false2020Q1--12-31Grayscale Bitcoin Trust (BTC)0001588489 0001588489 2020-03-31 0001588489 2019-12-31 0001588489 2020-01-01 2020-03-31 0001588489 2019-01-01 2019-03-31 0001588489 2020-05-01 0001588489 2019-01-01 2019-12-31 0001588489 2018-12-31 0001588489 2019-03-31 0001588489 btc:InvestmentInBitcoinMember 2020-03-31 0001588489 us-gaap:FairValueInputsLevel1Member 2020-03-31 0001588489 us-gaap:FairValueInputsLevel2Member 2020-03-31 0001588489 us-gaap:FairValueInputsLevel3Member 2020-03-31 0001588489 btc:CoinbaseIncMember btc:SponsorParentMember 2020-03-31 0001588489 btc:InvestmentInBitcoinMember 2019-12-31 0001588489 us-gaap:FairValueInputsLevel1Member 2019-12-31 0001588489 us-gaap:FairValueInputsLevel2Member 2019-12-31 0001588489 us-gaap:FairValueInputsLevel3Member 2019-12-31 0001588489 btc:SponsorMember 2020-01-01 2020-03-31 0001588489 btc:NonSponsorPaidExpensesMember 2020-01-01 2020-03-31 iso4217:USD xbrli:shares xbrli:pure iso4217:USD xbrli:shares btc:Bitcoin btc:Number
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM
10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
            
to
            
Commission File Number
 000-56121
 
Grayscale
®
Bitcoin Trust (BTC)
SPONSORED BY GRAYSCALE INVESTMENTS, LLC
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware
 
46-7019388
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
c/o Grayscale Investments, LLC
250 Park Avenue South
New York, New York 10003
(Address of Principal Executive Offices) (Zip Code)
(212)
668-1427
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Grayscale Bitcoin Trust (BTC) Shares
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  
    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  
    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
Large accelerated filer
 
 
Accelerated filer
 
             
Non-accelerated filer
 
 
Smaller reporting company
 
             
 
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has el
ec
ted not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    Yes  
    
No
  
Number of shares of the registrant’s common stock outstanding as of
May 1
, 2020: 336,251,000.
DOCUMENTS INCORPORATED BY REFERENCE: None
 
 

Grayscale
®
Bitcoin Trust (BTC)
Table of Contents
             
Item No.
 
Item Caption
 
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5
 
             
     
6
 
             
     
7
 
             
     
8
 
             
     
15
 
             
     
20
 
             
     
20
 
         
   
 
     
20
 
             
     
20
 
             
     
20
 
             
     
20
 
             
     
21
 
             
     
21
 
             
     
21
 
         
   
21
 
         
   
26
 
 
 
2

Statement Regarding Forward-Looking Statements
This Quarterly Report on Form
10-Q
contains “forward-looking statements” with respect to the financial conditions, results of operations, plans, objectives, future performance and business of Grayscale Bitcoin Trust (BTC) (the “Trust”). Statements preceded by, followed by or that include words such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of these terms and other similar expressions are intended to identify some of the forward-looking statements. All statements (other than statements of historical fact) included in this Quarterly Report that address activities, events or developments that will or may occur in the future, including such matters as changes in market prices and conditions, the Trust’s operations, the plans of Grayscale Investments, LLC (the “Sponsor”) and references to the Trust’s future success and other similar matters are forward-looking statements. These statements are only predictions. Actual events or results may differ materially from such statements. These statements are based upon certain assumptions and analyses the Sponsor made based on its perception of historical trends, current conditions and expected future developments, as well as other factors appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor’s expectations and predictions, however, is subject to a number of risks and uncertainties, including, but not limited to, those described in “Item 1A. Risk Factors.” Forward-looking statements are made based on the Sponsor’s beliefs, estimates and opinions on the date the statements are made and neither the Trust nor the Sponsor is under a duty or undertakes an obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, other than as required by applicable laws. Investors are therefore cautioned against relying on forward-looking statements.
Industry and Market Data
Although we are responsible for all disclosure contained in this Quarterly Report on Form
10-Q,
in some cases we have relied on certain market and industry data obtained from third-party sources that we believe to be reliable. Market estimates are calculated by using independent industry publications in conjunction with our assumptions regarding the Bitcoin industry and market. While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under the headings “Statement Regarding Forward-Looking Statements” and “Item 1A. Risk Factors” in the Annual Report on Form
10-K
for the year ended December 31, 2019, filed with the Securities and Exchange Commission on March 20, 2020 (the “Annual Report”).
 
