What changed in this filing

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Item 1. Financial Statements

2022-08-05 compared with 2022-05-06 · 52 added, 42 removed, 322 unchanged (23% of the section changed)

3 unchanged sentences

(Amounts in thousands, except Share and per Share amounts)

March 31, 2022

June 30, 2022

December 31, 2021

Investment in Bitcoin, at fair value (cost $ 7,267,351 and $ 7,303,280 as of March 31, 2022 and December 31, 2021, respectively)

Investment in Bitcoin, at fair value (cost $ 7,231,203 and $ 7,303,280 as of June 30, 2022 and December 31, 2021, respectively)

Sponsor’s Fee payable, related party

4 unchanged sentences

Accumulated net realized gain on investment in Bitcoin

Accumulated net unrealized appreciation on investment in Bitcoin

Accumulated net change in unrealized appreciation on investment in Bitcoin

Shares issued and outstanding, no par value (unlimited Shares authorized)

4 unchanged sentences

(Amounts in thousands, except quantity of Bitcoin and percentages)

March 31, 2022

June 30, 2022

Quantity of Bitcoin

11 unchanged sentences

(Amounts in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Investment income:

11 unchanged sentences

(Amounts in thousands, except change in Shares outstanding)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Increase (decrease) in net assets from operations:

1 unchanged sentence

Net realized gain on investment in Bitcoin

Net change in unrealized appreciation (depreciation) on investments in Bitcoin

Net change in unrealized appreciation (depreciation) on investment in Bitcoin

Net increase (decrease) in net assets resulting from operations

27 unchanged sentences

As partial consideration for the Sponsor’s services, the Trust pays Grayscale a Sponsor’s Fee as discussed in Note 6.

The Sponsor also acts as the sponsor and manager of other investment products including Grayscale Basic Attention Token Trust (BAT), Grayscale Bitcoin Cash Trust (BCH) (OTCQX:

BCHG), Grayscale Chainlink Trust (LINK), Grayscale Decentraland Trust (MANA), Grayscale Ethereum Trust (ETH) (OTCQX:

The Sponsor also acts as the sponsor and manager of other investment products including Grayscale Basic Attention Token Trust (BAT) (OTCQB:

GBAT), Grayscale Bitcoin Cash Trust (BCH) (OTCQX:

BCHG), Grayscale Chainlink Trust (LINK) (OTCQB:

GLNK), Grayscale Decentraland Trust (MANA) (OTCQX:

MANA), Grayscale Ethereum Trust (ETH) (OTCQX:

ETHE), Grayscale Ethereum Classic Trust (ETC) (OTCQX:

ETCG), Grayscale Filecoin Trust (FIL), Grayscale Horizen Trust (ZEN) (OTCQX:

ETCG), Grayscale Filecoin Trust (FIL) (OTCQB:

FILG), Grayscale Horizen Trust (ZEN) (OTCQX:

HZEN), Grayscale Litecoin Trust (LTC) (OTCQX:

LTCN), Grayscale Livepeer Trust (LPT), Grayscale Solana Trust (SOL), Grayscale Stellar Lumens Trust (XLM) (OTCQX:

LTCN), Grayscale Livepeer Trust (LPT) (OTCQB:

GLIV), Grayscale Solana Trust (SOL), Grayscale Stellar Lumens Trust (XLM) (OTCQX:

GXLM), Grayscale Zcash Trust (ZEC) (OTCQX:

2 unchanged sentences

The following investment products sponsored or managed by the Sponsor are also SEC reporting companies with their shares registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”):

Grayscale Bitcoin Cash Trust (BCH), Grayscale Ethereum Trust (ETH), Grayscale Ethereum Classic Trust (ETC), Grayscale Litecoin Trust (LTC), and Grayscale Digital Large Cap Fund LLC.

Grayscale Bitcoin Cash Trust (BCH), Grayscale Ethereum Trust (ETH), Grayscale Ethereum Classic Trust (ETC), Grayscale Horizen Trust (ZEN), Grayscale Litecoin Trust (LTC), Grayscale Stellar Lumens Trust (XLM), Grayscale Zcash Trust (ZEC), and Grayscale Digital Large Cap Fund LLC.

