Michael Novogratz transforms Galaxy Digital into high-performance computing company to safeguard margins against mining downturn

Michael Novogratz, through Galaxy Digital, is rethinking its business strategy in response to the pressure facing the Bitcoin mining industry. The New York-based company has signed a preliminary agreement with a U.S. hyperscale firm to convert all of its 800-megawatt energy capacity into high-performance computing infrastructure aimed at artificial intelligence companies.

The decision reflects an uncomfortable reality: after Bitcoin’s fourth halving, which halved mining rewards, profit margins have significantly contracted. Galaxy Digital, although maintaining 200 MW operational out of its approved 800 MW at the Helios plant in Texas, faces pressure to diversify its revenue streams.

Why Bitcoin mining is no longer enough

The mining industry is at a crossroads. Increasing mining difficulty and reduced rewards have made many operations unprofitable. Galaxy Digital’s mining revenue fell 23% quarter-over-quarter, revealing the operational stress these companies face, even with an 11% increase in total mining power.

The alternative is clear: pivot toward artificial intelligence. Cloud computing companies need massive energy infrastructure, and miners already have that operational capacity. It’s a quick solution that avoids building data centers from scratch, benefiting both sides: miners secure recurring income, and AI providers accelerate their expansion.

The domino effect Michael Novogratz can’t ignore

Galaxy Digital is not alone in this strategy. CORE Scientific (CORZ), one of the largest mining operations, led the way by signing a huge deal with CoreWeave, a company specializing in cloud computing infrastructure. Its stock price surged after the announcement, pressuring other miners to follow suit.

Hut 8 and HIVE Blockchain, other industry giants, are now dedicating significant resources to AI computing instead of focusing solely on Bitcoin. For Michael Novogratz, ignoring this trend would be a competitive negligence. Galaxy Digital has decided to act, though the operation is subject to regulatory review and due diligence.

Contradictory results: what the numbers reveal

Although mining revenues plummeted, Galaxy Digital managed to reduce its net losses in the third quarter and increased its operating income by over 30% compared to the previous period. This contrast suggests that the strategic reconfiguration is already showing results.

The company’s shares rose more than 7% in Toronto last Thursday, signaling market approval of the direction Michael Novogratz has charted. With BTC trading near $68,600, miners face a race against time: adapt or disappear. Galaxy Digital’s bet is clear: the 800 MW energy capacity once dedicated solely to mining can now generate multiplied value through AI computing.

The industry has learned a lesson: in times of margin compression, diversification is not an option—it’s survival.