Unless otherwise stated or the context otherwise requires, the terms “we,” “our” and “us” in this Quarterly Report refer to the Sponsor acting on behalf of the Trust.
A glossary of industry and other defined terms is included in this Quarterly Report, beginning on page 22.
3

PART I – FINANCIAL INFORMATION:
Item 1.
Financial Statements (Unaudited)
 
 
 
 
GRAYSCALE BITCOIN TRUST (BTC)
STATEMENTS OF ASSETS AND LIABILITIES
(UNAUDITED)
                 
(Amounts in U.S. dollars, except Share amounts)
 
March 31, 2020
 
 
December 31, 2019
 
Assets:
 
 
 
 
 
 
Investment in Bitcoin, at fair value (cost $1,223,309,388 and $839,093,484 as of March 31, 2020 and December 31, 2019, respectively)
  $
1,972,244,030
    $
1,866,217,842
 
                 
Total assets
  $
1,972,244,030
    $
1,866,217,842
 
                 
Liabilities:
 
 
 
 
 
 
Sponsor’s Fee payable, related party
  $
    $
 
                 
Total liabilities
   
     
 
                 
Net assets
  $
1,972,244,030
    $
1,866,217,842
 
                 
Net Assets consists of:
 
 
 
 
 
 
Paid-in-capital
   
1,250,883,025
     
861,353,899
 
Accumulated net investment loss
   
(92,628,558
)    
(80,835,170
)
Accumulated net realized gain on investment in Bitcoin
   
65,054,921
     
58,574,755
 
Accumulated net change in unrealized appreciation on investment in Bitcoin
   
748,934,642
     
1,027,124,358
 
                 
  $
1,972,244,030
    $
1,866,217,842
 
                 
Shares issued and outstanding, no par value (unlimited Shares authorized)
   
315,828,000
     
269,445,300
 
                 
Net asset value per Share
  $
6.24
    $
6.93
 
                 
 
 
 
 
See accompanying notes to the unaudited financial statements
4

GRAYSCALE BITCOIN TRUST (BTC)
SCHEDULES OF INVESTMENT
(UNAUDITED)
March 31, 2020
 
 
 
 
 
 
 
 
 
Number of Bitcoin
 
 
Cost
 
 
Fair Value
 
 
% of Net
Assets
 
Investment in Bitcoin
   
304,631.31046282
    $
1,223,309,388
    $
1,972,244,030
     
100
%
                                 
Net assets
   
    $
1,223,309,388
    $
1,972,244,030
     
100
%
                                 
                         
December 31, 2019
 
 
 
 
 
 
 
 
 
Number of Bitcoin
 
 
Cost
 
 
Fair Value
 
 
% of Net
Assets
 
Investment in Bitcoin
   
261,192.14022299
    $
839,093,484
    $
1,866,217,842
     
100
%
                                 
Net assets
   
    $
839,093,484
    $
1,866,217,842
     
100
%
                                 
See accompanying notes to the unaudited financial statements
5

GRAYSCALE BITCOIN TRUST (BTC)
STATEMENTS OF OPERATIONS
(UNAUDITED)
                 
 
Three Months Ended March 31,
 
(Amounts in U.S. dollars)
 
2020
 
 
2019
 
Investment income:
 
 
 
 
 
 
Investment income
  $
    $
 
                 
Expenses:
 
 
 
 
 
 
Sponsor’s Fee, related party
   
11,793,388
     
3,862,438
 
                 
Net investment loss
   
(11,793,388
)    
(3,862,438
)
                 
Net realized and unrealized (loss) gain from:
 
 
 
 
 
 
Net realized gain on investment in Bitcoin
   
6,480,166
     
1,844,077
 
Net change in unrealized (depreciation) appreciation on investment in Bitcoin
   
(278,189,716
)    
86,536,075
 
                 
Net realized and unrealized (loss) gain on investment
   
(271,709,550
)    
88,380,152
 
                 
Net (decrease) increase in net assets resulting from operations
  $
 
(283,502,938
)   $
 
84,517,714
 
                 
 
 
See accompanying notes to the unaudited financial statements
6

GRAYSCALE BITCOIN TRUST (BTC)
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
                 
 
Three Months Ended March 31,
 
(Amounts in U.S. dollars, except change in Shares outstanding)
 
2020
 
 
2019
 
(Decrease) increase in net assets from operations:
 
 
 
 
 
 
Net investment loss
  $
(11,793,388
)   $
(3,862,438
)
Net realized gain on investment in Bitcoin
   
6,480,166
     
1,844,077
 
Net change in unrealized (depreciation) appreciation on investment in Bitcoin
   
(278,189,716
)    
86,536,075
 
                 
Net (decrease) increase in net assets resulting from operations
   
(283,502,938
)    
84,517,714
 
                 
Increase in net assets from capital share transactions:
 
 
 
 
 
 
Shares issued
   
389,529,126
     
41,832,368
 
                 
Net increase in net assets resulting from capital share transactions
   
389,529,126
     
41,832,368
 
                 
Total increase in net assets from operations and capital share transactions
   
106,026,188
     
126,350,082
 
                 
Net assets:
 
 
 
 
 
 
Beginning of period
   
1,866,217,842
     
751,622,174
 
                 
End of period
  $
 
1,972,244,030
    $
 
877,972,256
 
                 
Change in Shares outstanding:
 
 
 
 
 
 
Shares outstanding at beginning of period
   
269,445,300
     
206,559,100
 
                 
Shares issued
   
46,382,700
     
11,309,100
 
                 
Net increase in Shares
   
46,382,700
     
11,309,100
 
                 
Shares outstanding at end of period
   
315,828,000
     
217,868,200
 
                 
 
