Mining companies continue expanding their operations to chase bull market profitability, and Galaxy Digital is financing a growing share of these projects through its miner-focused financial services.
To date in 2021, Galaxy has loaned at $65 million through financing agreements with two companies, and a third undisclosed loan to another mining company.
- $45 million loaned to Argo Blockchain
- $20 million loaned to HUT8
- Undisclosed amount loaned to Greenidge
Galaxy Digital is a financial services and investment management company in the digital asset, cryptocurrency, and blockchain technology sectors. The firm currently manages $3.2 billion of capital, interacts with over 600 institutional trading counterparties, and has completed more than 80 investments in crypto and fintech. To put it mildly, Galaxy is well on its way to becoming the Goldman Sachs of crypto.
The firm’s mining financial services operations only officially launched in January, and it offers “trade and risk management solutions, principal lending and equity investments, and M&A advisory services to miners”. So far, Galaxy has committed a total of $65 million in financing to public mining companies, and at least one additional loan with an amount undisclosed.
The sections below detail these loans.
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Argo Blockchain’s $45 million loans
Via Twitter on June 29, 2021, Argo announced it had secured a $20 million loan agreement with Galaxy.
The loan would be for six months and be backed by a portion of Argo’s Bitcoin treasury. The proceeds are being used to construct a 200-megawatt cryptocurrency mining facility in West Texas, giving Argo access to 800 MW of electrical power. In addition, the loan is helping to “meet operating cash flow requirements”.
In September, a second loan agreement was announced for an additional $25 million, once again backed by a portion of Argo’s Bitcoin treasury. The initial loan agreement was rolled into the new loan agreement with a maturity date of October 29, 2021, resulting in a total principal balance of $45 million.
Hut 8’s $20 million loan
On April 30, 2021, Hut 8 announced that it had entered into a $20 million revolving credit agreement with Galaxy. As of now, there is limited information on what the funds might be used for, but it’s reasonable to assume Hut 8 will use the capital to expand operations. Interestingly, Hut 8 is also loaning out 1,000 Bitcoin to Galaxy to earn a 4% annual yield. It appears that Hut 8 and Galaxy Digital are entering into a strategic partnership that will blossom in the coming years.
In an investor presentation from March, Greenidge also noted Galaxy as one of its financing partnerships, along with Foundry. The image below is taken from the presentation. The amount of financing Greenidge received from Galaxy isn’t known.
The three loan deals covered above are probably not the only lending activity Galaxy’s mining financial services team has been involved in, but these are the only ones on public record. Based on a recent investor presentation, Galaxy boasted to have a “strong pipeline” of over 70 companies it could help provide financing for. With time, more loans and financing agreements are sure to be publicly announced.
Disclosure: Galaxy Digital is an investor in Compass Mining.