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

Good morning, everyone, and welcome to the Galaxy Digital Third Quarter 2026 Earnings Call. Today's call is being recorded. [Operator Instructions] At this time, I'd like to turn the floor over to Taylor Reinhardt, Head of Investor Relations. Please go ahead. .

Good morning everyone, and welcome to Galaxy's Third Quarter 2026 Earnings Call. Before we begin, please note that our remarks, including answers to your questions, may contain forward-looking statements. Actual results may differ materially from those described in these statements as a result of various factors, including those identified in the disclaimers in our earnings release or other filings, which have been filed with the U.S. Securities and Exchange Commission, and on SEDAR. Forward-looking statements speak only as of today and will not be updated. Additionally, we may discuss references to non-GAAP metrics, the reconciliations of which can also be found in our earnings release. Finally, the information on this call does not constitute a recommendation, solicitation or offered by Galaxy or its affiliates to buy or sell any securities. With that, I'll now turn the call over to Mike Novogratz, Founder and CEO of Galaxy to discuss our results.

Good morning, everyone, and welcome Taylor to the Galaxy team. You guys will get to know her well, and we'll like her as much as we do. Listen, we had an awesome quarter. I'm really proud of what the team delivered. But what excites me more is what performance says about where Galaxy is headed. We've spent years investing ahead of 2 enormous shifts, finance moving on chain and the build-out of AI infrastructure. And we're increasingly seeing those investments translate into results with the strategy playing out in 3 important ways this quarter. First, we saw a strong rebound in crypto markets. Bitcoin was up more than 40%, with a meaningful improvement in sentiment and client activity. Our Global Markets business capitalized on that momentum, growing trading volumes and expanding client engagement. We also saw significant appreciation across our investment portfolio, reflecting the value of capital we've deployed across crypto and the broader technology ecosystem. Second, the opportune digital assets is getting bigger, and I think we're just scratching the surface of what's ahead. Crypto remains an important and growing asset class, but the opportunity extends well beyond that with digital assets increasingly becoming the foundation for the future of finance. And increasingly, those 2 worlds are coming together. You can see a growing adoption of stable coins. The tokenization of traditional financial assets and the participation of major financial institutions. I have a tremendous amount of conviction that the financial architecture developed by the crypto industry will underpin much of how the financial system operates in the future. Galaxy has spent years investing in these capabilities, and we're still early -- in early stages, I believe that, that investment will translate into meaningful results over the next several years. Regulatory clarity will be an important part of that. While the Clari Act has not become law, unfortunately, the SEC and the CFCD are working towards clear frameworks. There's still a lot to sort out, but the direction is encouraging. And investing ahead of these shifts have always been part of our strategy. We did it in early in crypto, investing in companies and technologies that help build the ecosystem. And now we're taking that same approach to AI, increasingly investing in the next generation of companies through our investment strategies and our balance sheet. Third is data centers, where we're building a very sizable business. Helios has come a long way in the past year. We're now generating approximately $80 million of leasing revenue per quarter from Phase 1. As Phase 2 comes online next year, we expect to exit 2027 at an annualized leasing revenue run rate of between $800 million and $850 million based on our current delivery schedules. That is a substantial business from the capacity we've already leased and the momentum is building. We have significant additional approved power available to lease and a deep development pipeline beyond that. I'm going to address the timing of leasing announcement of Helios II. Earlier this year, I spoke about the possibility of reaching an agreement during the summer. We were in advanced discussions around a potential transaction. But as the market dynamics shifted materially in late summer, we ultimately decided not to move forward on the terms being considered. The market for large-scale power via data centers has become increasingly constrained, while demand for capacity beginning in 2028 and beyond has strengthened with more than 800 megawatts of secured power and supporting infrastructure, we believe Helios II is an even more valuable asset today than it was just a few months ago. And with delivery plan for 2028, we have the flexibility to evaluate our opportunities and get the right deal. We build Galaxy by adopting the changing markets and being disciplined about where we commit capital. These are large, long-term agreements, and we're not going to compromise on terms just to meet an announcement date. We continue to have productive and after discussions with prospective customers with a focus on maximizing long-term value for shareholders. And as the Helios campus scales, we're fundamentally changing the earnings profile of Galaxy. We've established a digital asset franchise with significant earnings power, growing opportunities for recurring fee-based revenue and a data center business is adding long-term contracted cash flows. Together, these businesses give us multiple drivers of growth and more diversified earnings base that we believe will make Galaxy a stronger, more durable franchise over time. We also have the balance sheet to back that ambition. It's a competitive advantage that allows us to commit capital as a principle, invest in growth across our businesses and take advantage of opportunities as they arise. We're focused on putting that capital to work where we see the most attractive long-term returns. That includes investing in our own shares when we believe they're trading at a meaningful discount. We've repurchased $200 million year-to-date, and this morning announced an additional $200 million share repurchase authorization. As signify shareholders ourselves, we see buybacks as another potential way to allocate capital thoughtfully to create long-term value. Chris will now take you through how we're translating these opportunities into results across our businesses and what we're focused on next. Chris, over to you.

