What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-05 compared with 2022-05-06 · 52 added, 36 removed, 106 unchanged (45% of the section changed)

54 unchanged sentences

Review of Financial Results (unaudited)

Financial Highlights for the Three months ended March 31, 2022 and March 31, 2021

Financial Highlights for the Three and Six Months Ended June 30, 2022 and June 30, 2021

(All amounts in the following table and the subsequent paragraphs, except Share, per Share, Bitcoin and price of Bitcoin amounts, are in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net realized and unrealized gain (loss) on investment in Bitcoin

Net increase (decrease) in net assets resulting from operations

Net realized and unrealized loss on investment in Bitcoin for the three months ended March 31, 2022 was $(189,198) which includes a realized gain of $95,096 on the transfer of Bitcoins to pay the Sponsor’s Fee and net change in unrealized depreciation on investment in Bitcoin of $(284,294).

Net realized and unrealized loss on investment in Bitcoin for the period was driven by Bitcoin price depreciation from $45,867.86 per Bitcoin as of December 31, 2021 to $45,595.55 per Bitcoin as of March 31, 2022.

Net decrease in net assets resulting from operations was $(320,223) for the three months ended March 31, 2022, which consisted of the net realized and unrealized loss on investment in Bitcoin, less the Sponsor’s Fee of $131,025.

Net assets decreased to $29,255,830 at March 31, 2022, a 1% decrease for the period.

Net realized and unrealized loss on investment in Bitcoin for the three months ended June 30, 2022 was $(17,088,713) which includes a realized gain of $67,520 on the transfer of Bitcoins to pay the Sponsor’s Fee and net change in unrealized depreciation on investment in Bitcoin of $(17,156,233).

Net realized and unrealized loss on investment in Bitcoin for the period was driven by Bitcoin price depreciation from $45,595.55 per Bitcoin as of March 31, 2022 to $18,895.01 per Bitcoin as of June 30, 2022.

Net decrease in net assets resulting from operations was $(17,192,381) for the three months ended June 30, 2022, which consisted of the net realized and unrealized loss on investment in Bitcoin, plus the Sponsor’s Fee of $103,668.

Net assets decreased to $12,063,449 at June 30, 2022, a 59% decrease for the period.

The decrease in net assets resulted from the aforementioned Bitcoin price depreciation and by the withdrawal of approximately 3,192 Bitcoin to pay the foregoing Sponsor’s Fee.

Net realized and unrealized gain on investment in Bitcoin for the three months ended March 31, 2021 was $18,882,994 which includes a realized gain of $109,934 on the transfer of Bitcoins to pay the Sponsor’s Fee and net change in unrealized appreciation on investment in Bitcoin of $18,773,060.

Net realized and unrealized gain on investment in Bitcoin for the period was driven by Bitcoin price appreciation from $29,185.05 per Bitcoin as of December 31, 2020 to $58,601.27 per Bitcoin as of March 31, 2021.

Net increase in net assets resulting from operations was $18,738,694 for the three months ended March 31, 2021, which consisted of the net realized and unrealized gain on investment in Bitcoin, less the Sponsor’s Fee of $144,300.

Net assets increased to $38,360,399 at March 31, 2021, a 117% increase for the period.

Net realized and unrealized loss on investment in Bitcoin for the three months ended June 30, 2021 was $(15,565,070) which includes a realized gain of $114,595 on the transfer of Bitcoins to pay the Sponsor’s Fee and net change in unrealized depreciation on investment in Bitcoin of $(15,679,665).

Net realized and unrealized loss on investment in Bitcoin for the period was driven by Bitcoin price depreciation from $58,601.27 per Bitcoin as of March 31, 2021 to $34,764.81 per Bitcoin as of June 30, 2021.

Net decrease in net assets resulting from operations was $(15,716,544) for the three months ended June 30, 2021, which consisted of the net realized and unrealized loss on investment in Bitcoin, plus the Sponsor’s Fee of $151,474.

Net assets decreased to $22,643,855 at June 30, 2021, a 41% decrease for the period.

The decrease in net assets resulted from the aforementioned Bitcoin price depreciation and the withdrawal of approximately 3,256 Bitcoin to pay the foregoing Sponsor’s Fee.

