🤖 Texas Froze the Wrong Number

Good morning to everyone who read the headline and stopped there.

$GLXY ( ▲ 2.81% ) just posted the best operating quarter in its history. The stock fell 14%.

Today we're breaking down the number that actually changed this week. It wasn't in the earnings report.

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Galaxy reported Tuesday and led with an $85M loss.

The stock dropped 14%.

The loss came almost entirely from its crypto holdings falling in value.

Take those out and the two real businesses made $86M in gross profit, roughly breakeven for the first time ever.

The new one is data centers. It went from nothing to $20M of profit in one quarter.

That business is Helios, a campus in West Texas.

133 megawatts are running and rented to $CRWV ( ▼ 2.13% )

Think of it as a landlord business.

Galaxy owns the building and the power. CoreWeave brings the computers and pays rent for 15 years.

That's about $80 million a quarter at 90% margins, and over $30 billion full term.

One thing most analysts overlook.

Management says no new shares are needed for the next phase. True, because they borrowed $3.5B instead.

Funded is not the same as free.

But the number that really moved landed two days earlier.

On Monday, the governor of Texas stopped approving new data centers until the state audits everyone waiting in line.

That line now holds 474 gigawatts across more than 1,800 projects, over 5x the most electricity Texas has ever used in a single day.

Everyone read that as bad news.

Here's why it's the opposite.

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The 5,730 megawatt number everyone shared this week is the part Texas just froze.

The 1,624 megawatts nobody mentioned is the part that just got more valuable.

Galaxy's chart mixes two very different things.

1,624 megawatts already has permission to plug into the grid.

About 800 is rented to CoreWeave.

The other 830 is approved, ready to build, and has no tenant.

The remaining 4,100 megawatts is still waiting in line.

The line is what got frozen.

For three years, the scarce thing in AI was electricity. Since Monday in Texas, the scarce thing is permission.

Those are not the same. You can build more power. Nobody can build permission. Texas just stopped granting it.

Galaxy has 830 approved megawatts and no tenant. Behind it sit 1,800 projects that came to Texas to build their own power and no longer can.

Last week those were competitors. This week they're customers.

So what does this mean for your portfolio?

Every AI infrastructure company gets valued on the pipeline it can announce. It's why they all lead with a gigawatt number.

That number just became the least useful one on the page.

What matters now is how much you can actually turn on. Every name in this space sits on one side of that line, and most investors have never checked which.

Texas didn't slow down the AI buildout.

It just picked who gets to do it.

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