 
See accompanying notes to the unaudited financial statements
7

GRAYSCALE BITCOIN TRUST (BTC)
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. Organization
Grayscale Bitcoin Trust (BTC) (the “Trust”) is a Delaware Statutory Trust that was formed on September 13, 2013 and commenced operations on September 25, 2013. In general, the Trust holds Bitcoin (“BTC”) and, from time to time, issues common units of fractional undivided beneficial interest (“Shares”) (in minimum baskets of 100 Shares, referred to as “Baskets”) in exchange for Bitcoin. The redemption of Shares is not currently contemplated and the Trust does not currently operate a redemption program. Subject to receipt of regulatory approval and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. The Trust currently has no intention of seeking regulatory approval to operate an ongoing redemption program. The investment objective of the Trust is for the Shares to reflect the value of Bitcoin held by the Trust, less the Trust’s expenses and other liabilities. The Trust may also receive Incidental Rights and/or IR Virtual Currency as a result of the Trust’s investment in Bitcoin, in accordance with the terms of the Trust Agreement.
Incidental Rights are rights to claim, or otherwise establish dominion and control over, any virtual currency or other asset or right, which rights are incident to the Trust’s ownership of Bitcoin and arise without any action of the Trust, or of the Sponsor or Trustee on behalf of the Trust; IR Virtual Currency is any virtual currency tokens, or other asset or right, received by the Trust through the exercise (subject to the applicable provisions of the Trust Agreement) of any Incidental Right.
Grayscale Investments LLC (“Grayscale” or the “Sponsor”) acts as the Sponsor of the Trust and is a wholly owned subsidiary of Digital Currency Group, Inc. (“DCG”). The Sponsor is responsible for the
day-to-day
administration of the Trust pursuant to the provisions of the Trust Agreement. Grayscale is responsible for preparing and providing annual and quarterly reports on behalf of the Trust to investors and is also responsible for selecting and monitoring the Trust’s service providers. 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), Grayscale Ethereum Trust (ETH) (OTCQX: ETHE), Grayscale Ethereum Classic Trust (ETC) (OTCQX: ETCG), Grayscale Horizen Trust (ZEN), Grayscale Litecoin Trust (LTC), Grayscale Stellar Lumens Trust (XLM), Grayscale XRP Trust (XRP), Grayscale Zcash Trust (ZEC) and Grayscale Digital Large Cap Fund LLC (OTCQX: GDLC), each of which is an affiliate of the Trust.
Authorized Participants of the Trust are the only entities who may place orders to create or, if permitted, redeem Baskets. Genesis Global Trading, Inc. (“Genesis” or the “Authorized Participant”), a registered broker-dealer and wholly owned subsidiary of DCG, is the only Authorized Participant and is party to a participant agreement with the Sponsor and the Trust. Additional Authorized Participants may be added at any time, subject to the discretion of the Sponsor.
The custodian of the Trust
is Coinbase Custody Trust Company, LLC
(the “
Custodian
”), a third-party service provider. The Custodian
is responsible for safeguarding the Bitcoin, Incidental Rights, and IR Virtual Currency held by the Trust
, and holding the private key(s) that provide access to the Trust’s digital wallets and vaults. The 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. The responsibilities of the Transfer Agent are to maintain creations, redemptions, transfers, and distributions of the Trust’s Shares which are primarily held in book-entry form.
On March 25, 2015, the Trust received notice that its Shares were qualified for public trading on the OTCQX U.S. Marketplace of the OTC Markets Group Inc. (“OTCQX”). The Trust’s trading symbol on OTCQX is “GBTC” and the CUSIP number for its Shares is 389637109.
2. 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 March 31, 2020 and December 31, 2019 and results of operations for the three months ended March 31, 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. These unaudited financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2019 included in the Company’s Annual Report on Form
10-K.
The following is a summary of significant accounting policies followed by the Trust:
The financial statements 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 –
8