Net realized and unrealized loss on investment in Bitcoin for the six months ended June 30, 2022 was $(17,277,911) which includes a realized gain of $162,616 on the transfer of Bitcoins to pay the Sponsor’s Fee and net change in unrealized depreciation on investment in Bitcoin of $(17,440,527).

Net realized and unrealized loss on investment in Bitcoin for the period was driven by Bitcoin price depreciation from $45,867.86 per Bitcoin as of December 31, 2021 to $18,895.01 per Bitcoin as of June 30, 2022.

Net decrease in net assets resulting from operations was $(17,512,604) for the six months ended June 30, 2022, which consisted of the net realized and unrealized loss on

investment in Bitcoin, plus the Sponsor’s Fee of $234,693.

Net assets decreased to $12,063,449 at June 30, 2022, a 59% decrease for the period.

The decrease in net assets resulted from the aforementioned Bitcoin price depreciation and by the withdrawal of approximately 6,364 Bitcoin to pay the foregoing Sponsor’s Fee.

Net realized and unrealized gain on investment in Bitcoin for the six months ended June 30, 2021 was $3,317,924 which includes a realized gain of $224,529 on the transfer of Bitcoins to pay the Sponsor’s Fee and net change in unrealized appreciation on investment in Bitcoin of $3,093,395.

Net realized and unrealized gain on investment in Bitcoin for the period was driven by Bitcoin price appreciation from $29,185.05 per Bitcoin as of December 31, 2020 to $34,764.81 per Bitcoin as of June 30, 2021.

Net increase in net assets resulting from operations was $3,022,150 for the six months ended June 30, 2021, which consisted of the net realized and unrealized gain on investment in Bitcoin, less the Sponsor’s Fee of $295,774.

Net assets increased to $22,643,855 at June 30, 2021, a 28% increase for the period.

The increase in net assets resulted from the aforementioned Bitcoin price appreciation and the contribution of approximately 50,739 Bitcoin with a value of $1,905,227 to the Trust in connection with Share creations during the period, partially offset by the withdrawal of approximately 6,434 Bitcoin to pay the foregoing Sponsor’s Fee.

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Selected Operating Data

Three months ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(All Bitcoin balances are rounded to the nearest whole Bitcoin) Bitcoins:

7 unchanged sentences

Closing Balance

As of March 31,

As of June 30,

Price of Bitcoin on principal market (1)

2 unchanged sentences

Digital Asset Holdings per Share (3)

The Trust performed an assessment of the principal market at March 31, 2022 and 2021, and identified the principal market as Coinbase Pro.

As of March 31, 2022 and 2021, the NAV per Share was calculated using the fair value of Bitcoin based on the price provided by Coinbase Pro, the Digital Asset Exchange that the Trust currently considers its principal market, as of 4:00 p.m., New York time, on the valuation date.

The Trust performed an assessment of the principal market at June 30, 2022 and 2021, and identified the principal market as Coinbase Pro.

As of June 30, 2022 and 2021, the NAV per Share was calculated using the fair value of Bitcoin based on the price provided by Coinbase Pro, the Digital Asset Exchange that the Trust currently considers its principal market, as of 4:00 p.m., New York time, on the valuation date.

The Trust’s Digital Asset Holdings per Share is derived from the Index Price as represented by the Index as of 4:00 p.m., New York time, on the valuation date.

2 unchanged sentences

Business—Overview of the Bitcoin Industry and Market—Bitcoin Value—The Index and the Index Price” in the Trust’s Annual Report on Form 10-K

for a description of the Index and the Index Price.

The Digital Asset Exchanges used to calculate the Index Price as of June 30, 2022 and 2021 were Coinbase Pro, Bitstamp, Kraken, and LMAX Digital.

Business—Valuation of Bitcoin and Determination of Digital Asset Holdings” in the Trust’s Annual Report on Form 10-K

for a description of the Trust’s Digital Asset Holdings per Share.

The Digital Asset Exchanges used to calculate the Index Price as of March 31, 2022 and 2021 were Coinbase Pro, Bitstamp, Kraken, and LMAX Digital.