Grayscale Advisors, LLC, a Registered Investment Advisor and an affiliate of the Sponsor, is the advisor to the Grayscale Future of Finance (NYSE:

15 unchanged sentences

Summary of Significant Accounting Policies

In the opinion of management of the Sponsor of the Trust, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position as of March 31, 2022 and December 31, 2021 and results of operations for the three months ended March 31, 2022 and 2021 have been made.

The results of operations for the periods presented are not necessarily indicative of the results of operations expected for the full year.

In the opinion of management of the Sponsor of the Trust, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position as of June 30, 2022 and December 31, 2021 and results of operations for the three and six months ended June 30, 2022 and 2021 have been made.

The results of operations for the periods presented are not necessarily indicative of the results of

operations expected for the full year.

These unaudited financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K.

58 unchanged sentences

Amount at Fair

March 31, 2022

June 30, 2022

Investment in Bitcoin

6 unchanged sentences

Bitcoin is held by the Custodian on behalf of the Trust and is carried at fair value.

As of March 31, 2022 and December 31, 2021 the Trust held 641,637.82510544 and 644,809.96863835 Bitcoin, respectively.

The Trust determined the fair value per Bitcoin to be $ 45,595.55 and $ 45,867.86 on March 31, 2022 and December 31, 2021, respectively, using the price provided at 4:00 p.m., New York time, by the Digital Asset Exchange Market considered to be the Trust’s principal market (Coinbase Pro).

As of June 30, 2022 and December 31, 2021 the Trust held 638,446.30166100 and 644,809.96863835 Bitcoin, respectively.

The Trust determined the fair value per Bitcoin to be $ 18,895.01 and $ 45,867.86 on June 30, 2022 and December 31, 2021, respectively, using the price provided at 4:00 p.m., New York time, by the Digital Asset Exchange Market considered to be the Trust’s principal market (Coinbase Pro).

The following represents the changes in quantity of Bitcoin and the respective fair value:

18 unchanged sentences

Net realized gain on investment in Bitcoin

Ending balance as of March 31, 2022

Ending balance as of June 30, 2022

638,446.30166100

Creations and Redemptions of Shares

At March 31, 2022 and December 31, 2021, there were an unlimited number of Shares authorized by the Trust.

At June 30, 2022 and December 31, 2021, there were an unlimited number of Shares authorized by the Trust.

The Trust creates (and, should the Trust commence a redemption program, redeems) Shares from time to time, but only in one or more Baskets.

2 unchanged sentences

dollar value of accrued but unpaid fees and expenses of the Trust, by (y) the number of Shares outstanding at such time and multiplying the quotient obtained by 100.

Each Share represented approximately 0.0009 of one Bitcoin at both March 31, 2022 and December 31, 2021.

Each Share represented approximately 0.0009 of one Bitcoin at both June 30, 2022 and December 31, 2021.

The decrease in the number of Bitcoin represented by each Share is primarily a result of the periodic withdrawal of Bitcoin to pay the Sponsor’s Fee.

8 unchanged sentences

under the Exchange Act to list the Shares of the Trust on NYSE Arca.

As of the date of this Quarterly Report, the NYSE Arca 19b-4

application has not been approved by the SEC and the Trust has not sought relief from the SEC under Regulation M to operate an ongoing redemption program, and neither the Sponsor nor the Trust makes any representation as to if or when such approval and relief will be obtained.

On June 29, 2022, the SEC denied NYSE Arca’s 19b-4

application and the Sponsor subsequently petitioned the United States Court of Appeals for the District of Columbia for review of the SEC’s June 29, 2022 final order denying approval to list shares of the Trust on NYSE Arca as an exchange-traded product.

As of January 1, 2016, an amendment to the Trust Agreement was made to ensure that the Trust Agreement was consistent with the treatment of the Trust as a grantor trust.

25 unchanged sentences

threshold are recorded as a tax benefit or expense in the current period.

As of, and during the periods ended March 31, 2022 and December 31, 2021, the Trust did not have a liability for any unrecognized tax amounts.

As of, and during the periods ended June 30, 2022 and December 31, 2021, the Trust did not have a liability for any unrecognized tax amounts.

