What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-03 compared with 2023-08-04 · 52 added, 54 removed, 97 unchanged (52% of the section changed)

46 unchanged sentences

Review of Financial Results (unaudited)

Financial Highlights for the Three and Six Months Ended June 30, 2023 and June 30, 2022

Financial Highlights for the Three and Nine Months Ended September 30, 2023 and September 30, 2022

(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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

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

Net increase (decrease) in net assets resulting from operations

Net realized and unrealized gain on investment in Bitcoin for the three months ended June 30, 2023 was $1,183,911 which includes a realized gain of $52,169 on the transfer of Bitcoins to pay the Sponsor’s Fee and net change in unrealized appreciation on investment in Bitcoin of $1,131,742.

Net realized and unrealized gain on investment in Bitcoin for the period was driven by Bitcoin price appreciation from $28,467.79 per Bitcoin as of March 31, 2023 to $30,361.94 per Bitcoin as of June 30, 2023.

Net increase in net assets resulting from operations was $1,096,310 for the three months ended June 30, 2023, which consisted of the net realized and unrealized gain on investment in Bitcoin, less the Sponsor’s Fee of $87,601.

Net assets increased to $19,000,620 at June 30, 2023, a 6% increase for the period.

The increase in net assets resulted from the aforementioned Bitcoin price appreciation, partially offset by the withdrawal of approximately 3,128 Bitcoin to pay the foregoing Sponsor’s Fee.

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.

Net realized and unrealized loss on investment in Bitcoin for the three months ended September 30, 2023 was $(2,081,502) which includes a realized gain of $52,764 on the transfer of Bitcoins to pay the Sponsor’s Fee and net change in unrealized depreciation on investment in Bitcoin of $(2,134,266).

Net realized and unrealized loss on investment in Bitcoin for the period was driven by Bitcoin price depreciation from $30,361.94 per Bitcoin as of June 30, 2023 to $27,030.47 per Bitcoin as of September 30, 2023.

Net decrease in net assets resulting from operations was $(2,169,909) for the three months ended September 30, 2023, which consisted of the net realized and unrealized loss on investment in Bitcoin, plus the Sponsor’s Fee of $88,407.

Net assets decreased to $16,830,711 at September 30, 2023, a (11)% decrease for the period.

The decrease in net assets resulted from the aforementioned Bitcoin price depreciation and by the withdrawal of approximately 3,147 Bitcoin to pay the foregoing Sponsor’s Fee.

Net realized and unrealized gain on investment in Bitcoin for the six months ended June 30, 2023 was $8,695,043 which includes a realized gain of $88,037 on the transfer of Bitcoins to pay the Sponsor’s Fee and net change in unrealized appreciation on investment in Bitcoin of $8,607,006.

Net realized and unrealized gain on investment in Bitcoin for the period was driven by Bitcoin price appreciation from $16,556.29 per Bitcoin as of December 31, 2022 to $30,361.94 per Bitcoin as of June 30, 2023.

Net increase in net assets resulting from operations was $8,536,357 for the six months ended June 30, 2023, which consisted of the net realized and unrealized gain on investment in Bitcoin, less the Sponsor’s Fee of $158,686.

Net assets increased to $19,000,620 at June 30, 2023, a 82% increase for the period.

Net realized and unrealized gain on investment in Bitcoin for the three months ended September 30, 2022 was $379,521 which includes a realized gain of $31,890 on the transfer of Bitcoins to pay the Sponsor’s Fee and net change in unrealized appreciation on investment in Bitcoin of $347,631.

Net realized and unrealized gain on investment in Bitcoin for the period was driven by Bitcoin price appreciation from $18,895.01 per Bitcoin as of June 30, 2022 to $19,480.51 per Bitcoin as of September 30, 2022.

Net increase in net assets resulting from operations was $311,269 for the three months ended September 30, 2022, which consisted of the net realized and unrealized gain on investment in Bitcoin, less the Sponsor’s Fee of $68,252.

Net assets increased to $12,374,718 at September 30, 2022, a 3% increase for the period.

The increase in net assets resulted from the aforementioned Bitcoin price appreciation partially offset by the withdrawal of approximately 3,210 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.