For accounting purposes, the Trust reflects creations and the Bitcoins receivable with respect to such creations on the date of receipt of a notification of a creation but does not issue Shares until the requisite number of Bitcoins is received.

2 unchanged sentences

The Trust has not sought such relief as of the date of this Quarterly Report.

As of March 31, 2022, the Trust had a net closing balance with a value of $29,275,033,757, based on the Index Price (non- GAAP methodology).

As of March 31, 2022, the Trust had a total market value of $29,255,829,536, based on the principal market (Coinbase Pro).

As of March 31, 2021, the Trust had a net closing balance with a total value of $38,354,572,883, based on the Index Price (non- GAAP methodology).

As of March 31, 2021, the Trust had a total market value of $38,360,398,824, based on the principal market (Coinbase Pro).

As of June 30, 2022, the Trust had a net closing balance with a value of $12,056,356,116 based on the Index Price (non-GAAP

methodology).

As of June 30, 2022, the Trust had a total market value of $12,063,449,254, based on the principal market (Coinbase Pro).

As of June 30, 2021, the Trust had a net closing balance with a total value of $22,640,715,425, based on the Index Price (non- GAAP methodology).

As of June 30, 2021, the Trust had a total market value of $22,643,854,903, based on the principal market (Coinbase Pro).

Historical Digital Asset Holdings and Bitcoin Prices

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Movements may be influenced by various factors, including, but not limited to, government regulation, security breaches experienced by service providers, as well as political and economic uncertainties around the world.

The following chart illustrates the movement in the Trust’s Digital Asset Holdings per Share (as adjusted for the Share Split for periods prior to January 26, 2018) versus the Index Price and the Trust’s NAV per Share (as adjusted for the Share Split for periods prior to January 26, 2018) from September 25, 2013 to March 31, 2022:

The following table illustrates the movements in the Index Price from the beginning of the Trust’s operations on September 25, 2013 to March 31, 2022.

Since the beginning of the Trust’s operations, the Index Price has ranged from $117.03 to $67,352.59, with the straight average being $10,454.70.

The following table illustrates the movements in the Index Price from the beginning of the Trust’s operations on September 25, 2013 to June 30, 2022.

Since the beginning of the Trust’s operations, the Index Price has ranged from $117.03 to $67,352.59, with the straight average being $11,080.70 through June 30, 2022.

The Sponsor has not observed a material difference between the Index Price and the average prices from the constituent Digital Asset Exchanges individually or as a group.

Twelve months ended March 31, 2018

Twelve months ended March 31, 2019

Twelve months ended March 31, 2020

Twelve months ended March 31, 2021

Twelve months ended March 31, 2022

September 25, 2013 (the first Creation Basket of the Trust) to March 31, 2022

The following table illustrates the movements in the Digital Asset Market price of Bitcoin, as reported on the Trust’s principal market, from the beginning of the Trust’s operations on September 25, 2013 to March 31, 2022.

Since the beginning of the Trust’s operations, the price of Bitcoin has ranged from $110.83 to $67,371.70, with the straight average being $10,456.25.

Twelve months ended June 30, 2018

Twelve months ended June 30, 2019

Twelve months ended June 30, 2020

Twelve months ended June 30, 2021

Twelve months ended June 30, 2022

September 25, 2013 (the first Creation Basket of the Trust) to June 30, 2022

Since the beginning of the Trust’s operations, the price of Bitcoin has ranged from $110.83 to $67,371.70, with the straight average being $11,082.11 through June 30, 2022.

Digital Asset

Twelve months ended March 31, 2018

Twelve months ended March 31, 2019

Twelve months ended March 31, 2020

Twelve months ended March 31, 2021

Twelve months ended March 31, 2022

September 25, 2013 (the first Creation Basket of the Trust) to March 31, 2022

Twelve months ended June 30, 2018

Twelve months ended June 30, 2019

Twelve months ended June 30, 2020

Twelve months ended June 30, 2021

Twelve months ended June 30, 2022

September 25, 2013 (the first Creation Basket of the Trust) to June 30, 2022

The following chart sets out the historical closing prices for the Shares as reported by OTCQX and the Trust’s Digital Asset Holdings per Share.

7 unchanged sentences

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 2. Management’s Discussion and Analysis