However, the Sponsor’s conclusions concerning its determination of “more-likely-than-not”

1 unchanged sentence

analyses of and changes to tax laws, regulations and interpretations thereof.

The Sponsor of the Trust has evaluated whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions related to federal, state and local income taxes existed as of March 31, 2022 or December 31, 2021.

Related Parties

1 unchanged sentence

DCG, Genesis, Grayscale and CoinDesk Indices, Inc.

As of March 31, 2022 and December 31, 2021, 30,245,514 and 25,327,433 Shares of the Trust were held by related parties of the Trust, respectively.

As of June 30, 2022 and December 31, 2021, 66,977,631 and 25,327,433 Shares of the Trust were held by related parties of the Trust, respectively.

The Sponsor’s parent, an affiliate of the Trust, holds a minority interest in Coinbase, Inc., the parent company of the Custodian, that represents less than 1.0 % of Coinbase Inc.’s ownership.

7 unchanged sentences

dollar value of Bitcoin is determined by reference to the Digital Asset Exchange Market that the Trust considers its principal market as of 4:00 p.m., New York time, on each valuation date.

The Trust held no Incidental Rights or IR Virtual Currency as of March 31, 2022 and December 31, 2021.

No Incidental Rights or IR Virtual Currencies have been distributed in payment of the Sponsor’s Fee during the three months ended March 31, 2022 and 2021.

The Trust held no Incidental Rights or IR Virtual Currency as of June 30, 2022 and December 31, 2021.

No Incidental Rights or IR Virtual Currencies have been distributed in payment of the Sponsor’s Fee during the three and six months ended June 30, 2022 and 2021.

As partial consideration for receipt of the Sponsor’s Fee, the Sponsor is obligated under the Trust Agreement to assume and pay all fees and other expenses incurred by the Trust in the ordinary course of its affairs, excluding taxes, but including marketing fees;

10 unchanged sentences

expenses that are not Sponsor-paid Expenses, including, but not limited to, taxes and governmental charges, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust or the interests of shareholders (including in connection with any Incidental Rights and any IR Virtual Currency), any indemnification of the Custodian or other agents, service providers or counterparties of the Trust, the fees and expenses related to the listing, quotation or trading of the Shares on any secondary market (including legal, marketing and audit fees and expenses) to the extent exceeding $ 600,000 in any given fiscal year and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters (collectively “Additional Trust Expenses”).

circumstances, the Sponsor or its delegate (i) will instruct the Custodian to withdraw from the Digital Asset Account Bitcoins, Incidental Rights and/or IR Virtual Currency in such quantity as may be necessary to permit payment of such Additional Trust Expenses and (ii) may either (x) cause the Trust (or its delegate) to convert such Bitcoins, Incidental Rights and/or IR Virtual Currency into U.S.

In such circumstances, the Sponsor or its delegate (i) will instruct the Custodian to withdraw from the Digital Asset Account Bitcoins, Incidental Rights and/or IR Virtual Currency in such quantity as may be necessary to permit payment of such Additional Trust Expenses and (ii) may either (x) cause the Trust (or its delegate) to convert such Bitcoins, Incidental Rights and/or IR Virtual Currency into U.S.

dollars or other fiat currencies at the Actual Exchange Rate or (y) cause the Trust (or its delegate) to deliver such Bitcoins, Incidental Rights and/or IR Virtual Currency in kind in satisfaction of such Additional Trust Expenses.

For the three months ended March 31, 2022 and 2021, the Trust incurred Sponsor’s Fees of $ 131,024,620 and $ 144,299,795 , respectively.

As of March 31, 2022 and December 31, 2021, there were no accrued and unpaid Sponsor’s Fees.

For the three months ended June 30, 2022 and June 30, 2021, the Trust incurred Sponsor’s Fees of $ 103,668,521 and $ 151,473,648 , respectively.

For the six months ended June 30, 2022 and 2021, the Trust incurred Sponsor’s Fees of $ 234,693,141 and $ 295,773,443 , respectively.

As of June 30, 2022 and December 31, 2021, there were no accrued and unpaid Sponsor’s Fees.

In addition, the Sponsor may pay Additional Trust Expenses on behalf of the Trust, which are reimbursable by the Trust to the Sponsor.

