What changed in this filing

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Item 1. Financial Statements

2024-05-03 compared with 2023-11-03 · 200 added, 121 removed, 261 unchanged (55% of the section changed)

3 unchanged sentences

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

September 30,

Investment in Bitcoin, at fair value (cost $ 7,052,369 and $ 7,158,661 as of September 30, 2023 and December 31, 2022, respectively)

Investment in Bitcoin, at fair value (cost $ 4,001,652 and $ 7,016,906 as of March 31, 2024 and December 31, 2023, respectively)

Sponsor’s Fee payable, related party

Bitcoin payable, at fair value

Total liabilities

Net Assets consist of:

Paid-in-capital

Accumulated net investment loss

Accumulated net realized gain on investment in Bitcoin

Accumulated net change in unrealized appreciation on investment in Bitcoin

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

Net asset value per Share

Principal market net asset value per Share

See accompanying notes to the unaudited financial statements.

2 unchanged sentences

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

September 30, 2023

March 31, 2024

Quantity of Bitcoin

2 unchanged sentences

335,932.8104680

Total Investment

December 31, 2023

8 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Investment income:

2 unchanged sentences

Net investment loss

Net realized and unrealized gain (loss) from:

Net realized gain on investment in Bitcoin

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

Net realized and unrealized gain (loss) on investment

Net increase (decrease) in net assets resulting from operations

Net realized and unrealized gain from:

Net realized gain on investment in Bitcoin sold to pay expenses

Net realized gain on investment in Bitcoin sold for redemption of shares

Net change in unrealized appreciation on investment in Bitcoin

Net realized and unrealized gain on investment

Net increase in net assets resulting from operations

See accompanying notes to the unaudited financial statements.

3 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Increase (decrease) in net assets from operations:

Increase in net assets from operations:

Net investment loss

Net realized gain on investment in Bitcoin

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

Net increase (decrease) in net assets resulting from operations

Increase in net assets from capital share transactions:

Net realized gain on investment in Bitcoin sold to pay expenses

Net realized gain on investment in Bitcoin sold for redemption of shares

Net change in unrealized appreciation on investment in Bitcoin

Net increase in net assets resulting from operations

Increase (decrease)

in net assets from capital share transactions:

Shares issued

Shares redeemed

Net decrease in net assets resulting from capital share transactions

Total increase (decrease) in net assets from operations and capital share transactions

4 unchanged sentences

Shares issued

Net increase in Shares

Shares redeemed

( 317,940,000

Net decrease in Shares

( 316,400,000

Shares outstanding at end of period

3 unchanged sentences

Grayscale Bitcoin Trust (BTC) (the “Trust”) is a Delaware Statutory Trust that was formed on September 13, 2013 and commenced operations on September 25, 2013.

In general, the Trust holds Bitcoin (“BTC”) and, from time to time, issues common units of fractional undivided beneficial interest (“Shares”) (in minimum baskets of 100 Shares, referred to as “Baskets”) in exchange for Bitcoin.

The redemption of Shares is not currently contemplated and the Trust does not currently operate a redemption program.

Subject to receipt of regulatory approval and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program.

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

In general, the Trust holds Bitcoin (“ Bitcoin

”) and, from time to time, issues common units of fractional undivided beneficial interest (“Shares”) in exchange for Bitcoin.

Prior to January 11, 2024, the redemption of Shares was not contemplated and the Trust did not operate a redemption program.

On January 10, 2024, the Securities and Exchange Commission (the “SEC”) approved an application under Rule 19b-4

of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) by NYSE Arca, Inc.

(“NYSE Arca”) to list the Shares of the Trust, which began trading on NYSE Arca on January 11, 2024 (the “Uplisting Date”).

As if the date of this Quarterly Report, the Trust is an SEC reporting company with its Shares registered pursuant to Section 12(b) of the Exchange Act.

On January 10, 2024, in connection with the approval of the 19b-4

Application, the Sponsor authorized the commencement of a redemption program.

Effective January 11, 2024, the Trust creates and redeems Shares at such times and for such periods as determined by the Sponsor, but only in one or more whole Baskets.

A Basket equals 10,000 Shares.

The creation of a Basket requires the delivery to the Trust of the number of Bitcoins represented by one Share immediately prior to such creation multiplied by 10,000 .