Investment Companies
. The Trust uses fair value as its method of accounting for Bitcoin in accordance with its classification as an investment company for accounting purposes. The Trust is not registered under the Investment Company Act of 1940. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates and these differences could be material.
The Trust conducts its transactions in Bitcoin, including receiving Bitcoin for the creation of Shares and delivering Bitcoin for the redemption of Shares and for the payment of the Sponsor’s Fee. At this time, the Trust is not accepting redemption requests from Shareholders. Since its inception, the Trust has not held cash or cash equivalents.
Principal Market and Fair Value Determination
To determine which market is the Trust’s principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Trust’s net asset value (“NAV”), the Trust follows ASC
820-10,
which outlines the application of fair value accounting. ASC
820-10
determines fair value to be the price that would be received for Bitcoin in a current sale, which assumes an orderly transaction between market participants on 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. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.
The Trust only receives Bitcoin from the Authorized Participant and does not itself transact on any Digital Asset Markets. 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, as a related party of the Sponsor, provides information about the Digital Asset Markets on which it transacts to the Trust. In determining which of the eligible Digital Asset Markets is the Trust’s principal market, the Trust reviews these criteria in the following order:
First, the Trust reviews a list of Digital Asset Markets and excludes any Digital Asset Markets that are
non-accessible
to the Trust and the Authorized Participant. The Trust or the Authorized Participant does not have access to Digital Asset Exchange Markets that do not have a BitLicense and has access only to
non-Digital
Asset Exchange Markets that the Authorized Participant reasonably believes are operating in compliance with applicable law, including federal and state licensing requirements, based upon information and assurances provided to it by each market.
Second, the Trust sorts the remaining Digital Asset Markets from high to low by entity-specific and market-based volume and
level of
activity of Bitcoin traded on each Digital Asset Market in the trailing twelve months.
Third, the Trust then reviews
intra-day
pricing fluctuations and the degree of variances in price on Digital Asset Markets to identify any material notable variances that may impact the volume or price information of a particular Digital Asset Market.
Fourth, the Trust then selects a Digital Asset Market as its principal market based on the highest market-based volume, level of activity and price stability in comparison to the other Digital Asset Markets on the list. Based on information reasonably available to the Trust, Exchange Markets have the greatest volume and level of activity for the asset. The Trust therefore looks to accessible Exchange Markets as opposed to the Brokered Market, Dealer Market and
Principal-to-Principal
Markets to determine its principal market. As a result of the analysis, an Exchange Market has been selected as the Trust’s principal market.
The Trust determines its principal market (or in the absence of a principal market the most advantageous market) annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Digital Asset Market’s trading volume and level of activity in the trailing twelve months, (ii) if any Digital Asset Markets have developed that the Trust has access to, or (iii) if recent changes to each Digital Asset Market’s price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Trust’s determination of its principal market.
The cost basis of the investment in Bitcoin recorded by the Trust for financial reporting purposes is the fair value of Bitcoin at the time of transfer. The cost basis recorded by the Trust may differ from proceeds collected by the Authorized Participant from the sale of the corresponding Shares to investors.
Investment Transactions and Revenue Recognition
The Trust considers investment transactions to be the receipt of Bitcoin for Share creations and the delivery of Bitcoin for Share redemptions or for payment of expenses in Bitcoin. At this time, the Trust is not accepting redemption requests from Shareholders.
9

The Trust records its investment transactions on a trade date basis and changes in fair value are reflected as net change in unrealized appreciation or depreciation on investments. Realized gains and losses are calculated using the specific identification method. Realized gains and losses are recognized in connection with transactions including settling obligations for the Sponsor’s Fee in Bitcoin.
Fair Value Measurement
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.
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 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.
                                 
 
Amount at Fair
Value
 
 
Fair Value Measurement Using
 
Level 1
 
 
Level 2
 
 
Level 3
 
March 31, 2020
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Investment in Bitcoin
  $
1,972,244,030
    $
    $
1,972,244,030
    $
 
                                 
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Investment in Bitcoin
  $
1,866,217,842
    $
    $
1,866,217,842
    $
 
                                 
 
 
 
3. Fair Value of Bitcoin
Bitcoin is held by the Custodian on behalf of the Trust and is carried at fair value. As of March 31, 2020, and December 31, 2019, the Trust held 304,631.31046282 and 261,192.14022299 Bitcoin, respectively.
The Trust determined the fair value per Bitcoin to be $6,474.20 and $7,145.00 on March 31, 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).
10

The following represents the changes in quantity of Bitcoin and the respective fair value:
                 
 
Bitcoin
 
 
Fair Value
 
Balance at January 1, 2019
   
204,277.35165345
    $
751,622,174
 
Bitcoin contributed
   
61,555.82798061
     
462,775,143
 
Bitcoin distributed for Sponsor’s Fee, related party
   
(4,641.03941107
)    
(34,730,355
)
Net change in unrealized appreciation on investment in Bitcoin
   
—  
     
663,245,720
 
Net realized gain on investment in Bitcoin
   
—  
     
23,305,160
 
                 
Balance at December 31, 2019
   
261,192.14022299
     
1,866,217,842
 
                 
Bitcoin contributed
   
44,867.71207927
     
389,529,126
 
Bitcoin distributed for Sponsor’s Fee, related party
   
(1,428.54183944
)    
(11,793,388
)
Net change in unrealized depreciation on investment in Bitcoin
   
—  
     
(278,189,716
)
Net realized gain on investment in Bitcoin
   
—  
     
6,480,166
 
                 
Balance at March 31, 2020
   
304,631.31046282
    $
1,972,244,030
 
                 
 
 
 
4. Creations and Redemptions of Shares
At March 31, 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. The creation and redemption of Baskets on behalf of investors are made by the Authorized Participant in exchange for the delivery of Bitcoin to the Trust or the distribution of Bitcoin by the Trust. The number of Bitcoin required for each creation Basket or redemption Basket is determined by dividing (x) the number of Bitcoin owned by the Trust at 4:00 p.m., New York time, on such trade date of a creation or redemption order, after deducting the number of
 
Bitcoin
representing the U.S. 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 March 31, 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. The cost basis recorded by the Trust may differ from proceeds collected by the Authorized Participant from the sale of each Share to investors. The Authorized Participant may realize significant profits buying, selling, creating, and, if permitted, redeeming Shares as a result of changes in the value of Shares or Bitcoin.
Effective October 28, 2014, the Trust suspended its redemption program, in which Shareholders were permitted to request the redemption of their Shares through Genesis, the sole Authorized Participant at the time out of concern that the redemption program was in violation of Regulation M under the Exchange Act, resulting in a settlement reached with the Securities Exchange Commission (“SEC”). At this time, the Trust is not operating a redemption program and is not accepting redemption requests. Subject to receipt of regulatory approval and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. 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”).
5. Income Taxes
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. On February 9, 2017, the Court of Chancery of the State of Delaware ordered that the Original Trust Agreement be reformed so that the amendments made are retroactive to the original date of execution of the Trust Agreement. On September 11, 2017, the Trust received a private letter ruling from the IRS in which the IRS concluded, based on the facts at that time, that the Trust qualified as a grantor trust for U.S. federal income tax purposes as of the date of the private letter ruling.
11