Thanks, Mike. Starting with digital assets. One of the strengths of our global markets business is the breadth of solutions we can offer clients. We're seeing growing demand for more sophisticated trading and financing solutions particularly as traditional financial institutions look to participate in decentralized markets through products and structures they're familiar with. We spent years building capabilities for crypto native clients and that experience gives us an advantage as traditional finance increasingly moves on shape. We understand these markets can move quickly and have the flexibility to develop solutions for both groups. Lending is a great example. We've expanded Galaxy Onchain financing rate or GOFR, which gives clients access on-chain financing alongside our growth financing facility, which allows us to support more lending activity through external capital. We're expanding our loan syndication, collar lending and structured financing capabilities, broadening the range of clients and financing needs we can serve. We're seeing the same innovation across trading our derivatives business executes sophisticated options and hedging strategies for clients. And this quarter, we completed our first compute-linked derivatives transaction, extending our capabilities into an emerging market that we believe has the potential to grow into a sizable new stand-alone asset class. In Asset Management, we're expanding our investment strategy and product offerings to meet evolving institutional demand. During the quarter, we launched the Galaxy Sharplink Onchain Yield Fund, an actively managed strategy providing access to new opportunities in centralized finance through an institutionally managed SMA for a public company. Sticking with Onchain asset management theme, Sweep the first-ever decomposable 24/7 Onchain money market funds in partnership with State Street Global Advisors is now approaching $300 million of AUM , which we believe is an early signal of strong product market fit among first mover institutions interacting with tokenized real world assets. With Galaxy Digital Ventures, we are progressing towards the first close of Fund II expected towards the end of Q4 with a fund target size of $250 million to $300 million. As an investor, you only win the right to raise the second larg fund once you've proven out a strong process and great returns. And the GDV team has done that with Fund 1 currently marked at 2.25 gross MOIC. In digital asset infrastructure, we're seeing growing momentum with some of the world's largest financial institutions and are expanding our capabilities and offerings across tokenization, custody and staking to meet their evolving needs. Staking is an area where we're seeing growing engagement with major institutions. Assets under state grew 64% in the quarter to $4.6 billion. While this was primarily driven by price appreciation of the underlying assets in the quarter, we've also seen a number of large ETF providers begin delegating their Eth and Soul stake to Galaxy's infrastructure. driving over $400 million of gross new inflows in Q3 and subsequent to quarter end, and we expect additional sizable partner launches before year-end. More broadly, our relationship with BNY announced this summer has been an important validation of our capabilities as we continue to deepen our engagement with leading global financial institutions. These are complex engagements with long sales cycles, but the potential is significant. Our objective is to become a long-term strategic partner as institutions build out their digital asset businesses creating opportunities to expand relationships beyond an initial mandate and generate meaningful recurring revenue over time. Turning to our data center business. We're continuing to deliver against our development plans while advancing a substantial pipeline of future opportunities. This was our first full quarter of leasing revenue from Helios, marking an important milestone as our development investments and long-term contracted revenues begin burning into realized contracted cash flows. Phase 2, which will deliver an additional 260 megawatts of critical IT capacity is fully funded and under construction, putting us in a strong position as financing for new data center developments become increasingly constrained. Both buildings and the supporting substation are progressing on schedule and within budget, building on our successful delivery of Phase I. Structural steel inflation is well away on the first building. Construction is advancing on the second and key electrical infrastructure is being installed. We expect construction activity to ramp significantly over the coming months with data hall deliveries scheduled to begin in the