Crypto Winter’s Chilling Aftermath: Galaxy Digital and Riot Blockchain Report Q2 Losses

<p>Even though
the prolonged period of cryptocurrency winter is behind us, digital asset
market companies still feel its adverse effects. The consolidation of Bitcoin
(BTC) and other asset prices, low network activity, and increasing mining
difficulty make it challenging for both miners and cryptocurrency funds to
achieve profitability. The latest examples are publicly listed companies Riot
Platforms Inc. (NASDAQ: RIOT) and Galaxy Digital Holdings Ltd. (TSX: GLXY),
which reported negative financial results in the second quarter.</p><p>Galaxy Digital Loses $46
Million in Q2 2023</p><p>Founded by
American investor Michael Novogratz, the cryptocurrency firm Galaxy Digital
lost $46 million in the past quarter. This is a significant contrast compared to the profit of $134.3 million reported in the previous quarter.</p><p>“Compared
to the first quarter, the decrease was primarily attributable to lower net
realized gains on digital assets and net unrealized losses on investments,
partially offset by higher net realized gains on investments,” the company
explained in the official statement.</p><p>Trading
profits decreased 54% quarter-over-quarter (QoQ) to $565 million. However,
the company began <a href="https://www.financemagnates.com/cryptocurrency/galaxy-digital-turns-17b-net-income-from-2021-to-1b-loss-in-2022/" target="_blank" rel="follow">seeking profits elsewhere</a>, including in the asset management
industry. Galaxy Asset Management achieved revenue of $33.8 million,
representing an increase of 619% QoQ. Mining profits, operated by Galaxy
Digital Infrastructure Solutions, grew 51% QoQ to $15.4 million.</p><p>"Galaxy's
operating businesses performed well in the second quarter against a backdrop of
continued uncertainty and regulatory pressure, as we continue to manage the
Company to meet the evolving needs of our clients," Michael Novogratz, the
Founder and CEO of Galaxy, said.</p><p>The company
also reported maintaining a “strong liquidity position” of $696 million,
consisting of $302 million in cash and $395 million in digital assets. Of the
latter, stablecoins constituted $167 million.</p><p>Riot Blockchain Lost $27.7
Million in the Same Quarter</p><p>Turning to
the publicly listed cryptocurrency miner, Riot Blockchain, the company reported
Q2 2023 revenue of $76.7 million and achieved a record hash rate capacity of
10.7 EH/s. However, it was not enough to achieve profitability, with a net loss
of $27.7 million for the three-month period. Compared to the loss a year
earlier, this is a significantly improved result. In Q2 2022, Riot reported a
loss of $353.6 million.</p><p>In the
official statement, the company seems to focus mainly on the increasing hash
rate capacity and expanding the execution of the power strategy. This led to a
decrease in the average cost of mining a single <a href="https://www.financemagnates.com/terms/b/bitcoin/">Bitcoin</a> to $8,389, compared to an average Bitcoin price of $28,000 during the period.</p><blockquote><p lang="en" dir="ltr">Riot Reports Second Quarter 2023 Financial Results, Current Operational and Financial Highlights.$76.7 Million in Total Revenue, New All-Time Record Hash Rate Capacity of 10.7 EH/s, and Expanded Execution of Power Strategy.“I am excited to announce second quarter 2023 results…</p>— Riot Platforms, Inc. (@RiotPlatforms) <a href="https://twitter.com/RiotPlatforms/status/1689378796234014720?ref_src=twsrc%5Etfw">August 9, 2023</a></blockquote><p>“I am
excited to announce second-quarter 2023 results for Riot, as this quarter
showcased ongoing execution of our long-term strategy and included a number of
landmark announcements solidifying our future growth path,” Jason Les, the CEO
of Riot, commented. “Riot’s core business is Bitcoin mining, and the scale of
our vertically integrated operations and financial strength allowed us to
execute on our power strategy at unmatched scale this quarter.”</p><p>The total
revenue reached $76.7 million, which is up from $72.9 million during the corresponding
three months in 2022. This surge was largely due to a boost of 27% in Bitcoin
production compared to the same period last year, despite a drop in average
Bitcoin prices.</p><p>Regarding
production, the quarter saw 1,775 Bitcoins being mined, a significant
increase from the 1,395 Bitcoins that were mined in the same quarter of 2022. This
enhanced production is attributed to a considerable increase in the number of
miners deployed compared to the previous year.</p><p>In the last
month of the second quarter, several other publicly listed cryptocurrency
companies reported declines in production. These include Argo Blockchain, which
<a href="https://www.financemagnates.com/cryptocurrency/argos-june-bitcoin-production-and-revenue-fall-by-almost-20/" target="_blank" rel="follow">saw a drop</a> of nearly 20% in efficiency, and HIVE Blockchain, which <a href="https://www.financemagnates.com/cryptocurrency/hive-blockchain-crypto-production-falls-in-june-to-259-btc/" target="_blank" rel="follow">produced 259
BTC</a> compared to a record 304.6 BTC the year before.</p><p>After the
start of 2023, it seemed this year would be better for the industry than the
very weak 2022, during which miners <a href="https://www.financemagnates.com/cryptocurrency/why-bitcoin-miners-made-6-billion-less-in-2022/" target="_blank" rel="follow">earned $6 billion less</a> than the previous
year. However, the dynamic growth of <a href="https://www.financemagnates.com/terms/c/cryptocurrencies/">cryptocurrencies</a> halted during the summer,
and we are now witnessing market stagnation again. </p>

This article was written by Damian Chmiel at www.financemagnates.com.