The redemption of a Basket requires distribution by the Trust of the number of Bitcoins represented by one Share immediately prior to such redemption multiplied by 10,000 .

The Trust may from time to time halt creations and redemptions for a variety of reasons, including in connection with forks, airdrops and other similar occurrences.

The Trust’s investment objective is for the value of the Shares (based on Bitcoin per Share) to reflect the value of Bitcoin held by the Trust, less the Trust’s expenses and other liabilities.

2 unchanged sentences

IR Virtual Currency is any virtual currency tokens, or other asset or right, received by the Trust through the exercise (subject to the applicable provisions of the Trust Agreement) of any Incidental Right.

On May 2, 2018 and July 29, 2019, the Sponsor delivered to the former custodian and the current Custodian (as defined below), respectively, on behalf of the Trust, a notice stating that the Trust is abandoning irrevocably for no direct or indirect consideration, effective immediately prior to each time at which the Trust creates Shares, all Incidental Rights and IR Virtual Currency to which it would otherwise be entitled as of such time.

On January 5, 2024, the Trust delivered a supplemental notice to the Prime Broker, the Custodian and Coinbase Credit, Inc.

providing that the Trust also will abandon irrevocably for no direct or indirect consideration, effective immediately prior to each time at which the Trust redeems Shares, all Incidental Rights or IR Virtual Currency to which it would otherwise be entitled as of such time.

The Sponsor has committed to cause the Trust not to take any Affirmative Action to acquire any Incidental Rights or IR Virtual Currency, thereby irrevocably abandoning any Incidental Rights and IR Virtual Currency to which the Trust may become entitled in the future.

Because the Sponsor has now committed to causing the Trust to irrevocably abandon all Incidental Rights and IR Virtual Currency to which the Trust otherwise would become entitled in the future, and causing the Trust not to take any Affirmative Actions, the Trust will not receive any direct or indirect consideration for the Incidental Rights or IR Virtual Currency and thus the value of the Shares will not reflect the value of the Incidental Rights or IR Virtual Currency.

In addition, in the event the Sponsor seeks to change the Trust’s policy with respect to Incidental Rights or IR Virtual Currency, an application would need to be filed with the SEC by NYSE Arca seeking approval to amend its listing rules to permit the Trust to distribute the Incidental Rights or IR Virtual Currency in-kind

to an agent of the shareholders for resale by such agent.

Grayscale Investments, LLC (“Grayscale” or the “Sponsor”) acts as the Sponsor of the Trust and is a wholly owned subsidiary of Digital Currency Group, Inc.

5 unchanged sentences

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

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

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

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

4 unchanged sentences

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

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

GLIV), Grayscale Solana Trust (SOL) (OTCQB:

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

GLIV), Grayscale Solana Trust (SOL) (OTCQX:

GSOL), Grayscale Stellar Lumens Trust (XLM) (OTCQX:

5 unchanged sentences

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:

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

GFOF) product.

Authorized Participants of the Trust are the only entities who may place orders to create or, if permitted, redeem Baskets.

Grayscale Securities, LLC (“Grayscale Securities” or, in such capacity, an “Authorized Participant”), a registered broker-dealer and wholly owned subsidiary of the Sponsor, is the only Authorized Participant, and is party to a participant agreement with the Sponsor and the Trust.

Authorized Participants of the Trust are the only entities who may place orders to create or redeem Baskets.

Grayscale Securities, LLC (“Grayscale Securities” or, in such capacity, an “Authorized Participant”), a registered broker-dealer and wholly owned subsidiary

of the Sponsor, was the only Authorized Participant from October 3, 2022 through January 10, 2024.

On or after January 10, 2024, the Sponsor, on behalf of the Trust, and the Transfer Agent entered into Participant Agreements with a number of unaffiliated Authorized Participants in connection with the approval of NYSE Arca’s application under Rule 19b-4

of the Exchange Act.

In connection with the entry into the Participant Agreements, as of January 10, 2024, the Sponsor amended, solely, with respect to the Trust, the Participant Agreement, dated as of October 3, 2022, between the Sponsor and Grayscale Securities, to remove the Trust as an entity covered by the Agreement.

Effective January 10, 2024, Grayscale Securities no longer serves as Authorized Participant of the Trust.

Additional Authorized Participants may be added at any time, subject to the discretion of the Sponsor.