second quarter of 2027. On permitting, we've secured the key environmental approvals required ongoing construction at Helios. While certain additional approvals remain outstanding following Governor Abbott's September directive, we do not currently expect an impact to our construction progress or our anticipated energization time lines. Turning to Helios II. To build on Mike's earlier comments, we saw several important shifts in market dynamics beginning in late summer that we believe have meaningfully strengthened our competitive position. Forward our availability has become increasingly constrained. With new power approvals more difficult to secure and delays in competing developments limiting the amount of large sale compute capacity that can realistically be delivered between 2028 and 2030. At the same time, we're seeing a meaningful increase in demand from hyperscalers, frontier labs and Neo clouds, now looking to secure capacity for 2028 and beyond to support existing backlogs and future growth. Underlying demand for compute remains as strong as we've ever seen it. Financing markets have also become more selective, and we believe access to capital will increasingly favor developers with proven execution capabilities, high-quality counterparties and financing structures that appropriately allocate risk. Having successfully delivered Helios Phase I with Phase II fully funded and progressing on schedule, we are building a track record that we believe will differentiate Galaxy in this environment. Meanwhile, the evolving regulatory and book landscape in Texas has created additional uncertainty around future data center development. Based on our current understanding of the applicable requirements, we do not believe Helios II is subject to the same uncertainty facing certain other projects, further strengthening its relative attractiveness. Taken together, these developments have changed how we evaluate the opportunity at Helios II. We're taking the time to engage with the right counterparties and evaluate structures that we believe can maximize long-term shareholder value for Galaxy. The focus of our active conversations is square on investment-grade hyperscalers or counterparties supported by investment-grade credit enhancements, considering not only headline economics and counterparty quality, but also critical lease terms, probability of execution and future growth potential outside of the Helios campus. Beyond Helios II, we've made meaningful progress through ERCOT's batch 0 buses. As announced in September, Five of our Texas data center projects received conditional batch 0 classifications, representing approximately 4.2 gigawatts of capacity. That includes more than 1.6 gigawatts of preciously approved baseload capacity at Helios I and II,which remains largely unaffected by the ongoing ERCOT process. Our 3 expansion projects, Caspian, Saline and Helios III received study load classifications, representing an additional 2.6 gigawatts of potential capacity. While we submitted Caspian for baseload classification, ERCOT ultimately reclassified it as load and our subsequent dispute for reconsideration was denied. Although that wasn't the outcome we had sought Caspian remains part of the batch 0 study, and we expect greater clarity on power allocation and anticipated energization time lines for these projects in April 2027 based on the time lines communicated to us by ERCOT. These classifications cover a substantial portion of our broader development pipeline of more than 4.6 gigawatts providing a foundation for potential growth well beyond the initial phases of Helios. Beyond our data center business, we're all investing in the growth of AI across the firm with a focus on opportunities ranging from frontier model developers to emerging technologies at the intersection of AI and financial infrastructure. Through Galaxy Ventures and our broader investment activities, we're building on our experience gained from investing early in the digital asset ecosystem. To date, we've deployed more than $80 million across 11 portfolio companies via 17 investments, including SpaceX, Etched, Carta, born, TRM Labs and Architect. While these companies are all early in their growth journey, our current unrealized mark-to-market on that pool of investments is already 3.4x. Importantly, our ambition extends beyond just generating returns for our balance sheet. We're using these investments to build a track record, establish relationships and create commercial opportunities across the Galaxy platform. Across our businesses, we're focused on translating the investments we've made into tangible results and long-term earnings growth. I'll now turn the call over to Tony to discuss our financial results.

