that was the target. We're now spending close to 30% of GDP with the 6% structural deficit. And unless you leads test, medicare and plus the security unless you aid the agents for security, unless you got no authorities spending in that rate of 10% like both parties want to do. We are going to continue to print bigger and bigger deficits, and we will be in s*** load of trouble at one point. And there's a thing called [indiscernible] moment in economics where it goes from okay, okay, okay, oh s***. It's out there. I don't know where, but you see it and you saw it -- and I've been in 96 countries in my life. I was an emerging market investor in Goldman Sachs and then at Fortress. Once you lose the credibility of being in the developed market, it goes fast. And so if you look at Nigeria, right, Nigeria that one of the stronger economies you put your money on Nigeria, you see how much you have left. Turkey, right? Remember, Erdogan, Turkey was like this miracle emerging market stream 10 years ago and 110% inflation 2 years in a row. And so when we have central banks and treasuries finance departments that have no sense of good fiscal stewardship, the currency goes to hell in a hand basket. I would argue that in the U.S. and in Europe, in almost the whole world, we have lost any sense of business stewardship. There is a process fee going on. There is a -- there is -- I mean the idea that Lizbeth Warren and many others came up with, well, we've got this modern monetary theory. I mean, my mother told me when I was 8, you can't -- money doesn't grow on trees, right? You just can't quickly earn money. And that's really at the core of everyone who believes in Bitcoin, right, has a hard money asset. It's -- listen, I own a lot of gold, and I have a podcasting, when we give everyone at the end of a podcast announcement gold, beginning the year, I said this was going to $3,000. And we're $2,500, it was $1,800 gold is going to go to $3,000 and then gold is going to go to $10,000 we had to all get to $10,000. It's going to go to $10,000 because President Harris or President from doesn't want to take any pain. They want to give want to spend. And we have way across that point right? We're at 130% debt to GDP. No country has come back from that. And if you look at just their projections with their rosy projections, the CBO has us going to 150% of GDP. It doesn't work. And so 1 of the things I sleep best at night is this huge stash of Bitcoin I own because it can -- went to [ 73, it's at 56 right ] now. It will bounce around unless we get some lightning bolt and somebody comes up and says, "All right, guys, we're dealing with our ship, which I just don't see political will to do, you're going to see Bitcoin go higher, which is actually drive our whole industry.

Fantastic. Maybe with a little bit of time we have left, kind of coming back to the investment banking business you've got. Just again, thinking about what's going on in the U.S., changes you expect in terms of the next couple of years, do you think we're going to see more like consolidation, couple of years ago, we had a lot more exchanges, progress like kind of bank replacements? Where are the -- what's kind of coming that's interesting we should be thinking about looking at?

Listen, I think you're going to see people going from having -- checking accounts to wallets and you're going to have a crypto wallet, which is going to have your securities your bank accounts, your crypto, your tickets and other assets, your NFTs. And so who wins that, right? Lots of companies are trying to become the infrastructure of that overseas. If you go to DBS Bank, they've got an amazing [indiscernible] during the year to do all those things. And so we haven't seen that in the U.S. so that will happen. This is for crypto to really work outside of Bitcoin for most of you and most Americans in some weird way, it's got to be the back of the TV, right? This is a plumbing business in lots of ways. You don't really -- it's got to be a better product, and it's got to be, it's contributing something. So when I think about blockchain-based ticketing, yes, it's a better system, is it better enough that it's going to work? I don't know. Certainly in payments, but easy one, even now, if one of you guys need to borrow money and you're in Germany, and I'm like, oh, wire your money? It is a huge pain for me to wire a friend, $200,000 in Germany, right? And it comes a couple days later. Where in Bitcoin or in Stable Coins, it takes 4 seconds. And so it's a better product. And so our user experience, our user interface and our kind of -- otherwise, this will still be Bitcoin, stable coins and a casino for crypto [indiscernible]. And that's where I think this is the -- and I don't know if it's going to be this year or next year, but the next few years really is the test. So that's what you're betting on in lots of these venture buckets. And it makes sense to me to bet on it because as I see it work and I -- and just on small scale, and the question is how does it scale?

We've got just a minute left. Maybe I'll just squeeze one last really quick question. You mentioned something about a product like I think, an ETF with bitcoin and AI. Can you just maybe unpack that a little bit. We hear a lot about the intersection of AI and crypto. What does that mean? What are you guys kind of working on?

Well, listen, so we launched a series of funds with State Street, one is mostly crypto companies. And so right now, it's claim-based and a lot of miners -- there are -- we are trying to go public in the United States and knock on wood, we will be public soon enough. There are another 9 companies right behind us. And so I think you're going to see a plethora of equity opportunities in the next 12 months. And so we've set up an ETF with State Street for equity investors to play in the crypto space. And it is a mutual fund or a fund, but it has the capacity to sell calls, by puts, protect. I actually think there are times when the equities are very expensive to the online crypto and there's times when the equities are cheap to billing crypto. So being able to understand the whole ecosystem is a really important part of it. Where AI comes in is crypto created the data centers to mine Bitcoin, which happen to be the biggest data centers in the country and in the world. I didn't realize how big my data center was until about a year ago. And like, okay, there are very few 800-megawatt data centers in the country. And so partly luck that the crypto industry is sitting on these power contracts that are really, really valuable right now. And if you look at just the AI plan of the big Microsoft and Meta and Google and everyone else, if it's a staggering CapEx build that's coming. And so a lot of -- not all of the crypto miners, but some of them and including ourselves, are in the midst of that now. So that's the first AI angle. The second AI angle is you're going to have AI agents in the next 6 months to 18 months, each one of us. And at one point, those agents are going to actually spend your money. And the interchange for how that money gets moved, I think, is going to be some crypto version. It makes just so much more sense computers speaking to computers and crypto are those rails. It hasn't happened yet. But so we're investing in our venture business and a lot of things around that. And the final is that authenticity. I mean something as simple as a deep fake. The deep fakes are so good these days you can't tell. And so having something authenticated on the blockchain and having a process to -- know this is real. Frankly, when I was thinking about Bitcoin in 2013 and how to sell it, it was all about this thing called the double spending program and the [indiscernible] in general, all these computer science questions that Satoshi solved, but to a noncomputer science guy, I like it sounds like [indiscernible]. And I simplified it -- wait a minute, it was the first digital signature that you could encounterfit. And if you think about what that means, I can have a digital piece of art that I know is authentic, that you can counterfeit. Even if you control copy, past. I can prove that yours is a counterfeit in mine is not. And it's a real Chanel bag is worth a lot more than the Chanel bag that you buy in Canal Street, a real Picaso, like we have always won a scarcity in the world, and that is coming. And so I do think there are 3 or 4 angles or crypto and AI will come together. But again, we're early.

Well, unfortunately, we're out of time. Mike, what a great conversation. Thanks so much for being here. We really appreciate it.

Thank you, guys.