Furthermore, as of October 24, 2017, amendments to the Trust Agreement were made to permit the Trust to hold rights to acquire, or otherwise establish, dominion and control over, Incidental Rights and IR Virtual Currency in a manner consistent with the Trust’s continued treatment as a grantor trust for U.S. federal income tax purposes.
Accordingly, the Sponsor takes the position that the Trust is properly treated as a grantor trust for U.S. federal income tax purposes. Assuming that the Trust is a grantor trust, the Trust will not be subject to U.S. federal income tax. Rather, if the Trust is a grantor trust, each beneficial owner of Shares 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 Shares.
If the Trust were not properly classified as a grantor trust, the Trust might be classified as a partnership for U.S. federal income tax purposes. However, due to the uncertain treatment of digital currencies, including forks, airdrops and similar occurrences for U.S. federal income tax purposes, there can be no assurance in this regard. If the Trust were classified as a partnership for U.S. federal income tax purposes, the tax consequences of owning Shares generally would not be materially different from the tax consequences described herein, although there might be certain differences, including with respect to timing. In addition, tax information reports provided to beneficial owners of Shares would be made in a different form. If the Trust were not classified as either a grantor trust or a partnership for U.S. federal income tax purposes, it would be classified as a corporation for such purposes. In that event, the Trust would be subject to entity-level U.S. federal income tax (currently at a maximum rate of 21%) on its net taxable income and certain distributions made by the Trust to Shareholders would be treated as taxable dividends to the extent of the Trust’s current and accumulated earnings and profits.
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. 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 March 31, 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 March 31, 2020 or December 31, 2019.
6. 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 March 31, 2020 and December 31, 2019, 11,213,392 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.
In accordance with the Trust Agreement governing the Trust, the Trust pays a fee to the Sponsor, calculated as 2.0% of the aggregate value of the Trust’s assets, less its liabilities (which include any accrued but unpaid expenses up to, but excluding, the date of calculation), as calculated and published by the Sponsor or its delegates in the manner set forth in the Trust Agreement (the “Sponsor’s Fee”). The Sponsor’s Fee accrues daily in U.S. dollars and is payable in Bitcoin, monthly in arrears. The amount of Bitcoin payable in respect of each daily U.S. dollar accrual will be determined by reference to the same U.S. dollar value of Bitcoin used to determine such accrual. For purposes of these financial statements, the U.S. dollar value of Bitcoin is determined by reference to the Digital Asset Exchange Market that the Trust considers its principal market as of 4:00 p.m., New York time, on each valuation date.
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; administrator fees, if any; custodian fees; transfer agent fees; trustee fees; the fees and expenses related to the listing, quotation or trading of the Shares on any secondary market (including customary legal, marketing and audit fees and expenses) in an amount up to $600,000 in any given fiscal year; ordinary course legal fees and expenses; audit fees; regulatory fees, including, if applicable, any fees relating to the registration of the Shares under the Securities Act or the Exchange Act; printing and mailing costs; the costs of maintaining the Trust’s website and applicable license fees (the “Sponsor-paid Expenses”), provided that any expense that qualifies as an Additional Trust Expense will be deemed to be an Additional Trust Expense and not a Sponsor-paid Expense.
12

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. 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 March 31, 2020 and 2019, the Trust incurred Sponsor’s Fees of $11,793,388 and $3,862,438, respectively. As of March 31, 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 months ended March 31, 2020 and 2019, the Sponsor did not pay any Additional Trust Expenses on behalf of the Trust.
7. Risks and Uncertainties
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 highly speculative and volatile.
The net asset value of the Trust relates primarily to the value of Bitcoin held by the Trust, and fluctuations in the price of Bitcoin could materially and adversely affect an investment in the Shares of the Trust. The price of Bitcoin has a limited history. During such history, Bitcoin prices have been volatile and subject to influence by many factors, including the levels of liquidity. If Digital Asset Markets continue to experience significant price fluctuations, the Trust may experience losses. Several factors may affect the price of Bitcoin, including, but not limited to, global Bitcoin supply and demand, theft of Bitcoin from global exchanges or vaults, competition from other forms of digital currency or payment services, global or regional political, economic or financial conditions, and events and situations such as the novel coronavirus outbreak.
The Bitcoin held by the Trust are commingled and the Trust’s Shareholders 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 Shareholders.
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. There can be no assurance that the Custodian will maintain adequate insurance or that such coverage will cover losses with respect to the Trust’s Bitcoin. Further, transactions in Bitcoin 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 Shares.
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. If Bitcoin is determined to be a “security” under federal or state securities laws by the SEC or any other agency, or in a proceeding in a court of law or otherwise, it may have material adverse consequences for Bitcoin. For example, it may become more difficult for Bitcoin to be traded, cleared and custodied as compared to other digital assets that are not considered to be securities, which could, in turn, negatively affect the liquidity and general acceptance of Bitcoin and cause users to migrate to other digital assets. As such, any determination that Bitcoin is a security under federal or state securities laws may adversely affect the value of Bitcoin and, as a result, an investment in the Shares.
To the extent that Bitcoin is determined to be a security, the Trust and the Sponsor may also be subject to additional regulatory requirements, including those under the Investment Company Act of 1940, and the Sponsor may be required to register as an investment adviser under the Investment Advisers Act of 1940. If the Sponsor determines not to comply with such additional regulatory and registration requirements, the Sponsor will terminate the Trust. Any such termination could result in the liquidation of the Trust’s Bitcoin at a time that is disadvantageous to Shareholders. To the extent a private key required to access a Bitcoin address is lost, destroyed or otherwise compromised and no backup of the private keys are accessible, the Trust may be unable to access the Bitcoin controlled by the private key and the private key will not be capable of being restored by the Bitcoin network. The processes by which Bitcoin transactions are settled are dependent on the
peer-to-peer
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.
13