Thanks, Chris and Mike. For the third quarter, Galaxy reported net income of $323 million, adjusted gross profit of $569 million and adjusted EBITDA of $455 million, marking a sharp improvement from second quarter performance. Our results reflected the continued earnings power of our digital assets franchise, the first full quarter of leasing revenue from Helios and significant appreciation across our investment portfolio. Firm-wide operating expenses, excluding gross up transaction costs, digital asset impairments and pass-through data center operator costs were $161 million compared with $147 million in the prior quarter. This increase was primarily driven by higher depreciation and amortization expense related to Helios Phase 1 entering full operation. Our operating businesses generated combined adjusted gross profit of approximately $150 million, up more than 75% from $86 million in the prior quarter and adjusted EBITDA of $60 million compared with approximately $1 million in Q2. On a segment level, starting with digital assets, the business generated $71 million of adjusted gross profit, up from $66 million in the prior quarter, reflecting increased client activity and the breadth of our platform. Within global markets, adjusted gross profit increased to $53 million from $49 million in Q2. Our digital asset trading volumes grew 12%, outperforming the broader spot market where volumes declined, demonstrating the strength of our trading franchise. In lending, our average loan book grew over 25% to approximately $1.8 billion, reflecting continued demand for our financing solutions. Asset Management and Infrastructure Solutions generated $19 million of adjusted gross profit compared to $17 million in the second quarter. Assets under management increased by over 30% to $5.9 billion, driven by growth of more than 40% in ETFs and 30% in alternatives. As Chris mentioned, assets under stake also increased more than 60% to approximately $4.6 billion, reflecting both market appreciation and new capital inflows. Fee growth was more modest during the quarter as reported AUM reflects quarter-end balances, including capital raised late in the period, while fee revenue reflects activity throughout the course of the quarter. Turning to data centers. we generated approximately $79 million of adjusted gross profit and $69 million of adjusted EBITDA, representing the first full quarter of contribution from Helios Phase I. Capital expenditures were approximately $757 million during the quarter compared with $448 million in Q2. We expect spending to increase as Phase II construction progresses with a significant portion of the remaining construction expenditures anticipated in the first half of 2027. As a reminder, there are a few moving pieces related to interest income and expense in our data centers business that will affect our financials over coming quarters. As financing proceeds are deployed into construction, our short-term investment balances and related interest income will decline. At the same time, a greater portion of our borrowing costs will be capitalized on the balance sheet rather than expensed through the income statement. At quarter end, Data Center segment had approximately $6.8 billion in total assets and approximately $5.3 million in total liabilities reflecting continued investment in Helios and the financing secured for Phase 2. We do expect this segment's total asset base to grow as construction progresses and capital is deployed. The Treasury and Corporate segment generated $419 million of adjusted gross profit during the quarter compared with $42 million -- $42 million loss in Q2, driven primarily by significant appreciation across digital asset holdings and private investments during the quarter, including notable contributions from etched and forward Industries on others. As Mike mentioned, these investments reflect our ability to identify compelling opportunities across the digital asset ecosystem and broader technology ecosystem and represent an important source of long-term value for Galaxy. We also held approximately $1.7 billion in net digital assets and investments at quarter end, up nearly 50% from Q2, including exposure to bitcoin and other liquid -- digital assets. Firm-wide, we ended the quarter with approximately $4.9 billion of cash, stable coins and treasury bills compared with $2.5 billion at the end of June. This increase was driven largely by proceeds from the $3.5 billion financing completed during the quarter to fund construction of Helios Phase II. Looking ahead, we anticipate pursuing Phase III financing in the first half of 2027 with the structure of that financing being informed by market conditions, comparable transactions and our assessment of the most attractive terms available. We also have $445 million of exchangeable notes maturing in December 2026. We have the necessary resource on balance sheet to meet that maturity today but are always evaluating different financing options in the context of our overall liquidity position and broader capital priorities. We exited the quarter with approximately $3 billion of book equity with more than 8% allocated to our operating businesses, providing a strong capital foundation as we continue to scale. On share repurchases, we deployed approximately $79 million during the third quarter. And as Mike mentioned, we purchased the remaining portion of our previously authorized $200 million during the month of October. These repurchases more than offset dilution from equity-based compensation, contributing to a net reduction in shares outstanding year-to-date. The Board's approval of an additional $200 million authorization announced today allows us to continue opportunistically buying back stock when we believe it's trading at a meaningful discount to intrinsic value and it fits within our broad capital plan. With that, operator, let's open the line for questions.