The Authorized Participant(s) may engage additional Liquidity Providers at any time.

Genesis Global Trading, Inc.

(“Genesis”), a wholly owned subsidiary of DCG, served as a Liquidity Provider to Grayscale Securities from October 3, 2022 to September 12, 2023.

The Authorized Participant has engaged certain unaffiliated Liquidity Providers, and intends to engage additional Liquidity Providers who are unaffiliated with the Trust in the future.

The custodian of the Trust is Coinbase Custody Trust Company, LLC (the “Custodian”), a third-party service provider.

The Custodian is responsible for safeguarding the Bitcoin, Incidental Rights, and IR Virtual Currency held by the Trust, and holding the private key(s) that provide access to the Trust’s digital wallets and vaults.

The transfer agent for the Trust (the “Transfer Agent”) is Continental Stock Transfer & Trust Company.

The responsibilities of the Transfer Agent are to maintain creations, redemptions, transfers, and distributions of the Trust’s Shares which are primarily held in book-entry form.

Liquidity Providers facilitate the purchase and sale of Bitcoins in connection with cash orders for creations or redemptions of Baskets.

The Liquidity Providers with which Grayscale Investments, LLC, acting in its capacity as the “Liquidity Engager,” will engage in Bitcoin transactions are third parties that are not affiliated with the Sponsor or the Trust and are not acting as agents of the Trust, the Sponsor, or any Authorized Participant, and all transactions will be done on an arms-length basis.

Except for the contractual relationships between each Liquidity Provider and Grayscale Investments, LLC in its capacity as the Liquidity Engager, there is no contractual relationship between each Liquidity Provider and the Trust, the Sponsor, or any Authorized Participant.

The Liquidity Engager may engage additional Liquidity Providers who are unaffiliated with the Trust in the future.

Effective January 11, 2024, the Trust, the Sponsor and Coinbase, Inc., the prime broker of the Trust (“Coinbase” or the “Prime Broker”), on behalf of itself and as agent for Coinbase Custody Trust Company, LLC (“Coinbase Custody” or the “Custodian”) and Coinbase Credit, Inc.

(“Coinbase Credit” and, collectively with Coinbase and Coinbase Custody, the “Coinbase Entities”), entered into the Coinbase Prime Broker Agreement governing the Trust’s and the Sponsor’s use of the custodial and prime broker services provided by the Custodian and the Prime Broker.

The Prime Broker Agreement establishes the rights and responsibilities of the Custodian, the Prime Broker, the Sponsor and the Trust with respect to the Trust’s Bitcoin which is held in accounts maintained and operated by the Custodian, as a fiduciary with respect to the Trust’s assets, and the Prime Broker (together with the Custodian, the “Custodial Entities”) on behalf of the Trust.

The Custodian is responsible for safeguarding the Bitcoin held by the Trust, and holding the private key(s) that provide access to the Trust’s digital wallets and vaults.

Effective January 11, 2024, the transfer agent for the Trust (the “Transfer Agent”) is The Bank of New York Mellon.

The responsibilities of the Transfer Agent are to (1) facilitate the issuance and redemption of shares of the Trust;

(2) respond to correspondence by Trust shareholders and others relating to its duties;

(3) maintain shareholder accounts;

and (4) make periodic reports to the Trust.

Effective January 11, 2024, the co-transfer

agent for the Trust (the “Co-Transfer

Agent”) is Continental Stock Transfer & Trust Company.

The administrator for the Trust (the “Administrator”) is BNY Mellon Asset Servicing, a division of The Bank of New York Mellon.

1 unchanged sentence

The Administrator’s fees are paid on behalf of the Trust by the Sponsor.

The marketing agent for the Trust (the “Marketing Agent”) is Foreside Fund Services, LLC.

Effective January 10, 2024, the Marketing Agent provides the following services to the Sponsor:

(i) assist the Sponsor in facilitating Participation Agreements between and among Authorized Participants, the Sponsor, on behalf of the Trust, and the Transfer Agent;

(ii) provide prospectuses to Authorized Participants;

(iii) work with the Transfer Agent to review and approve orders placed by the Authorized Participants and transmitted to the Transfer Agent;

(iv) review and file applicable marketing materials with FINRA and (v) maintain, reproduce and store applicable books and records.