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.
8. Financial Highlights Per Share Performance
 
Three Months Ended March 31,
 
 
2020
 
 
2019
 
Per Share Data:
 
 
 
 
 
 
Net asset value, beginning of period
  $
6.93
    $
3.64
 
                 
Net (decrease) increase in net assets from investment operation
s
:
   
     
 
Net investment loss
   
(0.04
)    
(0.02
)
Net realized and unrealized (loss) gain
   
(0.65
)    
0.41
 
                 
Net (decrease) increase in net assets resulting from operations
   
(0.69
)    
0.39
 
                 
Net asset value, end of period
  $
6.24
    $
4.03
 
                 
Total return
   
-32.66
%    
54.34
%
                 
Ratios to average net assets:
   
     
 
Net investment loss
   
-2.00
%    
-2.00
%
                 
Expenses
   
-2.00
%    
-2.00
%
                 
Ratios of net investment loss and expenses to average net assets have been annualized.
An individual Shareholder’s return, ratios, and per Share performance may vary from those presented above based on the timing of Share transactions.
Total return is calculated assuming an initial investment made at the net asset value at the beginning of the
period
and assuming redemption on the last day of the
period and has been annualized
.
9. Indemnifications
In the normal course of business, the Trust enters into certain contracts that provide a variety of indemnities, including contracts with the Sponsor and affiliates of the Sponsor, DCG and its officers, directors, employees, subsidiaries and affiliates, and the Custodian as well as others relating to services provided to the Trust. The Trust’s maximum exposure under these and its other indemnities is unknown. However, no liabilities have arisen under these indemnities in the past and, while there can be no assurances in this regard, there is no expectation that any will occur in the future. Therefore, the Sponsor does not consider it necessary to record a liability in this regard.
10. Subsequent Events
As of the close of business on May
1
, 2020 the fair value of Bitcoin determined in accordance with the Trust’s accounting policy was $8,731.74 per Bitcoin.
There are no known events that have occurred that require disclosure other than that which has already been disclosed in these notes to the financial statements.
14

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with, and is qualified in its entirety by reference to, our unaudited financial statements and related notes included elsewhere in this Quarterly Report, which have been prepared in accordance with U.S. GAAP. The following discussion may contain forward-looking statements based on assumptions we believe to be reasonable. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those set forth under Item 1A. Risk Factors or in Item 1A, Risk Factors or other sections of our Annual Report on Form
10-K
for the year ended December 31, 2019.
Trust Overview
The Trust is a passive entity that is managed and administered by the Sponsor and does not have any officers, directors or employees. The Trust holds Bitcoins and, from time to time on a periodic basis, issues Creation Baskets in exchange for deposits of Bitcoins. As a passive investment vehicle, the investment objective of the Trust is for the Shares (based on Bitcoin per Share) to reflect the value of the Bitcoins held by the Trust, determined by reference to the Index Price, less the Trust’s expenses and other liabilities. The Shares are designed to provide investors with a cost-effective and convenient way to invest in Bitcoin. The Trust is not managed like a business corporation or an active investment vehicle.
Critical Accounting Policies and Estimates
Investment Transactions and Revenue Recognition
The Trust considers investment transactions to be the receipt of Bitcoin for Share creations and the delivery of Bitcoin for Share redemptions or for payment of expenses in Bitcoin. At this time, the Trust is not accepting redemption requests from Shareholders. The Trust records its investment transactions on a trade date basis and changes in fair value are reflected as net change in unrealized appreciation or depreciation on investments. Realized gains and losses are calculated using the specific identification method. Realized gains and losses are recognized in connection with transactions including settling obligations for the Sponsor’s Fee in Bitcoin.
Principal Market and Fair Value Determination
To determine which market is the Trust’s principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Trust’s NAV, the Trust follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
 820-10,
 which outlines the application of fair value accounting. ASC
 820-10
 determines fair value to be the price that would be received for Bitcoin in a current sale, which assumes an orderly transaction between market participants on 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. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.
The Trust only receives Bitcoin from the Authorized Participant and does not itself transact on any Digital Asset Markets. 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
15

and Exchange Markets, each as defined in the FASB Master Glossary. The Authorized Participant, as a related party of the Sponsor, provides information about the Digital Asset Markets on which it transacts to the Trust. In determining which of the eligible Digital Asset Markets is the Trust’s principal market, the Trust reviews these criteria in the following order:
  First, the Trust reviews a list of Digital Asset Markets and excludes any Digital Asset Markets that are
non-accessible
to the Trust and the Authorized Participant. The Trust or the Authorized Participant does not have access to Digital Asset Exchanges that do not have a BitLicense and has access only to
non-
Digital Asset Exchange Markets that the Authorized Participant reasonably believes are operating in compliance with applicable law, including federal and state licensing requirements, based upon information and assurances provided to it by each market.
  Second, the Trust sorts the remaining Digital Asset Markets from high to low by entity-specific and market-based volume and level of activity of Bitcoin traded on each Digital Asset Market in the trailing twelve months.
  Third, the Trust then reviews
intra-day
pricing fluctuations and the degree of variances in price on Digital Asset Markets to identify any material notable variances that may impact the volume or price information of a particular Digital Asset Market.
  Fourth, the Trust then selects a Digital Asset Market as its principal market based on the highest market-based volume, level of activity and price stability in comparison to the other Digital Asset Markets on the list. Based on information reasonably available to the Trust, Exchange Markets have the greatest volume and level of activity for the asset. The Trust therefore looks to accessible Exchange Markets as opposed to the Brokered Market, Dealer Market and
Principal-to-Principal
Markets to determine its principal market. As a result of the aforementioned analysis, an Exchange Market has been selected as the Trust’s principal market.
The Trust determines its principal market (or in the absence of a principal market the most advantageous market) annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Digital Asset Market’s trading volume and level of activity in the trailing twelve months, (ii) if any Digital Asset Markets have developed that the Trust has access to, or (iii) if recent changes to each Digital Asset Market’s price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Trust’s determination of its principal market.
The cost basis of the investment in Bitcoin recorded by the Trust for financial reporting purposes is the fair value of Bitcoin at the time of transfer. The cost basis recorded by the Trust may differ from proceeds collected by the Authorized Participant from the sale of the corresponding Shares to investors.
Investment Company Considerations
The Trust is an investment company for GAAP purposes and follows accounting and reporting guidance in accordance with the FASB ASC Topic 946,
 Financial Services – Investment Companies
. The Trust uses fair value as its method of accounting for Bitcoin in accordance with its classification as an investment company for accounting purposes. The Trust is not registered under the Investment Company Act of 1940. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates and these differences could be material.
Review of Financial Results (unaudited)
Financial Highlights for the Three Months ended March 31, 2020 and 2019
(All amounts in the following table and the subsequent paragraphs, except per Share, Bitcoin and price of Bitcoin amounts, are in thousands)
                 
 
Three Months Ended March 31,
 
 
2020
 
 
2019
 
Net realized and unrealized (loss) gain on investment in Bitcoin
  $
 (271,710
)   $
88,380
 
                 
Net (decrease) increase in net assets resulting from operations
  $
(283,503
)   $
84,518
 
                 
Net assets
  $
1,972,244
    $
877,972
 
                 
Net realized and unrealized loss on investment in Bitcoin for the three months ended March 31, 2020 was ($271,710) which includes a realized gain of $6,480 on the transfer of Bitcoins to pay the Sponsor’s Fee and net change in unrealized depreciation on investment in Bitcoin of ($278,190). Net realized and unrealized loss on investment in Bitcoin for the year was driven by Bitcoin price
16

depreciation from $7,145.00 per Bitcoin as of December 31, 2019 to $6,474.20 per Bitcoin as of March 31, 2020. Net decrease in net assets resulting from operations was ($283,503) for the three months ended March 31, 2020, which consisted of the net realized and unrealized loss on investment in Bitcoin, plus the Sponsor’s Fee of $11,793. Net assets increased to $1,972,244 at March 31, 2020, a 6% increase for the period. The increase in net assets resulted from the contribution of approximately 44,868 Bitcoin with a value of $389,529 to the Trust in connection with Share creations during the period, partially offset by the aforementioned Bitcoin price depreciation and the withdrawal of approximately 1,429 Bitcoin to pay the foregoing Sponsor’s Fee.
Net realized and unrealized gain on investment in Bitcoin for the three months ended March 31, 2019 was $88,380 which includes a realized gain of $1,844 on the transfer of Bitcoins to pay the Sponsor’s Fee and net change in unrealized appreciation on investment in Bitcoin of $86,536. Net realized and unrealized gain on investment in Bitcoin for the year was driven by Bitcoin price appreciation from $3,679.42 per Bitcoin as of December 31, 2018 to $4,094.99 per Bitcoin as of March 31, 2019. Net increase in net assets resulting from operations was $84,518 for the three months ended March 31, 2019, which consisted of the net realized and unrealized gain on investment in Bitcoin, less the Sponsor’s Fee of $3,862. Net assets increased to $877,972 at March 31, 2019, a 17% increase for the period. The increase in net assets resulted from the aforementioned Bitcoin price appreciation and the contribution of approximately 11,154 Bitcoin with a value of $41,832 to the Trust in connection with Share creations during the period, partially offset by the withdrawal of approximately 1,030 Bitcoin to pay the foregoing Sponsor’s Fee.
Off-Balance
Sheet Arrangements
The Trust is not a party to any
off-balance
sheet arrangements.
Cash Resources and Liquidity
The Trust has not had a cash balance at any time since inception. When selling Bitcoins, Incidental Rights and/or IR Virtual Currency to pay Additional Trust Expenses, the Sponsor endeavors to sell the exact number of Bitcoins, Incidental Rights and/or IR Virtual Currency needed to pay expenses in order to minimize the Trust’s holdings of assets other than Bitcoin. As a consequence, the Sponsor expects that the Trust will not record any cash flow from its operations and that its cash balance will be zero at the end of each reporting period.
In exchange for the Sponsor’s Fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust. As a result, the only ordinary expense of the Trust during the periods covered by this Quarterly Report was the Sponsor’s Fee. The Trust is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs.
Selected Operating Data
                 