[Operator Instructions] Our first question today comes from Patrick Molly from Piper Sandler. .

This is Will Cobb on for Patrick. I want to go back to the comments on the Helios lease discussions from over the summer. And you help us understand what led you to step away and what terms you need to see a deal and you're willing to sign? Was it driven mainly by economics and revenue? Or Potentially more by a counterparty credit support or something else?

Well, thank you for joining for the question. So as we said in the remarks, -- we have -- we have been pursuing opportunities throughout the year at early stages given that Helios II energization time line really isn't until the middle of 2028 at the earliest expected right now. Those conversations got pretty serious going into the summer. And then a lot of stuff happens, right? The -- we saw actual projects around us getting delayed we saw regulatory headwinds, not just in Texas but across the country, tightening up, and therefore, an expectation that available power on the forward was going to be tighter than I think we or the market really understood. At the same time, we saw a number of financing structures start to come into the market, think like investment group wraps around non-investment grade potential counterparties that we thought were interesting and that we were evaluating. The issue there is the devils are in the details. And so an investment-grade wrap that doesn't actually achieve investment-grade protection for both our enter equity isn't really investment-grade wrap. And you don't really know those things until you get into the details and you get to the finer points. And finally, to sort of back that up, the financing markets, obviously around that time also started backing up and the focus on structure counterparty is really came in to life for us and from the whole market. And so with all that as a backdrop, we decided to take a pause, take a breath, reignite conversations more broadly. And that sort of happened at exactly the same time that a number of the big hyperscalers started turning their attention to 2028 available power. And so that's what led us to decide to broaden out the process. And that's why now we're in active conversations with a number of high-grade potential tenants who are now very focused on figuring out what their power strategy is for 2028.

Our next question comes from James Yaro from Goldman Sachs.

I was hoping you might be able to update us on your current capital deployment priorities. In light of the new buyback program, the maturing notes at the end of the year, as well as the continued need to deploy capital into the data center segment? And could you speak to your appetite, I guess, maybe just expand on your appetite to potentially replace the notes maturing in December with additional debt?

Yes, sure, James. I'll take that one. So first, when we think about capital planning, we start with what is the business need across our 2 businesses, which obviously different capital need profiles. But that is the first focus for capital requirements. We obviously have a funding and financing plan for the data centers the digital asset businesses broadly tend to be self-financing in many ways as financial services oriented. And so we think of our business needs as the first priority. . Secondly, I would say we think about a capital buffer and cushion on the balance sheet, maintaining a healthy, strong, robust balance sheet. I think it's a very important principle from our standpoint. As we talked about, we have significant cash, stable coins and liquidity on balance sheet in addition to liquid investments on the balance sheet that we have the ability to shift around as necessary. As you'll see, we've got about 80% -- actually more than 80% of our capital now deployed into our operating businesses. We've talked about this over the last couple of quarters. You should expect that number to increase as we see the investment in those businesses grow out. And then third, we extinguished the buyback, the $200 million initial thought it was appropriate to have an additional authorization, but we will be very, I would say, opportunistic in how we think about deploying additional capital from a buyback perspective. And the second part of your question, remind me -- what was that part of your question?

