Osprey Bitcoin Trust 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer (who serves as our principal executive officer) and Chief Financial Officer (who serves as our principal financial and accounting officer), to allow timely decisions regarding required disclosure. As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2021. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective due to ineffective oversight of the Trust’s financial reporting by management, which resulted in a revision of our December 31, 2020 financial statements and our March 31, 2021 financial statements. This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the Securities and 54 Exchange Commission for newly public companies. Management determined that the circumstances that led to the revision of our financial statements for the year ended December 31, 2020 and the interim period ended March 31, 2021 was a material weakness in internal controls related to net assets presentation in the statement of assets and liabilities, which were due solely to human error, and were addressed by the following personnel and policy changes. The enhancements included hiring additional qualified accounting and financial reporting personnel, providing greater access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding financial statements presentation. Changes in Internal Control over Financial Reporting There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information Not applicable. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 55 PART III Item 10. Directors, Executive Officers and Corporate Governance The Trust does not have any directors, officers or employees. Under the Trust Agreement, all management functions of the Trust have been delegated to and are conducted by the Sponsor, its agents and its affiliates, including without limitation, the Custodian and its agents. As officers of the Sponsor, Gregory D. King, the Chief Executive Officer of the Sponsor, Robert Rokose, the Chief Financial Officer of the Sponsor and Matthew Mascera, as Director of Operations of the Sponsor, may take certain actions and execute certain agreements and certifications for the Trust, in their capacity as the principal officers of the Sponsor. The following individuals are the officers of the Sponsor responsible for overseeing the business and operations of the Trust: Gregory D. King, 47, Chief Executive Officer Gregory D. King is Founder and CEO of Osprey Funds, LLC and has served as CEO of the Sponsor since its inception in October 2018. Greg is the primary author of several financial industry innovations including creating the first ever exchange-traded note (“ETN”) for Barclays in 2006. In 2009, Greg cofounded VelocityShares, LLC, a provider of alternative ETPs, partnering with Credit Suisse as product issuer. VelocityShares was acquired by Janus Capital in 2014. During his career, Greg has created and launched over 100 exchange traded funds and notes for Barclays, Credit Suisse, Global X Funds, VelocityShares, Rex Shares, LLC and Osprey Funds. Greg received a Master’s in Business Administration from the University of California, Davis, and is a CFA Charter holder. He has been an investor in Bitcoin since 2013. Robert Rokose, 51, Chief Financial Officer and Treasurer Robert Rokose became Treasurer and CFO of the Sponsor in March 2020. He is also CFO of REX Shares, LLC, originally the parent company to the Sponsor. Bob has 28 years of accounting and financial services experience. His previous roles include CFO of U.S. Funds at JP Morgan Asset Management, Managing Director & CFO for PIMCO/Allianz Funds and Assistant Vice President & Assistant Controller of publicly held Lexington Global Asset Managers. Mr. Rokose has served as a Financial Services Consultant and has acted in that role since November 2016. From May 2014 to October 2016, Mr. Rokose was Chief Financial Officer and Treasurer of AccuShares Investment Management where he led all financial accounting and reporting for the organization. Bob is a Certified Public Accountant, licensed in the state of New York. He has an undergraduate degree from Pace University and a Master of Business Administration from the University of Connecticut. Jack Drogin, 59, General Counsel Jack Drogin became General Counsel and Chief Compliance Officer of the Sponsor in May 2021. He has over thirty years’ experience as an attorney, including ten on the Staff of the U.S. Securities and Exchange Commission, Division of Trading and Markets. from January 1991 toJune 2001. From October 2019 to May 2021, Jack was a shareholder in the Washington, D.C. office of Murphy & McGonigle, P.C. , a firm focused on financial services law and regulation. He holds an undergraduate degree from the University of Pennsylvania and a law degree from Harvard Law School. Jack is a member of the New York and District of Columbia bars. Matthew Mascera, 46, Director of Operations Matthew Mascera became Director of Operations of the Sponsor in March 2020. Matt has 23 years of experience in the Financial Services industry. From February 2016 to June 2019, Matt was Director of Operations and Trading at Seacliff Capital, a long/short equity hedge fund. From 2012 to 2015, Matt was a Senior Vice President in equities at FBR & Co. Previous to that, Matt was an Executive Director at UBS Securities where he had been since 2005. Matt holds a Bachelor’s degree in Finance from Tulane University. Advisory Board The Sponsor has an advisory board, which serves in an informal, advisory capacity. The