What changed in this filing

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Item 1. Financial Statements

2020-11-06 compared with 2020-08-07 · 46 added, 37 removed, 317 unchanged (21% of the section changed)

2 unchanged sentences

STATEMENTS OF ASSETS AND LIABILITIES

June 30, 2020

September 30, 2020

December 31, 2019

1 unchanged sentence

dollars, except Share amounts)

Investment in Bitcoin, at fair value (cost $ 1,972,997,225 and $ 839,093,484 as of June 30, 2020 and December 31, 2019, respectively)

Investment in Bitcoin, at fair value (cost $ 2,685,503,451 and $ 839,093,484 as of September 30, 2020 and December 31, 2019, respectively)

4,816,618,672

22 unchanged sentences

SCHEDULES OF INVESTMENT

June 30, 2020

September 30, 2020

Investment in Bitcoin

13 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(Amounts in U.S.

3 unchanged sentences

Net investment loss

Net realized and unrealized gain from:

Net realized and unrealized gain (loss) from:

Net realized gain on investment in Bitcoin

Net change in unrealized appreciation on investment in Bitcoin

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

( 717,533,289

1,103,990,863

Net realized and unrealized gain on investment

Net realized and unrealized gain (loss) on investment

( 708,082,111

1,128,265,984

Net increase in net assets resulting from operations

Net increase (decrease) in net assets resulting from operations

( 720,450,026

4 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(Amounts in U.S.

dollars, except change in Shares outstanding)

Increase in net assets from operations:

Increase (decrease) in net assets from operations:

Net investment loss

Net realized gain on investment in Bitcoin

Net change in unrealized appreciation on investment in Bitcoin

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

( 717,533,289

1,103,990,863

Net increase in net assets resulting from operations

Net increase (decrease) in net assets resulting from operations

( 720,450,026

5 unchanged sentences

1,870,811,646

Total increase in net assets from operations and capital share transactions

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

1,284,254,233

5 unchanged sentences

2,533,279,662

1,866,217,842

End of period

24 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 Bitcoin Cash Trust (BCH) (Symbol:

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

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

3 unchanged sentences

GDLC), each of which is an affiliate of the Trust.

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 Ethereum Trust (ETH).

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

11 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 June 30, 2020 and December 31, 2019 and results of operations for the three and six months ended June 30, 2020 and 2019 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 September 30, 2020 and December 31, 2019 and results of operations for the three and nine months ended September 30, 2020 and 2019 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.

51 unchanged sentences

Fair Value Measurement Using

June 30, 2020

September 30, 2020

Investment in Bitcoin

7 unchanged sentences

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

As of June 30, 2020, and December 31, 2019, the Trust held 386,723.19178964 and 261,192.14022299 Bitcoin, respectively.

The Trust determined the fair value per Bitcoin to be $ 9,134.09 and $ 7,145.00 on June 30, 2020 and December 31, 2019, 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 September 30, 2020, and December 31, 2019, the Trust held 449,791.02456026 and 261,192.14022299 Bitcoin, respectively.

The Trust determined the fair value per Bitcoin to be $ 10,708.57 and $ 7,145.00 on September 30, 2020 and December 31, 2019, 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:

16 unchanged sentences

Net change in unrealized appreciation on investment in Bitcoin

1,103,990,863

Net realized gain on investment in Bitcoin

Balance at June 30, 2020

Balance at September 30, 2020

449,791.02456026

1 unchanged sentence

Creations and Redemptions of Shares

At June 30, 2020 and December 31, 2019, there were an unlimited number of Shares authorized by the Trust.

At September 30, 2020 and December 31, 2019, 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 0.0010 of one Bitcoin at June 30, 2020 and December 31, 2019.

Each Share represented approximately 0.0010 of one Bitcoin at September 30, 2020 and December 31, 2019.

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.

30 unchanged sentences

Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current period.

As of and during the periods ended June 30, 2020 and December 31, 2019, the Trust did not have a liability for any unrecognized tax amounts.

As of and during the periods ended September 30, 2020 and December 31, 2019, 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 June 30, 2020 or December 31, 2019.

Related Parties

1 unchanged sentence

DCG, Genesis, and Grayscale.

As of June 30, 2020 and December 31, 2019, 12,606,247 and 12,617,869 Shares of the Trust were held by related parties of the Trust, respectively.

As of September 30, 2020 and December 31, 2019, 13,242,201 and 12,617,869 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.

18 unchanged sentences

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 Bitcoin 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 Bitcoin 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 June 30, 2020 and 2019, the Trust incurred Sponsor’s Fees of $ 14,803,403 and $ 8,130,266 , respectively.

For the six months ended June 30, 2020 and 2019, the Trust incurred Sponsor’s Fees of $ 26,596,791 and $ 11,992,704 , respectively.

As of June 30, 2020 and December 31, 2019, there were no accrued and unpaid Sponsor’s Fees.

For the three months ended September 30, 2020 and 2019, the Trust incurred Sponsor’s Fees of $ 22,080,009 and $ 12,367,915 , respectively.

For the nine months ended September 30, 2020 and 2019, the Trust incurred Sponsor’s Fees of $ 48,676,800 and $ 24,360,619 , respectively.

As of September 30, 2020 and December 31, 2019, 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 six months ended June 30, 2020 and 2019, the Sponsor did not pay any Additional Trust Expenses on behalf of the Trust.

For the three and nine months ended September 30, 2020 and 2019, the Sponsor did not pay any Additional Trust Expenses on behalf of the Trust.

Risks and Uncertainties

26 unchanged sentences

The Trust relies on third party service providers to perform certain functions essential to its operations.

Any disruptions to the Trust’s or the Trust’s service providers’ business operations resulting from business restrictions, quarantines or restrictions on the ability of

personnel to perform their jobs as a result of the COVID-19 pandemic could have an adverse impact on the Trust’s ability to access critical services and would be disruptive to the operation of the Trust.

Any disruptions to the Trust’s or the Trust’s service providers’ business operations resulting from business restrictions, quarantines or restrictions on the ability of personnel to perform their jobs as a result of the COVID-19 pandemic could have an adverse impact on the Trust’s ability to access critical services and would be disruptive to the operation of the Trust.

Financial Highlights Per Share Performance

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Per Share Data:

Net asset value, beginning of period

Net increase in net assets from investment operations:

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

Net investment loss

Net realized and unrealized gain

Net increase in net assets resulting from operations

Net realized and unrealized gain (loss)

Net increase (decrease) in net assets resulting from operations

Net asset value, end of period

10 unchanged sentences

Subsequent Events

As of the close of business on August 4, 2020 the fair value of Bitcoin determined in accordance with the Trust’s accounting policy was $ 11,235.00 per Bitcoin.

As of the close of business on November 2, 2020 the fair value of Bitcoin determined in accordance with the Trust’s accounting policy was $ 13,676.00 per Bitcoin.

There are no known eve nts 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