If you could just maybe just expand a little bit on the comments around the exchangeable notes and I guess, appetite to replace that. I think you pointed out you have enough resources to not have to do so, but just maybe the moving parts there.

Yes, yes. Got it. Thanks. Yes. So the exchangeable. So we have $445 million of exchangeable notes maturing in December. Look, the way we think about that is, first and foremost, we have the capital resources to pay that back in full without refinancing it. As you know, we did a convertible issuance Q4 of last year. Those resources were deployed across our operating businesses and to sort of prefund some of this -- and so we're not going to precommit to anything in terms of what we may or may not do for broader debt or capital planning. But suffice it to say, we have the resources to pay that back in the near term.

Our next question comes from Peter Christiansen from Citi.

I wanted to ask about the digital assets part of the business. You generated a decent gross profit this quarter. You had EBITDA still negative. I'm just curious, what are some of the key investments that's suppressing profitability there? And how do you think for digital assets to become more sustainably EBITDA, what do we need to to see occur.

Yes. So thanks for the question. This is Tony. I'll start, and Chris can add as he sees fit. So I would say, broadly, the second quarter, as we talked about in our comments, the broader landscape was volumes and activity in the crypto space were down. Obviously, the price of crypto is still something underlying that drives a lot of the activity in our trading and derivatives businesses. We continue to outperform in that space. Our volumes were up on a quarter-over-quarter basis. We believe we're continuing to take share in those businesses. Our lending book grew about 25% quarter-over-quarter and we're adding recurring revenue streams, which we think is the most important part of building a more durable business. We do continue to invest. We are making investments in a few different areas that we've talked about digital infrastructure, areas where we see future growth. And so as activity continues to pick up, I think we'll you should see us move closer towards consistent profitability in that segment. The other thing I will mention, it's a bit nuanced, but we did have a small accounting adjustment that we in terms of how we accounted for certain things in the business that if not for that change on a quarter-over-quarter basis, we would have been profitable in that segment just this quarter, it's sort of a onetime shift. But Other than that, we're -- well, Chris, I don't know if you have any other comments. .

Yes, I'll just supplement that a little bit. I think there's a few things going on in digital assets and the broader financial infrastructure markets that drive our thinking and our planning around profitability and what we're investing in. The key is like, one, volumes in the narrow niche crypto market obviously are suppressed and are a bit challenged at the moment. And our business generally is a pipe business where the more volume that flows through it, the more opportunity there is for us to generate revenue for the business historically at least. We do have a long-term view on crypto assets like Bitcoin, for example, and the decentralization theme, particularly in a more complicated digitally-driven agentic AI world. But that aside, the other thing that's happening is a transition to real-world assets of the legacy financial system, moving on chain. And so what we're doing today is prosecuting the business that we can in the crypto markets while investing in technology and people and licensure, for example, so that we are going to be in a position to be on the forefront to be able to service the transition of volumes from traditional legacy real-world assets on chain into a digital form. And so we actually -- while we never like to lose money ever, being able to sustain the amount of revenue we have in this niche market while being able -- having the luxury being able to having the capital to be able to invest in growth so that we're positioned to capture that mega opportunity is really where we're at in the business today.

Our next question comes from James Faucette from Morgan Stanley.

Wanted to ask quickly on Helios I and working with CoreWeave there. Just any insight you can share with us around what you know about their agreements with their partners for not only Phase 1, but also if that's linked to -- if that same partner is likely to also take on Phases II and III.