members listed below have no formal duties in connection with their service, but have agreed to make themselves available, upon the Sponsor’s request to advise on Sponsor matters, including without limitation those relating to the Trust. Each member of the advisory board, listed below, receives equity in the Sponsor in return for their services. Brian Estes Brian is the Managing Partner & Chief Investment Officer at Off the Chain Capital, a firm focused on Graham/Dodd value investing in blockchain digital assets. Josh Brown 56 Josh is the CEO of Ritholtz Wealth management, a New York City-based investment advisory firm. Michael Komaransky Michael is the founder of Grapefruit Trading, a crypto market maker firm. Prior, Michael served as the head of Trading at Cumberland, DRW’s digital-currency unit. J. Parsons J. Parsons has been a leader in the exchange traded product industry for over twenty years. Most recently. J. served as the Global Head of Sales in the iShares business of Barclays Global Investors (BGI). Item 11. Executive Compensation Not applicable. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Securities Authorized for Issuance under Equity Compensation Plans and Related Stockholder Matters Not applicable. Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information with respect to the beneficial ownership of the Units for: ● each person that, to the Sponsor’s knowledge based solely on the records of the Transfer Agent, owns beneficially a significant portion of the Units; ● each executive officer of the Sponsor individually; and ● all officers of the Sponsor as a group. The number of Units beneficially owned and percentages of beneficial ownership set forth below are based on the number of Units outstanding as of March 24, 2022 and do not take into account ownership of the Units held through Cede & Co., a nominee of DTC, for which there is no publicly available information. Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership Percentage of Beneficial Ownership Significant Unitholders: Celsius Network Ltd. 2,932,321 35.16 % Executive Officers of the Sponsor: (1) Robert Rokose 2,056 * % Gregory King 4,113 * % Matthew Mascera 0 Jack Drogin 0 Executive officers of the Sponsor as a group 2,056 * % (1) The Trust does not have any directors, officers or employees. Under the Trust Agreement, all management functions of the Trust have been delegated to and are conducted by the Sponsor, its agents and its affiliates. * Represents beneficial ownership of less than 1%. The business address for Celsius Network Ltd. is 1 Bartholomew Lane, London, EC2N 2AX UK. Alexander Mashinsky is the CEO and controlling shareholder of Celsius Network Ltd. The business address for each executive officer of the Sponsor is c/o Osprey Funds, LLC, 520 White Plains Road, Suite 500, Tarrytown, New York 10591. 57 Item 13. Certain Relationships and Related Transactions and Director Independence General The Sponsor has not established formal procedures to resolve all potential conflicts of interest. Consequently, investors may be dependent on the good faith of the respective parties subject to such conflicts to resolve them equitably. Although the Sponsor attempts to monitor these conflicts, it is extremely difficult, if not impossible, for the Sponsor to ensure that these conflicts do not, in fact, result in adverse consequences to the Trust. Prospective investors should be aware that the Sponsor presently intends to assert that Unitholders have, by subscribing for Units of the Trust, consented to the following conflicts of interest in the event of any proceeding alleging that such conflicts violated any duty owed by the Sponsor to investors. The Sponsor The Sponsor has a conflict of interest in allocating its own limited resources among, when applicable, different clients and potential future business ventures, to each of which it owes fiduciary duties. Additionally, the professional staff of the Sponsor also services other affiliates of the Trust, including, Rex Shares, LLC, a company under common control with the Sponsor. Although the Sponsor and its professional staff cannot and will not devote all of its or their respective time or resources to the management of the affairs of the Trust, the Sponsor intends to devote, and to cause its professional staff to devote, sufficient time and resources to manage properly the affairs of the Trust consistent with its or their respective fiduciary duties to the Trust and others. Although the Sponsor does not engage in trading Bitcoin with the Trust, the Sponsor may receive from the Trust Bitcoin to be used to pay certain Trust expenses, including without limitation, the Custodial fee. In such circumstances, the Sponsor will price the Bitcoin received from the Trust at the Bitcoin Market Price on the day it is received and convert the Bitcoin received into cash to be used to pay Trust expenses. The Sponsor typically receives its Management Fee in Bitcoin, valued at the Bitcoin Market Price on the day such Management Fee is paid. Item 14. Principal Accounting Fees and Services The Sponsor in its discretion, waived audit fees for the year ended December 31, 2021, and 2020. Fees for services performed by Grant Thornton LLP for the years ended December 31, 2021 and 2020 were: Years Ended December 31, 2021 2020 Audit fees $ 179,140 $ 24,380 Audit-related fees [-] [-] Tax fees [-] [-] Total $ 179,140 $ 24,380 In the table above, in accordance with the SEC’s definitions and rules, Audit Fees are fees paid to Grant Thornton LLP for professional services for the audit of the Trust’s financial statements included in annual and quarterly OTC Market filings, as well as financial statements included in the quarterly reports on the SEC’s Form 10-Q, and for services that are normally provided by the accountants in connection with regulatory filings or engagements. Pre-Approved Policies and Procedures The Trust has no board of directors, and as a result, has no audit committee or pre-approval policy with respect to fees paid to its principal accounting firm. Such determinations, including for the fiscal year ended December 31, 2021, are made by the Sponsor . 