What changed in this filing

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Item 1. Financial Statements

2021-05-07 compared with 2020-11-06 · 50 added, 97 removed, 266 unchanged (36% of the section changed)

1 unchanged sentence

GRAYSCALE BITCOIN TRUST (BTC)

STATEMENTS OF ASSETS AND LIABILITIES

September 30, 2020

STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

( Amounts in thousands, except Share amounts)

March 31, 2021

December 31, 2020

(Amounts in U.S.

dollars, except Share amounts)

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

1,866,217,842

4,816,618,672

1,866,217,842

Investment in Bitcoin, at fair value (cost $ 7,414,166 and $ 5,543,305 as of March 31, 2021 and December 31, 2020, respectively)

Sponsor's Fee payable, related party

Total liabilities

4,816,618,672

1,866,217,842

Net Assets consists of:

Paid-in-capital

2,732,165,545

Accumulated net investment loss

( 129,511,970

Accumulated net realized gain on investment in Bitcoin

Accumulated net change in unrealized appreciation on investment in Bitcoin

2,131,115,221

1,027,124,358

4,816,618,672

1,866,217,842

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

2 unchanged sentences

GRAYSCALE BITCOIN TRUST (BTC)

SCHEDULES OF INVESTMENT

September 30, 2020

SCHEDULES OF INVESTMENT (UNAUDITED)

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

March 31, 2021

Investment in Bitcoin

654,600.12768251

2,685,503,451

4,816,618,672

2,685,503,451

4,816,618,672

December 31, 2020

1 unchanged sentence

607,039.48515191

1,866,217,842

See accompanying notes to the unaudited financial statements.

GRAYSCALE BITCOIN TRUST (BTC)

STATEMENTS OF OPERATIONS

Three Months Ended

September 30,

Nine Months Ended

September 30,

(Amounts in U.S.

STATEMENTS OF OPERATIONS (UNAUDITED)

( Amounts in thousands)

Three Months Ended March 31,

Investment income:

5 unchanged sentences

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

( 717,533,289

1,103,990,863

Net realized and unrealized gain (loss) on investment

( 708,082,111

1,128,265,984

Net increase (decrease) in net assets resulting from operations

( 720,450,026

1,079,589,184

See accompanying notes to the unaudited financial statements.

GRAYSCALE BITCOIN TRUST (BTC)

STATEMENT OF CHANGES IN NET ASSETS

Three Months Ended

September 30,

Nine Months Ended

September 30,

(Amounts in U.S.

dollars, except change in Shares outstanding)

STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

( Amounts in thousands, except change in Shares outstanding)

Three Months Ended March 31,

Increase (decrease) in net assets from operations:

2 unchanged sentences

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

( 717,533,289

1,103,990,863

Net increase (decrease) in net assets resulting from operations

( 720,450,026

1,079,589,184

Increase in net assets from capital share transactions:

Shares issued

1,870,811,646

Net increase in net assets resulting from capital share transactions

1,870,811,646

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

1,284,254,233

( 556,382,266

2,950,400,830

1,225,275,222

Total increase in net assets from operations and capital share transactions

Beginning of period

3,532,364,439

2,533,279,662

1,866,217,842

End of period

4,816,618,672

1,976,897,396

4,816,618,672

1,976,897,396

Change in Shares outstanding:

19 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) (OTCQX:

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

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

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

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

ETCG), Grayscale Horizen Trust (ZEN), Grayscale Litecoin Trust (LTC) (Symbol:

LTCN), Grayscale Stellar Lumens Trust (XLM), Grayscale XRP Trust (XRP), Grayscale Zcash Trust (ZEC) and Grayscale Digital Large Cap Fund LLC (OTCQX:

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

LTCN), Grayscale Livepeer Trust (LPT), Grayscale Stellar Lumens Trust (XLM), Grayscale Zcash Trust (ZEC) and Grayscale Digital Large Cap Fund LLC (OTCQX:

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

14 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 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.

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, 2021 and December 31, 2020 and results of operations for the three months ended March 31, 2021 and 2020 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

September 30, 2020

(Amounts in thousands)

March 31, 2021

Investment in Bitcoin

4,816,618,672

December 31, 2020

Investment in Bitcoin

1,866,217,842

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, 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).

As of March 31, 2021, and December 31, 2020, the Trust held 654,600.12768251 and 607,039.48515191 Bitcoin, respectively.

The Trust determined the fair value per Bitcoin to be $ 58,601.27 and $ 29,185.05 on March 31, 2021 and December 31, 2020, 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:

(Amounts in thousands, except Bitcoin amounts)

Balance at January 1, 2020

8 unchanged sentences

607,039.48515191

1,866,217,842

Bitcoin contributed

50,738.88950472

1,870,811,646

Bitcoin distributed for Sponsor's Fee, related party

1 unchanged sentence

Net change in unrealized appreciation on investment in Bitcoin

1,103,990,863

Net realized gain on investment in Bitcoin

Balance at September 30, 2020

449,791.02456026

Balance at March 31, 2021

654,600.12768251

Creations and Redemptions of Shares

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

At March 31, 2021 and December 31, 2020, 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 September 30, 2020 and December 31, 2019.

Each Share represented approximately 0.0009 and 0.0010 of one Bitcoin at March 31, 2021 and December 31, 2020, respectively.

The decrease in the number of Bitcoin represented by each Share since inception is primarily a result of the Share Split and, to a lesser degree, 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.

5 unchanged sentences

The Trust currently has no intention of seeking regulatory approval to operate an ongoing redemption program.

During the year ended December 31, 2019, the Trust amended its offering to offer Shares on a periodic basis at such times and for such periods as the Sponsor determines in its sole discretion (each such period, an “Offering Period”).

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.

22 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 September 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 March 31, 2021 and December 31, 2020 , 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, 2020 or December 31, 2019.

Related Parties

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

DCG, Genesis, and Grayscale.

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.

DCG, Genesis, Grayscale and TradeBlock, Inc.

As of March 31, 2021 and December 31, 2020, 12,009,724 and 14,512,320 Shares of the Trust were held by related parties of the Trust, respectively.

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

7 unchanged sentences

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

The Trust held no Incidental Rights or IR Virtual Currency as of March 31, 2021 and December 31, 2020.

No Incidental Rights or IR Virtual Currencies have been distributed in payment of the Sponsor’s Fee during the three months ended March 31, 2021 and 2020.

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;

12 unchanged sentences

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 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.

For the three months ended March 31, 2021 and 2020, the Trust incurred Sponsor’s Fees of $ 144,299,795 and $ 11,793,388 , respectively.

As of March 31, 2021 and December 31, 2020, 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, 2020 and 2019, the Sponsor did not pay any Additional Trust Expenses on behalf of the Trust.

For the three months ended March 31, 2021 and 2020, the Sponsor did not pay any Additional Trust Expenses on behalf of the Trust.

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

Subsequently, DCG authorized such purchase.

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.

Risks and Uncertainties

14 unchanged sentences

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

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

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

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

9 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

September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

Per Share Data:

16 unchanged sentences

Subsequent Events

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.

On April 30, 2021, the Board of the Sponsor approved the purchase by DCG, the parent company of the Sponsor, of up to $ 750 million worth of Shares of the Trust.

Subsequently, DCG authorized such purchase.

This increases DCG’s prior authorization to purchase up to $ 250 million worth of Shares by $ 500 million.

Through April 30, 2021, DCG has purchased $ 193.5 million worth of Shares.

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.

As of the close of business on May 3, 2021 the fair value of Bitcoin determined in accordance with the Trust’s accounting policy was $ 57,587.67 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