Net realized and unrealized gain on investment in Bitcoin for the nine months ended September 30, 2023 was $6,613,541 which includes a realized gain of $140,801 on the transfer of Bitcoins to pay the Sponsor’s Fee and net change in unrealized appreciation on investment in Bitcoin of $6,472,740.

Net realized and unrealized gain on investment in Bitcoin for the period was driven by Bitcoin price appreciation from $16,556.29 per Bitcoin as of December 31, 2022 to $27,030.47 per Bitcoin as of September 30, 2023.

Net increase in net assets resulting from operations was $6,366,448 for the nine months ended September 30, 2023, which consisted of the net realized and unrealized gain on investment in Bitcoin, less the Sponsor’s Fee of $247,093.

Net assets increased to $16,830,711 at September 30, 2023, a 61% increase for the period.

The increase in net assets resulted from the aforementioned Bitcoin price appreciation partially offset by the withdrawal of approximately 9,385 Bitcoin to pay the foregoing Sponsor’s Fee.

Net realized and unrealized loss on investment in Bitcoin for the nine months ended September 30, 2022 was $(16,898,390) which includes a realized gain of $194,506 on the transfer of Bitcoins to pay the Sponsor’s Fee and net change in unrealized depreciation on investment in Bitcoin of $(17,092,896).

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 $19,480.51 per Bitcoin as of September 30, 2022.

Net decrease in net assets resulting from operations was $(17,201,335) for the nine months ended September 30, 2022, which consisted of the net realized and unrealized loss on investment in Bitcoin, plus the Sponsor’s Fee of $302,945.

Net assets decreased to $12,374,718 at September 30, 2022, a (58)% decrease for the period.

The decrease in net assets resulted from the aforementioned Bitcoin price depreciation and by the withdrawal of approximately 9,574 Bitcoin to pay the foregoing Sponsor’s Fee.

8 unchanged sentences

Selected Operating Data

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

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

7 unchanged sentences

Closing Balance

As of June 30,

As of September 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 June 30, 2023 and 2022, and identified the principal market as Coinbase.

As of June 30, 2023 and 2022, the NAV per Share was calculated using the fair value of Bitcoin based on the price provided by Coinbase, the Digital Asset Exchange that the Trust considered 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 September 30, 2023 and 2022, and identified the principal market as Coinbase.

As of September 30, 2023 and 2022, the NAV per Share was calculated using the fair value of Bitcoin based on the price provided by Coinbase, the Digital Asset Exchange that the Trust considered 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.

1 unchanged sentence

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 included in the Index as of June 30, 2023, were Coinbase, Kraken, and LMAX Digital.

Effective June 17, 2023, the Index Provider removed Binance.US from the Index, due to Binance.US’s announcement that the exchange was suspending U.S.

dollar deposits and withdrawals and planned to delist its U.S.

dollar trading pairs, and did not add any Constituent Exchanges as part of its review.

Effective July 29, 2023, the Index Provider added Bitstamp to the Index due to the exchange meeting the Index Provider’s minimum liquidity requirement, and did not remove any Constituent Exchanges as part of its scheduled quarterly review.

The Digital Asset Exchanges included in the Index as of June 30, 2022, were Coinbase Pro, Bitstamp, Kraken, and LMAX Digital.

The Digital Asset Exchanges included in the Index as of September 30, 2023 were Coinbase, Bitstamp, Kraken, and LMAX Digital.

Effective October 28, 2023, the Index Provider added Crypto.com to the Index due to the exchange meeting the Index Provider’s minimum liquidity requirement, and did not remove any Constituent Exchanges as part of its scheduled quarterly review.

The Digital Asset Exchanges included in the Index as of September 30, 2022, were Coinbase, 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.

3 unchanged sentences

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

As of June 30, 2023, the Trust had a net closing balance of 625,803.87494694 Bitcoins with a value of $19,023,499,093 based on the Index Price of $30,398.50 on June 30, 2023 (non-GAAP methodology).

As of June 30, 2023, the total market value of the Trust’s Bitcoin was $19,000,619,703, based on the price of a Bitcoin in the principal market (Coinbase) of $30,361.94 on June 30, 2023.