For the three months ended March 31, 2022 and 2021 the Sponsor did no t pay any Additional Trust Expenses on behalf of the Trust.

On March 10, 2021, the Board of the Sponsor (the “Board”) approved the purchase by DCG, the parent company of the Sponsor, of up to

$ 250 million worth of Shares of the Trust.

For the three and six months ended June 30, 2022 and 2021 the Sponsor did no t pay any Additional Trust Expenses on behalf of the Trust.

On March 10, 2021, the Board of the Sponsor (the “Board”) approved the purchase by DCG, the parent company of the Sponsor, of up to $ 250 million worth of Shares of the Trust.

Subsequently, DCG authorized such purchase.

4 unchanged sentences

This increased DCG’s prior authorization to purchase up to $ 750 million worth of Shares by $ 250 million.

On March 2, 2022, the Board approved the purchase by DCG of up to an aggregate total of $ 200 million worth of Shares of the Trust and s

hares of any of the following five investment products the Sponsor also acts as the sponsor and manager of, including Grayscale Bitcoin Cash Trust (BCH) (OTCQX:

On March 2, 2022, the Board approved the purchase by DCG of up to an aggregate total of $ 200 million worth of Shares of the Trust and shares of any of the following five investment products the Sponsor also acts as the sponsor and manager of, including Grayscale Bitcoin Cash Trust (BCH) (OTCQX:

BCHG), Grayscale Digital Large Cap Fund LLC (OTCQX:

2 unchanged sentences

ETCG), and Grayscale Stellar Lumens Trust (XLM) (OTCQX:

This increased DCG’s prior authorization to purchase up to $ 1 billion worth of Shares by up to a maximum of $ 200

This increased DCG’s prior authorization to purchase up to $ 1 billion worth of Shares by up to a maximum of $ 200 million.

The Share purchase authorization does not obligate DCG to acquire any specific number of Shares in any period, and may be expanded, extended, modified, or discontinued at any time.

From March 10, 2021 through March 31, 2022, DCG has purchased a total of $ 750.1 million worth of Shares of the Trust.

From March 10, 2021 through June 30, 2022, DCG has purchased a total of $ 771.8 million worth of Shares of the Trust.

During the three months ended June 30, 2022, approximately 35 million Shares were pledged as collateral under a loan agreement for which the counterparty defaulted and were subsequently assumed by Genesis Global Holdco, LLC and subsidiaries, which are wholly owned subsidiaries of DCG.

These amounts do not impact the remaining amount of Shares that can be repurchased under the publicly announced program.

Risks and Uncertainties

14 unchanged sentences

As a result, any incorrectly executed Bitcoin transactions could adversely affect an investment in the Shares.

The Securities and Exchange Commission (the “SEC”) has stated that certain digital assets may be considered “securities” under the federal securities laws.

The SEC has stated that certain digital assets may be considered “securities” under the federal securities laws.

The test for determining whether a particular digital asset is a “security” is complex and difficult to apply, and the outcome is difficult to predict.

2 unchanged sentences

The SEC staff also provided informal assurances to a handful of promoters that their digital assets are not securities.

On the other hand, the SEC has brought enforcement actions against the promoters of several other digital assets on the basis that the digital assets in question are securities.

On the other hand, the SEC has brought enforcement actions against the issuers and promoters of several other digital assets on the basis that the digital assets in question are securities.

If Bitcoin is determined to be a “security” under federal or state securities laws by the SEC or any other agency, or in a proceeding in a court of law or otherwise, it may have material adverse consequences for Bitcoin.

12 unchanged sentences

Financial Highlights Per Share Performance

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Per Share Data:

3 unchanged sentences

Net realized and unrealized gain (loss)

Net increase (decrease) in net assets resulting from operations

Net (decrease) increase in net assets resulting from operations

Net asset value, end of period

11 unchanged sentences

Subsequent Events

As of the close of business on May 2, 2022, the fair value of Bitcoin determined in accordance with the Trust’s accounting policy was

As of the close of business on August 1, 2022, the fair value of Bitcoin determined in accordance with the Trust’s accounting policy was $ 22,966.37

There are no known events that have occurred that require disclosure other than that which has already been disclosed in these notes to the financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements