What changed in this filing

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Item 1. Financial Statements

2021-11-05 compared with 2021-08-06 · 62 added, 49 removed, 267 unchanged (29% of the section changed)

2 unchanged sentences

STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

( Amounts in thousands, except Share amounts)

June 30, 2021

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

September 30, 2021

December 31, 2020

Investment in Bitcoin, at fair value (cost $ 7,377,287 and $ 5,543,305 as of June 30, 2021 and December 31, 2020, respectively)

Investment in Bitcoin, at fair value (cost $ 7,340,191 and $ 5,543,305 as of September 30, 2021 and December 31, 2020, respectively)

Sponsor's Fee payable, related party

11 unchanged sentences

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

June 30, 2021

September 30, 2021

Investment in Bitcoin

7 unchanged sentences

( Amounts in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Investment income:

2 unchanged sentences

Net investment loss

Net realized and unrealized (loss) gain from:

Net realized and unrealized gain from:

Net realized gain on investment in Bitcoin

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

Net realized and unrealized (loss) gain on investment

Net (decrease) increase in net assets resulting from operations

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.

2 unchanged sentences

( Amounts in thousands, except change in Shares outstanding)

Three Months Ended June 30,

Six Months Ended June 30,

(Decrease) increase in net assets from operations:

Three Months Ended September 30,

Nine Months Ended September 30,

Increase in net assets from operations:

Net investment loss

Net realized gain on investment in Bitcoin

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

Net (decrease) increase in net assets resulting from operations

Net change in unrealized appreciation on investment in Bitcoin

Net increase in net assets resulting from operations

Increase in net assets from capital share transactions:

1 unchanged sentence

Net increase in net assets resulting from capital share transactions

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

Total increase in net assets from operations and capital share transactions

Beginning of period

24 unchanged sentences

ETHE), Grayscale Ethereum Classic Trust (ETC) (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), Grayscale Decentralized Finance Fund LLC (DeFi), and Grayscale Digital Large Cap Fund LLC (OTCQX:

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

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

LTCN), Grayscale Livepeer Trust (LPT), Grayscale Stellar Lumens Trust (XLM) (OTCQX:

GXLM), Grayscale Zcash Trust (ZEC) (OTCQX:

ZCSH), Grayscale Decentralized Finance Fund LLC (DeFi), and Grayscale Digital Large Cap Fund LLC (OTCQX:

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) and Grayscale Digital Large Cap Fund LLC (GDLC).

Grayscale Bitcoin Cash Trust (BCH), Grayscale Ethereum Trust (ETH), Grayscale Ethereum Classic Trust (ETC), Grayscale Litecoin Trust (LTC), and Grayscale Digital Large Cap Fund LLC.

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

4 unchanged sentences

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 Custodian Agreement is for an initial term of three years .

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

4 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, 2021 and December 31, 2020 and results of operations for the three and six months ended June 30, 2021 and 2020 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, 2021 and December 31, 2020 and results of operations for the three and nine months ended September 30, 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.

17 unchanged sentences

Therefore, the Trust looks to the Authorized Participant when assessing entity-specific and market-based volume and level of activity for Digital Asset Markets.

The Authorized Participant transacts in a Brokered Market, a Dealer Market, Principal-to-Principal Markets and Exchange Markets, each as defined in the FASB Master Glossary (collectively, “Digital Asset Markets”).

The Authorized Participant transacts 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, as a related party of the Sponsor, provides information about the Digital Asset Markets on which it transacts to the Trust.

32 unchanged sentences

(Amounts in thousands)

June 30, 2021

September 30, 2021

Investment in Bitcoin

3 unchanged sentences

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

As of June 30, 2021, and December 31, 2020, the Trust held 651,344.12940358 and 607,039.48515191 Bitcoin, respectively.

The Trust determined the fair value per Bitcoin to be $ 34,764.81 and $ 29,185.05 on June 30, 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).

As of September 30, 2021, and December 31, 2020, the Trust held 648,068.81398005 and 607,039.48515191 Bitcoin, respectively.