58 PART IV Item 15. Exhibits and Financial Statements Schedules 1. Financial Statements See Index to Financial Statements on Page F-1 for a list of the financial statements being filed herein. 2. Financial Statement Schedules Schedules have been omitted since they are either not required, not applicable, or the information has otherwise been included. 3. Exhibits Exhibit Number Exhibit Description 4.1 Second Amended and Restated Declaration of Trust and Trust Agreement (incorporated by reference Exhibit 4.1 of the Registration Statement on Form 10 filed by the Registrant on July 8, 2021) 4.6* Description of Units 10.1 † Custodial Services Agreement, dated May 18, 2020, between Osprey Bitcoin Trust and Fidelity Digital Asset Services, LLC (incorporated by reference to Exhibit 10.1 of the Registration Statement on Form 10 filed by the Registrant on July 8, 2021) 10.2 Index Provider Agreement (incorporated by reference to Exhibit 10.2 of the Amendment No. 1 to Registration Statement on Form 10 filed by the Registrant on September 10, 2021) 10.3 † Transfer Agency and Registrar Service Agreement (incorporated by reference to Exhibit 10.3 of the Amendment No. 1 to Registration Statement on Form 10 filed by the Registrant on September 10, 2021) 10.4 Form of Subscription Agreement (incorporated by reference to Exhibit 10.4 of the Amendment No. 1 to Registration Statement on Form 10 filed by the Registrant on September 10, 2021) 10.5 † Administration Agreement (incorporated by reference to Exhibit 10.5 of the Amendment No. 1 to Registration Statement on Form 10 filed by the Registrant on September 10, 2021) 10.6 † Custodial Services Agreement, dated as of February 4, 2022, between Osprey Bitcoin Trust and Coinbase Custody Trust Company, LLC (incorporated by reference to Exhibit 10.1 of the Form 8-K filed by the Registrant on February 10, 2022) 31.1* Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 31.2* Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 32.1 * Certification by Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 * Certification by Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS* Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File—The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document 59 * Filed herewith. † Certain schedules or similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Trust agrees to furnish supplemental copies of any of the omitted schedules or attachments upon request by the Securities and Exchange Commission. 60 Item 16. Form 10-K Summary Not applicable. 61 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned in the capacities* indicated, thereunto duly authorized. Osprey Funds, LLC as Sponsor of Osprey Bitcoin Trust By: /s/ Gregory D. King Name: Gregory D. King Title: Chief Executive Officer* By: /s/ Robert J. Rokose Name: Robert J. Rokose Title: Chief Financial Officer* Date: March 29, 2022 * The Registrant is a trust and the persons are signing in their capacities as officers or directors of Osprey Funds, LLC, the Sponsor of the Registrant. 62 INDEX TO FINANCIAL STATEMENTS Page Osprey Bitcoin Trust - Annual Financial Statements Report of Independent Registered Public Accounting Firm F-2 Statements of Assets and Liabilities at December 31, 2021 and 2020 F-4 Schedules of Investment at December 31, 2021 and 2020 F-5 Statements of Operations for the years ended December 31, 2021 and 2020 F-6 Statements of Changes in Net Assets for the years ended December 31, 2021 and 2020 F-7 Notes to Financial Statements F-8 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Investors and Sponsor of Osprey Bitcoin Trust Opinion on the financial statements We have audited the accompanying statements of assets and liabilities, including the schedules of investment, of Osprey Bitcoin Trust (a Delaware Statutory Trust) (the “Trust”) as of December 31, 2021 and 2020, and the related statements of operations and changes in net assets for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Trust as of December 31, 2021 and 2020, and the results of its operations for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. Basis for opinion These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Trust’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles F- 2 used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ GRANT THORNTON LLP We have served as the Trust’s auditor since 2019. New York, New York March 29, 2022 F- 3 Osprey Bitcoin Trust Statements of Assets and Liabilities December 31, 2021 and December 31, 2020 (Amounts in U.S. dollars, except units issued and outstanding) December 31, 2021 December 31, 2020 Assets Investment in Bitcoin, at fair value (cost $ 75,945,739 and $ 7,980,103 , respectively) $ 129,756,984 $ 44,946,574 Cash 257 25,235 Total assets $ 129,757,241 $ 44,971,809 Liabilities Subscriptions received in advance $ - $ 25,000 Management Fee payable 53,985 18,459 Other payable 30,088 21,668 Total liabilities 84,073 65,127 Net assets $ 129,673,168 $ 44,906,682 Net assets Paid-in capital $ 76,978,282 $ 8,150,986 Accumulated net investment loss ( 1,197,493 ) ( 266,516 ) Accumulated net realized gain on investment in Bitcoin 77,554 65,219 Accumulated net change in unrealized appreciation on investment in Bitcoin 53,814,825 36,956,993 $ 129,673,168 $ 44,906,682 Units issued and outstanding, no par value (unlimited Units authorized) 8,340,536 4,529,312 * Net asset value per Unit $ 15.55 $ 9.91 * * Units have been adjusted retroactively to reflect the 4:1 stock split effective January 5, 2021. The accompanying notes are an integral part of these financial statements. F- 4 Osprey Bitcoin Trust Schedules of Investment December 31, 2021 and December 31, 2020 (Amounts in U.S. dollars, except units) December 31, 2021 Units Fair Value Percentage of Net Assets Investment in Bitcoin , at fair value (cost $ 75,945,739 ) 2,828.93 $ 129,756,984 100 % Liabilities, less cash $ ( 83,816 ) ( 0 )% $ 129,673,168 100 % December 31, 2020 Units Fair Value Percentage of Net Assets Investment in Bitcoin , at fair value (cost $ 7,980,103 ) 1,548.46 $ 44,946,574 100 % Liabilities, less cash $ ( 39,892 ) ( 0 )% $ 44,906,682 100 % The accompanying notes are an integral part of these financial statements. F- 5 Osprey Bitcoin Trust Statements of Operations For the years ended December 31, 2021 and 2020 (Amounts in U.S. dollars) Year ended December 31, 2021 Year ended December 31, 2020 Expenses Management Fee $ 605,731 $ 132,210 Other 434,246 36,919 Total expenses 1,039,977 169,129 Other expenses waived by the Sponsor ( 109,000 ) - Net expenses 930,977 169,129 Net investment loss ( 930,977 ) ( 169,129 ) Net realized gain and net change in unrealized appreciation on investment in Bitcoin Net realized gain on investment in Bitcoin 12,335 18,466 Net change in unrealized appreciation on investment in Bitcoin 16,857,832 32,044,385 Total net realized gain and net change in unrealized appreciation on investment in Bitcoin 16,870,167 32,062,851 Net increase in net assets resulting from operations $ 15,939,190 $ 31,893,722 The accompanying notes are an integral part of these financial statements. F- 6 Osprey Bitcoin Trust Statements of Changes in Net Assets For the years ended December 31, 2021 and 2020 (Amounts in U.S. dollars, except units issued and outstanding) Year ended December 31, 2021 Year ended December 31, 2020 Increase in net assets from operations Net investment loss $ ( 930,977 ) $ ( 169,129 ) Net realized gain on investment in Bitcoin 12,335 18,466 Net change in unrealized appreciation on investment in Bitcoin 16,857,832 32,044,385 Net increase in net assets resulting from operations 15,939,190 31,893,722 Increase in net assets from capital transactions Subscriptions 68,827,296 3,175,825 Net Increase in net assets 84,766,486 35,069,547 Net assets at the beginning of the year 44,906,682 9,837,135 Net assets at the end of the year $ 129,673,168 $ 44,906,682 Change in units issued and outstanding Units issued and outstanding at the beginning of the year 4,529,312 * 3,980,128 * Subscriptions 3,811,224 549,184 * Units issued and outstanding at the end of the year 8,340,536 4,529,312 * * Units have been adjusted retroactively to reflect the 4:1 stock split effective January 5, 2021. The accompanying notes are an integral part of these financial statements. F- 7 Osprey Bitcoin Trust Notes to the Financial Statements As of December 31, 2021 1. Organization Osprey Bitcoin Trust (the “Trust”) is a Delaware Statutory Trust that was formed on January 3, 2019 and commenced operations on January 22, 2019 and is governed by the Second Amended and Restated Declaration of Trust and Trust Agreement (the “Trust Agreement”) dated November 1, 2020. In general, the Trust holds Bitcoin and, from time to time, issues common units of fractional undivided beneficial interest (“Units”) in exchange for Bitcoin. The investment objective of the Trust is for the Units to track the price of Bitcoin, less liabilities and expenses of the Trust. The Units are designed as a convenient and cost-effective method for investors to gain investment exposure to Bitcoin, similar to a direct investment in Bitcoin. Osprey Funds LLC (the “Sponsor”) acts as the sponsor of the Trust. The Sponsor is responsible for the day-to-day administration of the Trust pursuant to the provisions of the Trust Agreement. The Sponsor is responsible for preparing and providing annual reports on behalf of the Trust to investors and is also responsible for selecting and monitoring the Trust’s service providers. As consideration for the Sponsor’s services, the Trust pays the Sponsor a Management Fee as discussed in Notes 2 and 5. The Trust’s original Custodian was Xapo, Inc. (“Xapo”), a third- party provider (Xapo was acquired by Coinbase Custody Trust Company, LLC during 2019). During March 2020, the Trust changed custodians from Xapo to Unchained Capital. During June 2020, the Trust changed custodians to Fidelity Digital Asset Services, LLC’s (the “Custodian”). The custodian is responsible for safeguarding the Bitcoin held by the Trust. The transfer agent for the Trust (the “Transfer Agent”) is Continental Stock Transfer & Trust Company. The Transfer Agent is responsible the issuance and redemption of Units, the payment, if any, of distributions with respect to the Units, the recording of the issuance of the Units and the maintaining of certain records therewith. F- 8 Osprey Bitcoin Trust Notes to the Financial Statements As of December 31, 2021 2. Summary of Significant Accounting Policies Basis of Presentation The financial statements are expressed in US dollars and have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The Trust qualifies as an investment company for accounting purposes pursuant to the accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies. The Trust is not registered under the U.S. Securities and Exchange Commission (“SEC”) Investment Company Act of 1940. Use of Estimates GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. The most significant estimate in the financial statements is the fair value of investments. Actual results could differ from those estimates and these differences could be material. Cash Cash is received by the Trust from investors and converted into Bitcoin for investment. Cash held by the Trust represents deposits maintained with Signature Bank (New York). At times, bank deposits may be in excess of federally insured limits. In accordance with ASC 230 “Statement of Cash Flows”, the Trust qualifies for an exemption from the requirement to provide a statement of cash flows and has elected not to provide a statement of cash flows. Subscriptions and Redemptions of Units Proceeds received by the Trust from the issuance and sale of Units consist of Bitcoin deposits and forked or airdropped cryptocurrency coins from the Bitcoin Network, or their respective U.S. dollar cash equivalents. Such Bitcoins (or cash equivalent) will only be (1) owned by the Trust and held by the Custodian (or, if cash, used by the Sponsor to purchase Bitcoins to be held by the Custodian), (2) disbursed (or converted to U.S. dollars, if necessary) to pay the Trust’s expenses, (3) distributed to Accredited Investors (subject to obtaining regulatory approval from the Securities and Exchange Commission (“SEC”) described below) in connection with the redemption of Units, (4) distributed (or converted to U.S. dollars, prior to distribution, to Unitholders as dividends, and (5) liquidated in the F- 9 Osprey Bitcoin Trust Notes to the Financial Statements As of December 31, 2021 event that the Trust terminates or as otherwise required by law or regulation. The Trust conducts its transactions in Bitcoin, including receiving Bitcoin for the creation of Units and delivering Bitcoin for the redemption of Units (if a redemption program were to be established) and for the payment of the Management Fee. During June 2020 the Trust began a continuous offering of up to $5,000,000 of Units with no par value, each Unit representing a fractional undivided beneficial interest in the Trust. 154,183 Units were sold to both accredited and non-accredited investors in an offering of to $ 5,000,000 of Units, dated June 1, 2020, registered in Connecticut and qualified in New York, pursuant to Rule 504 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”) (“Rule 504 Offering”). The Rule 504 Offering closed on August 12, 2020. These Units have been adjusted retroactively to reflect the 4:1 stock split effective January 5, 2021. On November 12, 2020, the Trust began an offering of an unlimited number of Units pursuant to Rule 506(c) under the Securities Act (“November 2020 Offering”). 4,206,224 Units were sold pursuant to the November 2020 Offering. These Units have been adjusted retroactively to reflect the 4:1 stock split effective January 5, 2021. On December 30, 2020, the Sponsor of the Trust announced that it has declared a four to one split of the Trust’s issued and outstanding Units of fractional undivided beneficial interest. With the Unit split, Unitholders of record on December 31, 2020 received four additional Units of the Trust for each Unit held. The effective date of the split was January 5, 2021. On January 14, 2021, The Financial Industry Regulatory Authority (“FINRA”) determined that the Trust’s Units met the criteria for trading on the over-the-counter market (“OTC Market”). On February 16, 2021, the Trust’s Units began trading in the OTC Market, operated by OTC Markets Group, Inc., under the ticker symbol “OBTC”. On March 3, 2021, the Trust’s Units began trading in the OTCQX tier of the OTC Market, under the ticker symbol “OBTC.” As of December 31, 2021, there were 8,340,536 Units issued and outstanding. 3,350,172 of the Units are restricted securities that may not be resold absent registration or an exemption from registration under the Securities Act, and 4,990,364 of the Units are unrestricted securities. Effective November 1, 2021, the Trust suspended the November 2020 Offering under rule 506(c) under the Securities Act. The Trust is currently unable to redeem Units. At some date in the future, the Trust may seek approval from the SEC to operate an ongoing redemption program. Investment Transactions and Revenue Recognition The Trust identifies Bitcoin as an “other investment” in accordance with ASC 946. The Trust records its investment transactions on a trade date basis and changes in fair value are reflected as the net change in unrealized appreciation or depreciation on investments. Realized gains and losses are calculated using a first in first out method. Realized gains and losses are recognized in connection with transactions including settling obligations for the Management Fee and other expenses in Bitcoin. F- 10 Osprey Bitcoin Trust Notes to the Financial Statements As of December 31, 2021 Management Fee The Trust is expected to pay the remuneration due to the Sponsor (the “Management Fee” or “Sponsor Fee”). Effective November 1, 2020, the Management Fee changed to an annual rate of 0.49 % of the daily Net Asset Value of the Trust and accrues daily in Bitcoin. Prior to November 1, 2020, the Management Fee equaled an annual rate of 0.99 % of the daily Net Asset Value of the Trust and accrued daily in Bitcoin. The Management Fee is payable at the Sponsor’s sole discretion, in Bitcoin or in U.S. Dollars for the Bitcoin market price in effect for such Bitcoin at the time of payment. Trust Expenses In accordance with its Trust Agreement, the Sponsor bears the routine operational, administrative and other ordinary administrative operating expenses of the Trust as “Assumed Expenses” other than audit fees, index license fees, aggregate legal fees in excess of $50,000 and the fees of the Custodian (revised “Excluded Expenses”) and certain extraordinary expenses of the Trust, including but not limited to taxes and governmental charges, expenses and costs, expenses and indemnities related to any extraordinary services performed by the Sponsor (or any other service provider, including the Delaware Trust Company (the “Trustee”)) on behalf of the Trust to protect the Trust or the interest of Unitholders, indemnification expenses, fees and expenses related to public trading on OTCQX (“Extraordinary Expenses”). Fair Value Measurements The Trust’s investment in Bitcoin is stated at fair value in accordance with ASC 820-10 “Fair Value Measurements”, which outlines the application of fair value accounting. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the ‘exit price’) in an orderly transaction between market participants at the measurement date. ASC 820-10 requires the Trust to assume that Bitcoin is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market. Principal market is the market with the greatest volume and level of activity for Bitcoin, and the most advantageous market is defined as the market that maximizes the amount that would be received to sell the asset or minimizes the amount that would be paid to transfer the liability, after taking into account transaction costs. The Principal Market is generally selected based on the most liquid and reliable exchange (including consideration of the ability for the Trust to access the specific market, either directly or through an intermediary, at the end of each period). The Sponsor has identified Coinbase Pro as the principal market for Bitcoin. GAAP utilizes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Trust. Unobservable inputs reflect the Trust’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access. Since valuations are based on quoted prices that are F- 11 Osprey Bitcoin Trust Notes to the Financial Statements As of December 31, 2021 readily and regularly available in an active market, these valuations do not entail a significant degree of judgment. Level 2 – Valuations based on quoted prices in markets that are not active or for which significant inputs are observable, either directly or indirectly. Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The availability of valuation techniques and observable inputs can vary by investment. 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. Definition of Net Asset Value The net asset value (“NAV”) of the Trust is used by the Trust in its day-to-day operations to measure the net value of the Trust’s assets. The NAV is calculated on each business day and is equal to the aggregate value of the Trust’s assets less its liabilities (which include accrued but unpaid fees and expenses, both estimated and finally determined), based on the Bitcoin market price. In calculating the value of the Bitcoin held by the Trust on any business day, the Trust will use the market price as of 4:00 P.M. New York time. The Trust will also calculate the NAV per Unit of the Trust daily, which equals the NAV of the Trust divided by the number of outstanding Units (the “NAV per Unit”). The Trust considers 4:00 P.M. New York time as a cut off for the end of the day reporting. 3. Fair Value of Bitcoin The investment measured at fair value on a recurring basis and categorized using the three levels of fair value hierarchy consisted of the following as of December 31, 2021 and December 31, 2020: Number Per Bitcoin Amount at Fair Value Measurement Category December 31, 2021 of Bitcoin Fair Value Fair Value Level 1 Level 2 Level 3 Investment in Bitcoin 2,828.93 $ 45,867.86 $ 129,756,984 $ - $ 129,756,984 $ - Number Per Bitcoin Amount at Fair Value Measurement Category December 31, 2020 of Bitcoin Fair Value Fair Value Level 1 Level 2 Level 3 Investment in Bitcoin 1,548.46 $ 29,026.66 $ 44,946,574 $ - $ 44,946,574 $ - The Trust determined the fair value per Bitcoin using the price provided at 4:00 p.m., New York time, by Coinbase Pro as the Trust’s principal market. The Trust’s liabilities accrued in Bitcoin are converted into United States dollar amounts at the period-end Bitcoin price. The fluctuations arising from the effect of changes in liabilities denominated in Bitcoin are included with the net realized or unrealized appreciation or depreciation on investment in Bitcoin in the statements of operations. F- 12 Osprey Bitcoin Trust Notes to the Financial Statements As of December 31, 2021 The following represents the changes in quantity and the respective fair value of Bitcoin for the year ended December 31, 2021: Bitcoin Fair Value Balance at January 1, 2021 1,548.46 $ 44,946,574 Bitcoin distributed for Management Fee, related party ( 12.12 ) ( 577,302 ) Bitcoin distributed for other fees ( 6.90 ) ( 314,213 ) Subscriptions 1,299.49 68,827,516 Net realized gain on investment in Bitcoin - 29,635 Net change in unrealized appreciation on investment in Bitcoin - 16,844,774 Balance at December 31, 2021 2,828.93 $ 129,756,984 Net realized gain on the transfer of Bitcoins to pay the Management Fee and other expenses for the year ended December 31, 2021, was $ 12,335 , which includes $ 29,635 net realized gain on investment in Bitcoin, and $ 17,300 net realized loss resulted from the changes in liabilities denominated in Bitcoin. Net change in unrealized appreciation on investment in Bitcoin for the year ended December 31, 2021, was $ 16,857,832 , which includes net change in unrealized appreciation on investment in Bitcoin of $ 16,844,774 , and $ 13,058 net unrealized appreciation due to changes in value of liabilities The following represents the changes in quantity and the respective fair value of Bitcoin for the year ended December 31, 2020: Bitcoin Fair Value Balance at January 1, 2020 1,376.48 $ 9,846,468 Bitcoin distributed for Management Fee, related party ( 13.41 ) ( 107,310 ) Bitcoin distributed for other fees ( 2.45 ) ( 31,260 ) Subscriptions 187.84 3,175,825 Net realized gain on investment in Bitcoin - 18,466 Net change in unrealized appreciation on investment in Bitcoin - 32,044,385 Balance at December 31, 2020 1,548.46 $ 44,946,574 Net realized gain on the transfer of Bitcoins to pay the Management Fee and other expenses for the year ended December 31, 2020, was $ 18,466 . Net change in unrealized appreciation on investment in Bitcoin for year ended December 31, 2020 was $ 32,044,385 . 4. Income Taxes The Trust is grantor trust for U.S. federal income tax purposes. Accordingly, the Trust will not be subject to U.S. federal income tax. Rather, each beneficial owner of Units will be treated as directly owning its pro rata share of the Trust’s assets and a pro rata portion of the Trust’s income, gain, losses and deductions will “flow through” to each beneficial owner of Units. F- 13 Osprey Bitcoin Trust Notes to the Financial Statements As of December 31, 2021 In accordance with GAAP, the Trust has defined the threshold for recognizing the benefits of tax return positions in the financial statements as “more-likely-than-not” to be sustained by the applicable taxing authority and requires measurement of a tax position meeting the “more-likely-than-not” threshold, based on the largest benefit that is more than 50% likely to be realized. As of December 31, 2021, the Trust did not have a liability for any unrecognized tax amounts for uncertain tax positions related to federal, state, and local income taxes. However, the conclusions concerning the 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 December 31, 2021 and December 31, 2020. The Trust’s 2019, 2020, and 2021 tax returns are subject to audit by federal, state and local tax authorities. 5. Related Parties Osprey Fund LLC and REX Shares, LLC, which is under common control with the Sponsor, are related parties of the Trust. The Trust is responsible for custody and index fees, which are included in other expenses in the statement of operations and are paid by the Sponsor on behalf of the Trust. For the years ended December 31, 2021, and 2020 the Trust reimbursed the Sponsor the expenses in the amount of $ 314,213 and $ 31,260 , respectively. The Sponsor in its discretion, may elect to reduce, or waive, the Trust’s expenses. For the years ended December 31, 2021, and 2020, the Sponsor irrevocably waived $ 109,000 , and $ 0 , respectively, of the Trust’s audit fees. For the years ended December 31, 2021, and 2020, the Trust incurred Management Fees of $ 605,731 and $ 132,210 , respectively, which are recorded in the accompanying statements of operations. As of December 31, 2021 and December 31, 2020, there were unpaid Management Fees of $ 53,985 and $ 18,459 , respectively, which are recorded in the accompanying statements of assets and liabilities. The Trust’s Management Fee is accrued daily in Bitcoins and will be payable, at the Sponsor’s sole discretion, in Bitcoins or in U.S. dollars at the Bitcoin market price in effect at the time of such payment. From inception through the year ended December 31, 2021, all Management Fees have been made in Bitcoin to the Sponsor. 6. Risks and Uncertainties Investment in Bitcoin F- 14 Osprey Bitcoin Trust Notes to the Financial Statements As of December 31, 2021 The Trust is subject to various risks including market risk, liquidity risk, and other risks related to its concentration in a single asset, Bitcoin. Investing in Bitcoin is currently unregulated, 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 Units 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 Bitcoin exchanges 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, and competition from other forms of digital currency or payment services. The Bitcoin held by the Trust are commingled and the Trust’s Unitholders have no specific rights to any specific Bitcoin. In the event of the insolvency of the Trust, its assets may be inadequate to satisfy a claim by its Unitholders. There is currently no clearing house for Bitcoin, nor is there a central or major depository for the custody of Bitcoin. There is a risk that some or all of the Trust’s Bitcoin could be lost or stolen. The Trust does not have insurance protection on its Bitcoin which exposes the Trust and its Unitholders to the risk of loss of the Trust’s Bitcoin. Further, Bitcoin transactions are irrevocable. Stolen or incorrectly transferred Bitcoin may be irretrievable. As a result, any incorrectly executed Bitcoin transactions could adversely affect an investment in the Trust. To the extent private keys for Bitcoin addresses are lost, destroyed or otherwise compromised and no backup of the private keys are accessible, the Trust may be unable to access the Bitcoin held in the associated addresses and the private keys will not be capable of being restored. 