On March 25, 2015, the Trust received notice that its Shares were qualified for public trading on the OTCQX U.S.

Marketplace of the OTC Markets Group Inc.

The Trust’s trading symbol on OTCQX is “GBTC” and the CUSIP number for its Shares is 389637109.

Until January 10, 2024, the Trust’s trading symbol on OTCQX was “GBTC”.

On January 10, 2024, the SEC approved an application under Rule 19b-4

of the Exchange Act by NYSE Arca to list the Shares of the Trust.

Shares of the Trust began trading on NYSE Arca on January 11, 2024.

The Trust’s trading symbol on NYSE Arca is “GBTC” and the CUSIP number for its Shares is 389637109

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 September 30, 2023 and December 31, 2022 and results of operations for the three and nine months ended September 30, 2023 and 2022 have been made.

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, 2024 and December 31, 2023 and results of operations for the three months ended March 31, 2024 and 2023 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, 2022 included in the Trust’s Annual Report on Form 10-K.

These unaudited financial statements should be read in conjunction with the audited financial statements

for the year ended December 31, 2023 included in the Trust’s Annual Report on Form 10-K.

Certain prior period information has been updated to conform to the current period financial statement presentation without a material change to the Statements of Assets and Liabilities.

The presentation update has no effect on the Trust’s financial position as previously reported.

The following is a summary of significant accounting policies followed by the Trust:

6 unchanged sentences

The Trust conducts its transactions in Bitcoin, including receiving Bitcoin for the creation of Shares and delivering Bitcoin for the redemption of Shares and for the payment of the Sponsor’s Fee.

At this time, the Trust is not accepting redemption requests from shareholders.

Since its inception, the Trust has not held cash or cash equivalents.

Principal Market and Fair Value Determination

To determine which market is the Trust’s principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Trust’s net asset value (“NAV”), the Trust follows ASC 820-10,

GAAP (“Principal Market NAV”), the Trust follows ASC 820-10,

which outlines the application of fair value accounting.

2 unchanged sentences

Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.

The Trust only receives Bitcoin in connection with a creation order from the Authorized Participant (or its Liquidity Provider) and does not itself transact on any Digital Asset Markets.

The Trust only receives Bitcoin in connection with a creation order from the Authorized Participant (or a Liquidity Provider) and does not itself transact on any Digital Asset Markets.

Therefore, the Trust looks to market-based volume and level of activity for Digital Asset Markets.

The Authorized Participant(s), or a Liquidity Provider on behalf of the Authorized Participant(s), may transact in a Brokered Market, a Dealer Market, Principal-to-Principal

Markets and Exchange Markets, each as defined in the FASB ASC Master Glossary (collectively, “Digital Asset Markets”).

The Authorized Participant(s), or a Liquidity Provider, may transact in a Brokered Market, a Dealer Market, Principal-to-Principal

Markets and Exchange Markets (referred to as “Trading Platform Markets” in this Quarterly Report), each as defined in the FASB ASC Master Glossary (collectively, “Digital Asset Markets”).

In determining which of the eligible Digital Asset Markets is the Trust’s principal market, the Trust reviews these criteria in the following order:

First, the Trust reviews a list of Digital Asset Markets that maintain practices and policies designed to comply with anti-money laundering (“AML”) and know-your-customer (“KYC”) regulations, and non-Digital

Asset Exchange Markets that the Trust reasonably believes are operating in compliance with applicable law, including federal and state licensing requirements, based upon information and assurances provided to it by each market.

Asset Trading Platform Markets that the Trust reasonably believes are operating in compliance with applicable law, including federal and state licensing requirements, based upon information and assurances provided to it by each market.

Second, the Trust sorts these Digital Asset Markets from high to low by market-based volume and level of activity of Bitcoin traded on each Digital Asset Market in the trailing twelve months.

1 unchanged sentence

Fourth, the Trust then selects a Digital Asset Market as its principal market based on the highest market-based volume, level of activity and price stability in comparison to the other Digital Asset Markets on the list.

Based on information reasonably available to the Trust, Exchange Markets have the greatest volume and level of activity for the asset.

The Trust therefore looks to accessible Exchange Markets as opposed to the Brokered Market, Dealer Market and Principal-to-Principal

Based on information reasonably available to the Trust, Trading Platform Markets have the greatest volume and level of activity for the asset.

