Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Let's talk right now with Galaxy Digital. It's trading on
Speaker 2: the NASDAC after a nearly after a long drawn out
Speaker 2: process with the SEC that reportedly costs over twenty five
Speaker 2: million dollars. Joining us to discuss as Mike Novogratz, the
Speaker 2: founder and CEO. Mike, great to have you on the program.
Speaker 2: Really excited to talk about a lot of other happy
Speaker 2: things with you, But I want to start with this listing.
Speaker 2: Why was it so long drawn out, problematic, infuriating? What
Speaker 2: word would you use?
Speaker 3: Listen the I would use the word Unamerican.
Speaker 1: The SEC under the Biden administration really just wasn't fair.
Speaker 1: And it's been a breath of fresh air with the
Speaker 1: new administration that their process says they're looking at your business,
Speaker 1: they're doing what the SEC is supposed to do. And
Speaker 1: so we waited thirteen hundred and seven to go public.
Speaker 1: It kept us out of the deepest capital markets in
Speaker 1: the world. It put all the companies, not just ours,
Speaker 1: at a big disadvantage.
Speaker 3: But we're looking forward. We listed on Friday.
Speaker 1: It was a glorious day for you know, our Galaxy family.
Speaker 1: The NASDAQ does an amazing job of making you feel
Speaker 1: special and we couldn't be happier to have finally cleared
Speaker 1: that hurdle.
Speaker 4: Okay, so you cleared that hurdle, but as you said,
Speaker 4: it took a long time. So I'm curious as to
Speaker 4: how you feel the company, Your company has evolved since
Speaker 4: you first filed to Listen in the US.
Speaker 3: Well, we're a very different company, Listen.
Speaker 1: I mean, sometimes scarcity makes you tough, and you you know,
Speaker 1: most of our growth was funded by trading profits and
Speaker 1: investing profits, and so it kept us, it kept us
Speaker 1: very focused on not being wrong. What's changed. We're now
Speaker 1: really a holding company with two different divisions.
Speaker 3: Right. We have a very large AI data center company.
Speaker 1: We've got a project in Helios called Helios down in
Speaker 1: West Texas that in the Panhandle that we think will
Speaker 1: be the largest data center in America by twenty thirty.
Speaker 3: We already have eight hundred megawatts of power and we're
Speaker 3: in the queue for more. We've had a great partnership
Speaker 3: with core Weave.
Speaker 1: I watched core Weave stock seems to go up every
Speaker 1: single day, and so we share for them because there
Speaker 1: are tenant you know, we have contracts signed with them
Speaker 1: on the first six hundred megawats of our power to
Speaker 1: deliver a little bit less than that to them.
Speaker 3: And so that's a big business.
Speaker 1: And so we have that business, and then we have
Speaker 1: our traditional crypto business. And the crypto business really was
Speaker 1: built to be a bridge between institutions and the crypto community.
Speaker 1: And to be fair, I was really early right. This
Speaker 1: idea that the herd was coming was my tag phrase.
Speaker 1: They just didn't come. But they're here now with this
Speaker 1: new administration, the regulatory clarity that we're starting to get
Speaker 1: from sec, CFDC, FDIC, you know, getting the right people
Speaker 1: in those seats who are pro crypto. We just got
Speaker 1: stable coined legislation on Monday, and so there's only one
Speaker 1: more piece of one more hurdle for Congress, which is
Speaker 1: going to be called a market structure bill. But after
Speaker 1: that it's up to the crypto industry to build something
Speaker 1: that America wants.
Speaker 2: I do want to point out Core Weave is up
Speaker 2: another ten percent today and the stock is more than
Speaker 2: doubled tripled basically since the IPO. So yes, very successful.
Speaker 2: Tenant a great one to sign up for that data center.
Speaker 2: In terms of Galaxy, you did have a decline in
Speaker 2: revenue in the first quarter, and a lot of people
Speaker 2: will find that puzzling since the price of bitcoin was
Speaker 2: up so much, right it rallied up over through through
Speaker 2: and over one hundred thousand dollars. Are you going to
Speaker 2: see a bounce back in revenue now that this legislation
Speaker 2: has passed well?
Speaker 1: And so if you look at big Coin from start
Speaker 1: to finish in the first quarter, it was actually down
Speaker 1: a little bit in the Ethereum and the other coins
Speaker 1: were down a lot. Right, Ethereum was down over forty percent,
Speaker 1: And so we still have a big balance sheet. Right
Speaker 1: we have roughly a billion dollars of crypto assets at
Speaker 1: another four hundred million of ventury private equity crypto assets,
Speaker 1: and so we have a lot of beta to the
Speaker 1: overall market. And so traditionally our earnings have been very
Speaker 1: correlated with price. We are changing that quickly as our
Speaker 1: businesses become more stable. Right when we started, we made
Speaker 1: most of our money by being long at the right
Speaker 1: time and short at the right time. Now we've got
Speaker 1: a staking business, a lot of recurring revenue businesses that
Speaker 1: we're building as well as this data center. The data
Speaker 1: center won't really be a cash flow positive for another
Speaker 1: year and then it becomes literally a cash machine, and
Speaker 1: so we hope the volatility of our earnings goes down
Speaker 1: when these other businesses come online.
Speaker 4: So, Mike, the crypto industry is definitely having a moment
Speaker 4: right now. There's a listing of your company, Galaxy Digital Coinbase,
Speaker 4: joining the S and P five hundred. You also have
Speaker 4: the debut of etro, and of course a price of
Speaker 4: bitcoin itself on an upswing today hitting a record a
Speaker 4: one hundred and eight thousand dollars. Do you think the
Speaker 4: news around the crypto ecosystem is helping to drive the
Speaker 4: price of bitcoin? Is? What's what's a what's whigging the
Speaker 4: dog here?