So let me -- I'll just -- I'll set the stage for our relationship with CoreWeave, how it's set up and how we understand their contract restructure and how their business model works. And I think it's important and it's illustrative of how we think about the risk and also the insight we have or don't have into their ultimate operations. Our relationship with CoreWeave, with the 3 leases that exist today for Helios I, also that CoreWeave's parent company. We face CoreWeave Inc. The way we think about that is that means that ultimately, we face CoreWeave's higher portfolio of customers. And we face effectively CoreWeaves residual equity and interest in those contracts after their site-level GPU secured financings. That's pretty much the business model. That's our exposure. We like that exposure because what it means is that we are not subject to at our facility, a single counterparty look-through exposure in the instance where there's a eosocratic problem with that 1 counterparty. CoreWeave's portfolio of pretty much all of the entire hyperscaler universe and most of the Frontier labs is the credit that we look to across their whole portfolio. core weaves contracts, while we don't have insight into all them more into the specificity, necessarily, CoreWeave generally contracts with its customers under 4, I believe now the average is closer to 5 years as they reported on a GPU hour basis generically, not on a facility level agreement. And so what that means is CoreWeave has the ability to balance their loads to their customers across their data on our footprint. That's important because it means that the answer to the question of who's the underlying tenant at Helios. By definition, can and we expect will change over time, both because they commit generic GPU loads to their clients and because we know that the tenders of their contracts are shorter than the leases they have to time by definition. We have been communicated by Tim from CoreWeave that that the loads running today that we see every day on the screen in Helios I are coming from a customer contract that's currently alluded to a large multitrillion-dollar investment-grade hyperscaler -- the -- we don't have insight yet into ultimately who's going to be in Phase II, let alone Phase III that will happen as we get closer to energization and data hall turnover, and they decide at that point in time, in 2027, where their load is needed and they want to allocate load to a particular facility. And so that's really the setup. I know that investors want to hear a direct look through to an investment-grade counterparty on the other side. It's just not business model and that the way the contracts are set out the core web side. And it's the platform and the risk that we underwrote when we originally did the transaction. That's not to say. I'll add on the -- that's not to say that there won't be opportunities if it's credit enhancing to look through to a direct customer and drop it down in SPV, for example, which we've seen happen once or twice in the market so far. But that sort of is downstream from core financing their and getting better execution on their GPU financing through an SPV direct deal and would come with hourly to approve or disapprove of any change in the tenant from the CoreWeave parent company down to a particular SPV. And so we'll look at that on a case-by-case basis and evaluate and assume it's credit enhancing. It's obviously something that we would engage with.

Got it. That's really helpful. And then back on the Helios II and kind of the engagement there, obviously, I think we're all sensitive to the changes in some of the market dynamics, et cetera, that Mike alluded to and mentioned at the outset. Are there other key market -- incremental market changes or clarifications that we should expect to come through before we would be able to announce a new tenant for Helios II? Or I'm just trying to get a sense of what the time line in [indiscernible] is to be paying attention to for that.

Yes. So the dynamics there, I tried to lay it out as clearly as probable in the prepared remarks. There's a few things that I would look towards. There's nothing today holding us back from executing on what would be a deal with an end tenant. But the speculation around late summer and the timing and the conversation we're in like we could have signed a deal had we wanted to. A lot of that was in our control to make a decision go forward. We proactively chose not to because of the change in market dynamics, and that still sort of exists today. . There is -- obviously, Texas, there's a lot going on in Texas from a regulatory perspective. There are some key dates coming up. In December, we expect to have clarity on audit results that we've submitted across the assets in Helios II. All of those things -- in April of 2027, we expect to get allocations of batch 0 study load, power, et cetera. Like all those things are on potential tenants might. What I would say quite clearly is there are absolutely investment-grade tenants who despite questions around the ERCOT process, want to contract and lock up power. And when they do the work on our portfolio, in particular, is and Helios IIwe think they generally come to the same conclusion we have, which is Helios II is a pretty unique asset in terms of when it studies were approved prior to the batch process. and the likelihood that Helios II is going to be unimpacted generally by any of the uncertainty. But nonetheless, like those dates are key. And for some of the tenant base looking at it, they're looking for us to pass through those as we expect to in order to sort of finally contract. Again, that's not the entire base. There are absolutely deals we expect we could do -- but the entire universe clarity on the regulatory front in Texas, in particular, is -- would help the process along.

Our next question comes from Devin Ryan from Citizens Bank.