The Trust therefore looks to accessible Trading Platform Markets as opposed to the Brokered Market, Dealer Market and Principal-to-Principal

Markets to determine its principal market.

As a result of the aforementioned analysis, an Exchange Market has been selected as the Trust’s principal market.

As a result of the aforementioned analysis, a Trading Platform Market has been selected as the Trust’s principal market.

The Trust determines its principal market (or in the absence of a principal market the most advantageous market) annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Digital Asset Market’s trading volume and level of activity in the trailing twelve months, (ii) if any Digital Asset Markets have developed that the Trust has access to, or (iii) if recent changes to each Digital Asset Market’s price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Trust’s determination of its principal market.

3 unchanged sentences

The Trust considers investment transactions to be the receipt of Bitcoin for Share creations and the delivery of Bitcoin for Share redemptions or for payment of expenses in Bitcoin.

At this time, the Trust is not accepting redemption requests from shareholders.

The Trust records its investment transactions on a trade date basis and changes in fair value are reflected as net change in unrealized appreciation or depreciation on investments.

13 unchanged sentences

To the extent that valuations are based on sources that are less observable or unobservable in the market, the determination of fair value requires more judgment.

Fair value estimates do not necessarily represent the amounts that may be ultimately realized by the Trust.

Fair value estimates

do not necessarily represent the amounts that may be ultimately realized by the Trust.

Fair Value Measurement Using

(Amounts in thousands)

Amount at Fair

September 30, 2023

March 31, 2024

Investment in Bitcoin

Fair Value Measurement Using

Value Measurement Using

(Amounts in thousands)

Amount at Fair

December 31, 2023

Investment in Bitcoin

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-08,

Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60):

Accounting for and Disclosure of Crypto Assets

(“ASU 2023-08”).

is intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income.

The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period.

ASU 2023-08 is effective for annual and interim reporting periods beginning after December 15, 2024.

Early adoption is permitted for both interim and annual financial statements that have not yet been issued.

The Trust adopted this new guidance on January 1, 2024, with no material impact on its financial statements and disclosures as the Trust historically used fair value as its method of accounting for Bitcoin in accordance with its classification as an investment company for accounting purpos es.

Fair Value of Bitcoin

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

As of September 30, 2023 and December 31, 2022 the Trust held 622,656.98992690 and 632,041.52945742 Bitcoin, respectively.

The Trust determined the fair value per Bitcoin to be $ 27,030.47 and $ 16,556.29 on September 30, 2023 and December 31, 2022, 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).

As of March 31, 2024 and December 31, 2023 the Trust held 335,932.8104680 and 619,525.9291702 Bitcoin, respectively.

As of March 31, 2024, the Trust recorded a payable of $ 58,252,673 representing the redemption of 820.1561472 Bitcoin covered by contractually binding orders for the redemption of Shares where the Bitcoin has not yet been transferred out of the Trust’s account.

The redemption of 820.1561472 Bitcoin was subsequently settled in April 2024.

The Trust determined the fair value per Bitcoin to be $ 71,026.32 and $ 42,533.28 on March 31, 2024 and December 31, 2023, respectively, using the price provided at 4:00 p.m., New York time, by the Digital Asset Trading Platform Market considered to be the Trust’s principal market (Coinbase).

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

5 unchanged sentences

( 12,515.60028722

Net change in unrealized depreciation on investment in Bitcoin

Net change in unrealized appreciation on investment in Bitcoin

Net realized gain on investment in Bitcoin

5 unchanged sentences

Bitcoin contributed

1,374.74002839

Bitcoin redeemed

( 283,124.05477443

Bitcoin distributed for Sponsor’s Fee, related party

1 unchanged sentence

Net change in unrealized appreciation on investment in Bitcoin

Net realized gain on investment in Bitcoin

Ending balance as of September 30, 2023

Net realized gain on investment in Bitcoin sold to pay expenses

Net realized gain on investment in Bitcoin sold for redemption of shares

Ending balance as of March 31, 2024

335,932.8104680

Creations and Redemptions of Shares

At September 30, 2023 and December 31, 2022, 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.

At March 31, 2024 and December 31, 2023, there were an unlimited number of Shares authorized by the Trust.

The Trust creates and redeems Shares from time to time, but only in one or more Baskets.