Speaker 3: I think?
Speaker 1: Listen, it started with Larry Fink when he got orange pilled,
Speaker 1: and the largest ask managers of the world said, this
Speaker 1: is a real asset in at least bitcoin that everyone
Speaker 1: should be part of, and and lots of other companies
Speaker 1: Investo with us followed suit, right, and so that was
Speaker 1: kind of round one of institutions coming in. But really
Speaker 1: it was the change of the shift of approach from
Speaker 1: the Gary Ganzler sec. To this Trump administration which has
Speaker 1: just embraced our industry, and that freed up the animal
Speaker 1: spirits both here and abroad. I've had conversations with heads
Speaker 1: of large sovereign wealth funds that said, if America's buying bitcoind,
Speaker 1: we're buying bitcoin. And so you're seeing like the snowball
Speaker 1: is rolling downhill. The one thing that could have held
Speaker 1: it back some at least the bitcoin price would have
Speaker 1: been if you know, Scott Besson and his and his
Speaker 1: team and Congress could have really not that deficit from
Speaker 1: seven percent of GDP down towards three, which was his plan.
Speaker 1: Right now it looks like it's going from seven to eight.
Speaker 1: And you know, I like Scott Bess and a lot.
Speaker 1: I think he's as competent and capable as anybody. We're
Speaker 1: in a really hard position as a country, and when
Speaker 1: you have this kind of debt and you're seeing it.
Speaker 3: With long ends of interest yield.
Speaker 1: Curves are selling off everywhere, the dollars under pressure, and
Speaker 1: that all is very good for bitcoin and crypto assets
Speaker 1: as well.
Speaker 2: Yeah, it was pretty shocking to look at weakness in
Speaker 2: the dollar and other haven assets, and for a long
Speaker 2: time Bitcoin was kind of bucking the trend and going
Speaker 2: the other way, almost as if it was taking on
Speaker 2: a reserve currency status. I know that would be a
Speaker 2: fantasy for a lot of bitcoiners, for sure. I want
Speaker 2: to ask you about tokenization though, Mike, you at Galaxy
Speaker 2: have tokenized a number of really cool things. I think
Speaker 2: I read you tokenized as stratavarious violin and you mentioned
Speaker 2: the new SEC you want to tokenize your shares or
Speaker 2: you're in talks with them to do that. How are
Speaker 2: those talks progressing and when do you think that's going
Speaker 2: to be possible.
Speaker 3: Listen, the SEC is really open minded to people coming
Speaker 3: down with ideas, and so.
Speaker 1: I think you're going to see tokenized equities at least
Speaker 1: experiments with them in the next you know, one to
Speaker 1: one to two months. I'm just throwing at it, throwing
Speaker 1: out a range. I don't know for certain, but it's
Speaker 1: going to happen. And tokenization itself, I keep saying, this
Speaker 1: is going to got to go real slow and then
Speaker 1: all of a sudden, real fast, and I think, quite frankly,
Speaker 1: might end up driving a lot of crypto adoption. You know,
Speaker 1: people will be more comfortable owning Apple stock in a
Speaker 1: token ized form maybe than owning your crypto. But once
Speaker 1: you start learning to go from an account to a wallet.
Speaker 1: The big migration in the next five years are going
Speaker 1: to be from accounts to wallets. Right this stable coin
Speaker 1: bill is going to allow lots of new issues of
Speaker 1: stable coins, and all of a sudden, people are gonna
Speaker 1: in this in this device here, going to have their
Speaker 1: money market fund and maybe some of their stock and
Speaker 1: maybe some of their bitcoin in a custody self custodied
Speaker 1: wallet as.
Speaker 3: Opposed to having to call their bank or their brokerage.
Speaker 2: But you know what, Mike, you know, I've spent some
Speaker 2: time on our ETF program last year Scarlett now co
Speaker 2: anchors that she kicked me off the set, and for
Speaker 2: a long time we talked about the ETF of crypto assets.
Speaker 2: Will crypto now replace? Will token tokenization replace et I
Speaker 2: F ETFs? I mean is is Eric Balchuna is going
Speaker 2: to cover tokens instead of ETFs.
Speaker 3: You will have a token I show in a few years.
Speaker 3: I don't think you'll replace. Listen, the US capital markets
Speaker 3: are gigantic.
Speaker 1: But crypto is going to take a piece of it,
Speaker 1: and it's going to and tokenization is going to grow
Speaker 1: much faster than people think.
Speaker 3: You know it.
Speaker 1: One of the advantages of having a token is stock
Speaker 1: is much broader distribution. You know, I can envision a
Speaker 1: day where the young kid in Tanzania who's got a
Speaker 1: you know, two dollars and thirty seven cent savings has
Speaker 1: put it into a tiny piece of applestock, right like
Speaker 1: the the the democratization of being able to participate in
Speaker 1: markets is going to go limit up, Yeah, because almost
Speaker 1: everyone on the planet has one of these, and it's
Speaker 1: going to be very easy to get, you know, digital
Speaker 1: digital wallets, got.
Speaker 4: It, got it, Mike, Really appreciate your joining us. A
Speaker 4: pleasure speaking with you, Mike Novograts of Galaxy Digital, and
Speaker 4: who knows, maybe we'll launch a tokenization IQ or token
Speaker 4: IQ show sometimes soon.
Speaker 3: We'll come back for that, all right, there you go,