I want to come back to Chris's comments on kind of broadening the pipes to be able to trade more kind of a couple of parts here. What else are you watching on regulatory guidance you guys think is critical from here? And then assuming that progresses. How are you thinking about where Galaxy is best positioned to participate in tokenization, meaning -- how do you see Galaxy being able to compete with, obviously, well-funded incumbents that will likely be coming here as well. And then are there specific real-world assets that are more attractive to Galaxy and then even beyond just trading and trade finance how do you see Galaxy's potential infrastructure partner here as we kind of progress in this world of tokenizing more real-world assets and trading them. I appreciate there's a lot in there, but just want some thougts.

Yes. It's Mike. Listen, so our big bet is that the infrastructure that crypto created is going to end up being the infrastructure that a lot of the traditional world operates on. When that happens, we'll see, right? It is starting to happen. I would tell you that almost every traditional finance shop is building towards that. Part because they have because what happens, they need to be there. 1 of our businesses that is -- we're putting a lot of effort into it and growing is actually being the partner to help build that infrastructure for traditional finance companies. That's in some ways, a fee or a SaaS business, but the real upside of that is once you get partnership, the ancillary services, the trading, the potentially offering other products, that's where the growth of those things come. And so we announced the 1 deal with Bank of New York. We are very engaged with a few other large participants -- and like, I think that's a good strategy. It's not going to dominate our revenue in the next 12 months. But when I look out 24 and 36 months, it's where I think will be a key part of that play. The second real angle is on Onchain credit. Chris talked about a few of the deals we've already done, like we have credit as part of our DNA. Chris came from a credit shop. It's been a big driver of our business since we started. And we are 1 of the leaders of Onchain credit today. We think that business is going to continue to grow. And so building OnChain Prime, building Onchain credit. Onchain asset management lives really on top of that. That I'd love to say in 2 years, we're really an on chain. Our digital asset business is really an Onchain digital asset business, and that's what we're driving towards. And that's what -- when someone asked Tony about the investment dollars, they're all tech dollars, and they're all tech dollars and regulatory dollars going into that build-out.

our next question comes from Edward Engel from Compass Point.

Back in February, I think you kind of acknowledged maybe aspirations that you'd have a deal for those 2 within the next 12 months. Should we assume this time line maybe gets extended by a little bit, just given that you walked away from the deal of summer? And then just quickly on Helios I financing. I think you last mentioned that the Phases 1 and II have enough free cash flow to kind of self-fund Phase III. Has that also changed just given maybe the exchangeable notes that do and maybe some of these recent buybacks.

I'll take the first part of the question. On Helios II leasing time line, I think we've covered a lot of it so far. I think expectations around timing of signing a deal. Let's start from the fact that Helios II's energization time line is expected to be in mid-2028. If you work back from mid-2028 that gives us 1.75 roughly years of room for both finding the right partner, and negotiating the right deal, design, planning and then ultimate construction. While that's not infinite time, that is a lot of cushion that we have, which we appropriately think we should take given how dynamic the market is to find the right partner, get the right economic transaction because these are deals we have to live with for effectively the rest of our professional lives given their tenor. . So we take it very seriously. It's very important. I wouldn't peg a specific time. I would tell you, though, that it's very difficult to enter into direct conversations with some of the largest companies in the world without an intent to ultimately transact and we are in direct conversations with some of those companies right now. And so I'm pretty positive and pretty bullish on the opportunity set in front of us for that right now. and know that our end date solving backwards is to deliver those potential clients' data halls in 2028.

Yes. On the second part of your question, so as you know, Phase 1 and Phase II are fully funded through the completion and end of construction, we will have the opportunity to refinance Phase 1 if we think the economics make sense from a refi standpoint, which may give us the opportunity to take some additional capital out. But importantly, we do not need to do that. As we've said before, Phase II is fully equity funded through the project. We intend to pursue debt financing sometime in the first half of 2027 and the equity financing being fully available already has not changed. .