The creation and redemption of Baskets on behalf of investors are made by the Authorized Participant in exchange for the delivery of Bitcoin to the Trust or the distribution of Bitcoin by the Trust.

1 unchanged sentence

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 10,000.

Each Share represented approximately 0.0009 of one Bitcoin at both September 30, 2023 and December 31, 2022.

Each Share represented approximately 0.0009 of one Bitcoin at both March 31, 2024 and December 31, 2023.

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

The cost basis of investments in Bitcoin recorded by the Trust is the fair value of Bitcoin, as determined by the Trust, at 4:00 p.m., New York time, on the date of transfer to the Trust by the Authorized Participant based on the creation Baskets.

The cost basis recorded by the Trust may differ from proceeds collected by the Authorized Participant from the sale of each Share to investors.

The Authorized Participant may realize significant profits buying, selling, creating, and, if permitted, redeeming Shares as a result of changes in the value of Shares or Bitcoin.

Effective October 28, 2014, the Trust suspended its redemption program, in which shareholders were permitted to request the redemption of their Shares through Genesis, the sole Authorized Participant at the time out of concern that the redemption program was in violation of Regulation M under the Exchange Act, resulting in a settlement reached with the Securities Exchange Commission (“SEC”).

At this time, the Trust is not operating a redemption program and is not accepting redemption requests.

Subject to receipt of regulatory approval and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program.

On October 19, 2021, NYSE Arca, Inc.

(“NYSE Arca”) filed an application with the SEC pursuant to Rule 19b-4 under the Exchange Act to list the Shares of the Trust on NYSE Arca.

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.

The Authorized Participant or Liquidity Provider may realize significant profits buying, selling, creating, and, if permitted, redeeming Shares as a result of changes in the value of Shares or Bitcoin.

On October 19, 2021, NYSE Arca filed an application with the SEC pursuant to Rule 19b-4

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

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.

On August 29, 2023, the D.C.

Circuit Court of Appeals granted the Sponsor’s petition and vacated the SEC’s order, finding that the denial of the Sponsor’s proposal was arbitrary and capricious.

The SEC has determined not to seek panel rehearing or rehearing en banc.

The SEC determined not to seek panel rehearing or rehearing en banc.

On October 23, 2023, the D.C.

Circuit Court of Appeals issued a formal mandate.

There is no guarantee that the ruling by the D.C.

Circuit Court of Appeals will ultimately result in approval of NYSE Arca’s 19b 4 application to list the Shares of the Trust on NYSE Arca.

On October 19, 2023, the Sponsor filed with the SEC a registration statement on Form S-3 to register the Shares of the Trust under the Securities Act of 1933.

The registration statement on Form S-3 has not been declared effective, and the Trust will not seek effectiveness of such registration statement unless and until the NYSE Arca Rule 19b-4 application is approved and the Trust receives an exemption or other relief from Regulation M to operate a redemption program.

The Trust makes no representation as to when or if such approval will be obtained and when such an exemption or relief will be available.

Ultimately, on January 10, 2024, the SEC approved NYSE Arca’s 19b-4

application to list the Shares of the Trust on NYSE Arca as an exchange-traded product and in connection with the approval of the 19b-4

Application, the Sponsor authorized the commencement of a redemption program.

Three Months Ended March 31,

Activity in Number of Shares Issued and Redeemed:

Shares issued

Shares redeemed

( 317,940,000

Net Change in Number of Shares Issued and Redeemed

( 316,400,000

(Amounts in thousands)

Three Months Ended March 31,

Activity in Value of Shares Issued and Redeemed:

Shares issued

Shares redeemed

Net Change in Number of Shares Issued and Redeemed

Bitcoin receivable represents the quantity of bitcoin covered by contractually binding orders for the creation of Shares where the bitcoin has not yet been transferred to the Trust’s account.

Generally, ownership of the bitcoin is transferred within two business days of the trade date.

(Amounts in thousands)

Three Months Ended March 31,

Bitcoin receivable

Bitcoin payable represents the quantity of bitcoin covered by contractually binding orders for the redemption of Shares where the bitcoin has not yet been transferred out of the Trust’s account.

Generally, ownership of the bitcoin is transferred within two business days of the trade date.

(Amounts in thousands)

Three Months Ended March 31,

Bitcoin payable

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.