The Trust determined the fair value per Bitcoin to be $ 43,529.16 and $ 29,185.05 on September 30, 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:

16 unchanged sentences

Net realized gain on investment in Bitcoin

Balance at June 30, 2021

Balance at September 30, 2021

648,068.81398005

Creations and Redemptions of Shares

At June 30, 2021 and December 31, 2020, there were an unlimited number of Shares authorized by the Trust.

At September 30, 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 0.0009 and 0.0010 of one Bitcoin at June 30, 2021 and December 31, 2020, respectively.

Each Share represented approximately 0.0009 and 0.0010 of one Bitcoin at September 30, 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.

5 unchanged sentences

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 currently has no intention of seeking regulatory approval to operate an ongoing 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.

As of the date of this filing, the NYSE Arca 19b-4 application has not been approved by the SEC and the Trust has not obtained relief from the SEC under 17 CFR §§ 242.101 and 102, and the Trust makes no representation as to when or if such approval and relief will be obtained.

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 June 30, 2021 and December 31, 2020, the Trust did not have a liability for any unrecognized tax amounts.

As of and during the periods ended September 30, 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 June 30, 2021 or December 31, 2020.

Related Parties

1 unchanged sentence

DCG, Genesis, Grayscale and TradeBlock, Inc.

As of June 30, 2021 and December 31, 2020, 16,567,432 and 14,512,320 Shares of the Trust were held by related parties of the Trust, respectively.

As of September 30, 2021 and December 31, 2020, 16,531,978 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 June 30, 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 and six months ended June 30, 2021 and 2020.

The Trust held no Incidental Rights or IR Virtual Currency as of September 30, 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 and nine months ended September 30, 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;

8 unchanged sentences

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 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”).

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.

(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.

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, 2021 and 2020, the Trust incurred Sponsor’s Fees of $ 151,473,648 and $ 14,803,403 , respectively.

For the six months ended June 30, 2021 and 2020, the Trust incurred Sponsor’s Fees of $ 295,773,443 and $ 26,596,791 , respectively.

As of June 30, 2021 and December 31, 2020, there were no accrued and unpaid Sponsor’s Fees.

For the three months ended September 30, 2021 and 2020, the Trust incurred Sponsor’s Fees of $ 137,296,546 and $ 22,080,009 , respectively.

For the nine months ended September 30, 2021 and 2020, the Trust incurred Sponsor’s Fees of $ 433,069,989 and $ 48,676,800 , respectively.

As of September 30, 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 six months ended June 30, 2021 and 2020, the Sponsor did not pay any Additional Trust Expenses on behalf of the Trust.

For the three and nine months ended September 30, 2021 and 2020, the Sponsor did no t 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.

2 unchanged sentences

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

On October 20, 2021, the Board of the Sponsor approved the purchase by DCG, the parent company of the Sponsor, of up to $ 1 billion worth of Shares of the Trust.

Subsequently, DCG authorized such purchase.

This increases DCG’s prior authorization to purchase up to $ 750 million worth of Shares by $ 250 million.

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.

6 unchanged sentences

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 events and situations.

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

6 unchanged sentences

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

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

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.

11 unchanged sentences

Financial Highlights Per Share Performance

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Per Share Data:

Net asset value, beginning of period

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

Net increase in net assets from investment operations:

Net investment loss

Net realized and unrealized (loss) gain

Net (decrease) increase in net assets resulting from operations

Net realized and unrealized gain

Net increase 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 2, 2021 the fair value of Bitcoin determined in accordance with the Trust’s accounting policy was $ 39,170.03 per Bitcoin.

On October 19, 2021, pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934, and Rule 19b-4 thereunder, NYSE Arca, Inc., filed a Form 19b-4 proposing to list and trade shares of the Trust under NYSE Arca Rule 8.201-E (Commodity Based Trust Shares).

On October 20, 2021, the Board of the Sponsor approved the purchase by DCG, the parent company of the Sponsor, of up to $ 1 billion worth of Shares of the Trust.

Subsequently, DCG authorized such purchase.

This increases DCG’s prior authorization to purchase up to $ 750 million worth of Shares by $ 250 million.

Through November 1, 2021, DCG has purchased $ 558 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 November 1, 2021 the fair value of Bitcoin determined in accordance with the Trust’s accounting policy was $ 61,504.85 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