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. A risk also exists with respect to previously unknown technical vulnerabilities, which may adversely affect the value of Bitcoin. On March 11, 2020, the World Health Organization officially declared COVID-19, the disease caused by the novel coronavirus, a pandemic. Management is closely monitoring the evolution of the pandemic, including how it may affect the economy and general population. 7. Indemnifications In the normal course of business, the Trust enters into contracts with service providers that contain a variety of representations and warranties and which provide general indemnifications. It is not possible to determine the maximum potential exposure or amount under these agreements due to the Trust having no prior claims. Based on experience, the Trust would expect the risk of loss to be remote. F- 15 Osprey Bitcoin Trust Notes to the Financial Statements As of December 31, 2021 8. Financial Highlights Year ended December 31, 2021 Year ended December 31, 2020 Per Unit Performance (for a unit outstanding throughout the year) (as corrected) Net asset value per unit at beginning of year $ 9.91 * $ 2.47 * Net increase (decrease) in net assets resulting from operations Net realized gain (loss) and change in unrealized appreciation (depreciation) on investment 5.76 7.46 Net investment loss ( 0.12 ) ( 0.02 ) Net increase (decrease) in net assets resulting from operations 5.64 7.44 Net asset value per unit at end of year $ 15.55 $ 9.91 * Total return 56.91 % 301.21 % Supplemental Data Ratios to average net asset value Expenses 0.77 % ** 1.05 % Net investment loss ( 0.77 )% ( 1.05 )% * The net asset value per unit has been adjusted to retroactively reflect the 4:1 stock split effective January 5, 2021. ** Such percentages are after expenses waivers. The Sponsor voluntarily waived a portion of Other Expenses (equal to 0.09 % of average net assets). An individual Unitholder’s return, ratios, and per Unit performance may vary from those resented above based on the timing of Unit transactions. Total return and ratios to average net asset value are calculated for the Unitholders taken as a whole. Immaterial Error Correction In January 2022, the Trust re-evaluated the methodology of calculating financial highlights per unit performance. The Trust determined that methodology used to allocate performance per unit F- 16 Osprey Bitcoin Trust Notes to the Financial Statements As of December 31, 2021 between net investment loss and net realized gain (loss) and change in unrealized appreciation (depreciation) on investment was not acceptable under GAAP (ASC-946-210-50), which resulted in immaterial error. This error did not change the net increase (decrease) in net assets resulting from operations per unit or net asset value per unit. The impact of the immaterial error correction on financial highlights presented below: Financial Highlights - Per Unit Performance (for a unit outstanding throughout the period) As previously reported Correcting adjustment As corrected Year ended December 31, 2020 Net increase (decrease) in net assets resulting from operations Net realized gain (loss) and change in unrealized appreciation (depreciation) on investment $ 7.48 $ ( 0.02 ) $ 7.46 Net investment gain (loss) ( 0.04 ) 0.02 ( 0.02 ) Net increase (decrease) in net assets resulting from operations $ 7.44 - $ 7.44 Six months ended June 30, 2021 Net increase (decrease) in net assets resulting from operations Net realized gain (loss) and change in unrealized appreciation (depreciation) on investment $ 1.87 $ 0.11 $ 1.98 Net investment gain (loss) 0.05 ( 0.11 ) ( 0.06 ) Net increase (decrease) in net assets resulting from operations $ 1.92 - $ 1.92 Nine months ended September 30, 2021 Net increase (decrease) in net assets resulting from operations Net realized gain (loss) and change in unrealized appreciation (depreciation) on investment $ 5.19 $ ( 0.23 ) $ 4.96 Net investment gain (loss) ( 0.32 ) 0.23 ( 0.09 ) Net increase (decrease) in net assets resulting from operations $ 4.87 - $ 4.87 Other reporting periods were not impacted by the aforementioned change in methodology, therefore were not presented above. 9. Subsequent Events On February 4, 2022, the Trust entered into a Custodial Services Agreement with Coinbase Custody Trust Company, LLC. On March 11, 2022, the Trust delivered to Fidelity Digital Asset Services, LLC, notice of termination of the custodial services agreement dated May 18, 2020, pursuant to which Fidelity was engaged to keep in safe custody the Trust’s digital assets and to maintain and operate the Trust’s custody account on behalf of the Trust. The notice of termination will become effective on April 10, 2022. On March 10, 2022, the Trust transferred its custodied digital assets from Fidelity Digital Asset Services, LLC to Coinbase Custody Trust Company, LLC. There are no other events that have occurred through March 29, 2022, the date the financial statements were available to be issued, that require disclosure other than that which has already been disclosed in these notes to the financial statements. F- 17