2 unchanged sentences

federal income tax purposes as of the date of the private letter ruling.

Furthermore, as of October 24, 2017, amendments to the Trust Agreement were made to permit the Trust to hold rights to acquire, or otherwise establish, dominion and control over, Incidental Rights and IR Virtual Currency in a manner consistent with the Trust’s continued treatment as a grantor trust for U.S.

federal income tax purposes.

Accordingly, the Sponsor takes the position that the Trust is properly treated as a grantor trust for U.S.

19 unchanged sentences

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

As of, and during the periods ended September 30, 2023 and December 31, 2022, the Trust did not have a liability for any unrecognized tax amounts.

As of, and during the periods ended March 31, 2024 and December 31, 2023, 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”

tax positions may be subject to review and adjustment at a later date based on factors including, but not limited to, further implementation guidance, and on-going

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 September 30, 2023 or December 31, 2022.

tax positions may be subject to review and adjustment at a later date based on factors including, but not limited to, further implementation guidance, and ongoing analyses of and changes to tax laws, regulations and interpretations thereof.

Related Parties

The Trust considers the following entities, their directors, and certain employees to be related parties of the Trust:

DCG, Genesis, Genesis Global Holdco, LLC, Grayscale, Grayscale Securities, and CoinDesk Indices, Inc.

As of September 30, 2023 and December 31, 2022, 36,070,527 and 36,065,470 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.

The Trust considered the following entities, their directors, and certain employees to be related parties of the Trust as of March 31, 2024

DCG, Genesis, Grayscale and Grayscale Securities.

As of March 31, 2024 and December 31, 2023, 133,009 and 131,794 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.

On January 9, 2024, the Sponsor and the Trustee entered into Amendment No.

1 to the Sixth A&R Trust Agreement in order to reduce the Sponsor’s Fee to 1.5 %, effective as of the Uplisting Date.

As a result, effective January 11, 2024, the Sponsor’s Fee was lowered from 2.0 % to 1.5 %.

In accordance with the Trust Agreement governing the Trust, the Trust pays a fee to the Sponsor, calculated as 1.5 % of the aggregate value of the Trust’s assets, less its liabilities (which include any accrued but unpaid expenses up to, but excluding, the date of calculation), as calculated and published by the Sponsor or its delegates in the manner set forth in the Trust Agreement (the “Sponsor’s Fee”).

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For purposes of these financial statements, the U.S.

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 September 30, 2023 and December 31, 2022.

No Incidental Rights or IR Virtual Currencies have been distributed in payment of the Sponsor’s Fee during the three and nine months ended September 30, 2023 and 2022.

dollar value of Bitcoin is determined by reference to the Digital Asset Trading Platform 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, 2024 and December 31, 2023.

No Incidental Rights or IR Virtual Currencies have been distributed in payment of the Sponsor’s Fee during the three months ended March 31, 2024 and 2023.

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;

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printing and mailing costs;

the costs of maintaining the Trust’s website and applicable license fees (the “Sponsor-paid Expenses”), provided that any expense that qualifies as an Additional Trust Expense will be deemed to be an Additional Trust Expense and not a Sponsor-paid Expense.

the costs of maintaining the Trust’s website and applicable license fees (together, the “Sponsor-paid Expenses”), provided that any expense that qualifies as an Additional Trust Expense will be deemed to be an Additional Trust Expense and not a Sponsor-paid Expense.

The Trust may incur certain extraordinary, non-recurring

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”).

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) when the Sponsor incurs such expenses on behalf of the Trust, cause the Trust (or its delegate) to deliver such Bitcoins, Incidental Rights and/or IR Virtual Currency in kind to the Sponsor in satisfaction of such Additional Trust Expenses.

For the three months ended September 30, 2023 and September 30, 2022 the Trust incurred Sponsor’s Fees of $ 88,406,944 and $ 68,251,452 , respectively.

For the nine months ended September 30, 2023 and 2022, the Trust incurred Sponsor’s Fees of $ 247,092,719 and $ 302,944,593 , respectively.

As of September 30, 2023 and December 31, 2022, there were no accrued and unpaid Sponsor’s Fees.

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, 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”).

In such circumstances, the Sponsor or its delegate (i) will instruct the Custodian to withdraw from the Vault Balance Bitcoins 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 into U.S.

in each case in such quantity as may be necessary to permit payment of such Additional Trust Expenses.