As of June 30, 2022, the Trust had a net closing balance of 638,446.30166100 Bitcoins with a value of $12,056,356,116 based on the Index Price of $18,883.90 on June 30, 2022 (non-GAAP methodology).

As of June 30, 2022, the total market value of the Trust’s Bitcoin was $12,063,449,254 based on the price of a Bitcoin in the principal market (Coinbase) of $18,895.01 on June 30, 2022.

As of September 30, 2023, the Trust had a net closing balance of 622,656.98992690 Bitcoins with a value of $16,830,798,258 based on the Index Price of $27,030.61 on September 30, 2023 (non-GAAP methodology).

As of September 30, 2023, the total market value of the Trust’s Bitcoin was $16,830,711,087, based on the price of a Bitcoin in the principal market (Coinbase) of $27,030.47 on September 30, 2023.

As of September 30, 2022, the Trust had a net closing balance of 635,235.84358745 Bitcoins with a value of $12,381,743,912 based on the Index Price of $19,491.57 on September 30, 2022 (non-GAAP methodology).

As of September 30, 2022, the total market value of the Trust’s Bitcoin was $12,374,718,203 based on the price of a Bitcoin in the principal market (Coinbase) of $19,480.51 on September 30, 2022.

Historical Digital Asset Holdings and Bitcoin Prices

2 unchanged sentences

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 (date of the first Creation Basket of the Trust) to June 30, 2023.

For more information on the determination of the Trust’s Digital Asset Holdings, see “Item 1.

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.

The following table illustrates the movements in the Index Price from July 1, 2018 to June 30, 2023.

During such period, the Index Price has ranged from $3,164.99 to $67,352.59, with the straight average being $21,934.62 through June 30, 2023.

The following table illustrates the movements in the Index Price from October 1, 2018 to September 30, 2023.

During such period, the Index Price has ranged from $3,164.99 to $67,352.59, with the straight average being $23,007.03 through September 30, 2023.

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

Twelve months ended June 30, 2019

Twelve months ended June 30, 2020

Twelve months ended June 30, 2021

Twelve months ended June 30, 2022

Twelve months ended June 30, 2023

July 1, 2018 to June 30, 2023

The following table illustrates the movements in the Digital Asset Market price of Bitcoin, as reported on the Trust’s principal market, from July 1, 2018 to June 30, 2023.

During such period, the price of Bitcoin has ranged from $3,164.61 to $67,371.70, with the straight average being $21,934.94 through June 30, 2023.

Twelve months ended September 30, 2019

Twelve months ended September 30, 2020

Twelve months ended September 30, 2021

Twelve months ended September 30, 2022

Twelve months ended September 30, 2023

October 1, 2018 to September 30, 2023

The following table illustrates the movements in the Digital Asset Market price of Bitcoin, as reported on the Trust’s principal market, from October 1, 2018 to September 30, 2023.

During such period, the price of Bitcoin has ranged from $3,164.61 to $67,371.70, with the straight average being $27,007.33 through September 30, 2023.

Digital Asset

Twelve months ended June 30, 2019

Twelve months ended June 30, 2020

Twelve months ended June 30, 2021

Twelve months ended June 30, 2022

Twelve months ended June 30, 2023

July 1, 2018 to June 30, 2023

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 from May 5, 2015 to June 30, 2023.

Digital Asset

Twelve months ended September 30, 2019

Twelve months ended September 30, 2020

Twelve months ended September 30, 2021

Twelve months ended September 30, 2022

Twelve months ended September 30, 2023

October 1, 2018 to September 30, 2023

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 from May 5, 2015 to September 30, 2023.

GBTC Premium/(Discount):

1 unchanged sentence

Digital Asset Holdings per Share ($)

The following chart sets out the historical premium and discount for the Shares as reported by OTCQX and the Trust’s Digital Asset Holdings per Share from May 5, 2015 to June 30, 2023.

The following chart sets out the historical premium and discount for the Shares as reported by OTCQX and the Trust’s Digital Asset Holdings per Share from May 5, 2015 to September 30, 2023.

GBTC Premium/(Discount):

2 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