For the three months ended March 31, 2024 and 2023, the Trust incurred Sponsor’s Fees of $ 94,877,619 and $ 71,084,974 , respectively.

As of March 31, 2024 and December 31, 2023, 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 and nine months ended September 30, 2023 and 2022 the Sponsor did no t pay any Additional Trust Expenses on behalf of the Trust.

For the three months ended March 31, 2024 and 2023 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.

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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 September 30, 2022, DCG purchased a total of $ 771.8 million worth of Shares of the Trust under this authorization.

From October 1, 2022 through September 30, 2023 DCG did not purchase any Shares of the Trust under this authorization.

From March 10, 2021 through March 31, 2023, DCG purchased a total of $ 771.8 million worth of Shares of the Trust under this authorization.

1, 2023 through March 31, 2024, DCG did not purchase any Shares of the Trust under this authorization.

Risks and Uncertainties

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Investing in Bitcoin is currently highly speculative and volatile.

The net asset value of the Trust relates primarily to the value of Bitcoin held by the Trust, and fluctuations in the price of Bitcoin could materially and adversely affect an investment in the Shares of the Trust.

The Principal Market NAV of the Trust, calculated by reference to the principal market price in accordance with U.S.

GAAP, relates primarily to the value of Bitcoin held by the Trust, and fluctuations in the price of Bitcoin could materially and adversely affect an investment in the Shares of the Trust.

The price of Bitcoin has a limited history.

During such history, Bitcoin prices have been volatile and subject to influence by many factors, including the levels of liquidity.

If Digital Asset Markets continue to experience significant price fluctuations, the Trust may experience losses.

Several factors may affect the price of Bitcoin, including, but not limited to, global Bitcoin supply and demand, theft of Bitcoin from global exchanges or vaults, competition from other forms of digital currency or payment services, global or regional political, economic or financial conditions, and other unforeseen events and situations.

If the Digital Asset Markets continue to experience significant price fluctuations, the Trust may experience losses.

Several factors may affect the price of Bitcoin, including, but not limited to, global Bitcoin supply and demand, theft of Bitcoin from global trading platforms or vaults, competition from other forms of digital currency or payment services, global or regional political, economic or financial conditions, and other unforeseen events and situations.

The Bitcoin held by the Trust are commingled, and the Trust’s shareholders have no specific rights to any specific Bitcoin.

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statements by senior officials at the SEC have indicated that the SEC did not consider Bitcoin or Ethereum to be securities, and does not currently consider Bitcoin to be a security.

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

The SEC staff has also provided informal assurances via no-action

letter to a handful of promoters that their digital assets are not 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.

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To the extent a private key required to access a Bitcoin address is lost, destroyed or otherwise compromised and no backup of the private keys are accessible, the Trust may be unable to access the Bitcoin controlled by the private key and the private key will not be capable of being restored by the Bitcoin Network.

The processes by which Bitcoin transactions are settled are dependent on the peer-to-peer

The processes by which Bitcoin transactions are settled are dependent on the Bitcoin peer-to-peer

network, and as such, the Trust is subject to operational risk.

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Three Months Ended

September 30,

Nine Months Ended

September 30,

Per Share Data

Net asset value, beginning of period

Principal market net asset value, beginning of period

Net increase (decrease) in net assets from investment operations:

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Net realized and unrealized gain (loss)

Net increase (decrease) in net assets resulting from operations

Net asset value, end of period

Net increas e

in net assets resulting from operations

Principal market net asset value, end of period

Ratios to average net assets:

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The amount shown for a Share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the number of Shares issued in Creations occurring at an operational value derived from an operating metric as defined in the Trust Agreement.

Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period and assuming redemption on the last day of the period.

Total return is calculated assuming an initial investment made at the Principal Market NAV at the beginning of the period and assuming redemption on the last day of the period.

Indemnifications

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Subsequent Events

As of the close of business on October 30, 2023, the fair value of Bitcoin determined in accordance with the Trust’s accounting policy was $ 34,455.72 per Bitcoin.

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.

As of the close of business on April 30

, 2024, the fair value of Bitcoin determined in accordance with the Trust’s accounting policy was $ 59,098.16 per Bitcoin.

There are no known events that have occurred that require disclosure other than that which has already b e

en 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