 
Three Months Ended March 31,
 
 
2020
 
 
2019
 
 
(All Bitcoin balances are rounded to the nearest whole 
Bitcoin)
 
Bitcoins:
 
 
 
 
 
 
Opening Balance
   
261,192
     
204,277
 
Creations
   
44,868
     
11,154
 
Sponsor’s Fee, related party
   
(1,429
)    
(1,030
)
                 
Closing balance
   
304,631
     
214,401
 
Accrued but unpaid Sponsor’s Fee, related party
   
—  
     
—  
 
                 
Net closing balance
   
304,631
     
214,401
 
                 
Number of Shares:
 
 
 
 
 
 
Opening balance
   
269,445,300
     
206,559,100
 
Creations
   
46,382,700
     
11,309,100
 
                 
Closing balance
   
315,828,000
     
217,868,200
 
                 
17

                 
 
As of March 31,
 
 
2020
 
 
2019
 
Price of Bitcoin on principal market(1)
  $
6,474.20
    $
4,094.99
 
                 
NAV per Share(2)
  $
6.24
    $
4.03
 
                 
Index Price
  $
6,466.48
    $
4,088.08
 
                 
Digital Asset Holdings per Share(3)
  $
6.24
    $
4.02
 
                 
 
(1) The Trust performed an assessment of the principal market at March 31, 2020 and 2019, and identified the principal market as Coinbase Pro.
 
(2) As of March 31, 2020 and 2019 the NAV per Share was calculated using the fair value of Bitcoin based on the price provided by Coinbase Pro, the Digital Asset Exchange that the Trust currently considers its principal market, as of 4:00 p.m., New York time, on the valuation date.
 
(3) The Trust’s Digital Asset Holdings per Share is derived from the Index Price as represented by the Index as of 4:00 p.m., New York time, on the valuation date. The Trust’s Digital Asset Holdings per Share is calculated using a
non-GAAP
methodology where the volume-weighted average price is derived from multiple Digital Asset Exchanges. See “Item 1. Business—Trust Objective and Key Operating Metrics” in the Trust’s Annual Report on Form
10-K
for a description of the Trust’s Digital Asset Holdings per Share. The Digital Asset Exchanges used to calculate the Index Price as of March 31, 2020 were Coinbase Pro, LMAX Digital, itBit, Kraken and Bitstamp. As of March 31, 2019, the Digital Asset Exchanges used to calculate the Index Price consisted of Coinbase Pro, Bittrex, Kraken, Bitstamp, and itBit.
 
For accounting purposes, the Trust reflects creations and the Bitcoins receivable with respect to such creations on the date of receipt of a notification of a creation but does not issue Shares until the requisite number of Bitcoins is received. At this time, the Trust is not accepting redemption requests from Shareholders. Subject to receipt of regulatory approval from the SEC 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.
As of March 31, 2020, the Trust had a net closing balance with a value of $1,969,892,276, based on the Index Price
(non-GAAP
 methodology). As of March 31, 2020, the Trust had a total market value of $1,972,244,030, based on the principal market (Coinbase Pro).
As of March 29, 2019 (the last business day on which a Creation Basket could have been originated), the Trust had a net closing balance with a value of $869,774,518, based on the Index Price
(non-GAAP
methodology). As of March 31, 2019, the Trust had a net closing balance with a total value of $876,490,741, based on the Bitcoin Index Price of
(non-GAAP
 methodology). As of March 31, 2019, the Trust had a total market value of $877,972,256,based on the principal market (Coinbase Pro).
Historical Digital Asset Holdings and Bitcoin Prices
As movements in the price of Bitcoin will directly affect the price of the Shares, investors should understand recent movements in the price of Bitcoin. Investors, however, should also be aware that past movements in the Bitcoin price are not indicators of future movements. Movements may be influenced by various factors, including, but not limited to, government regulation, security breaches experienced by Service Providers, as well as political and economic uncertainties around the world.
The following chart illustrates the movement in the Trust’s Digital Asset Holdings per Share (as adjusted for the Share Split for periods prior to January 26, 2018) versus the Index Price and the Trust’s NAV per Share (as adjusted for the Share Split for periods prior to January 26, 2018) from September 25, 2013 to March 31, 2020.
18

IMAGE
The following table illustrates the movements in the Index Price from the beginning of the Trust’s operations on September 25, 2013 to March 31, 2020. Since the beginning of the Trust’s operations, the Index Price has ranged from $117.03 to $18,756.45, with the straight average being $3,422.74.
                                                         
Period
 
Average
 
 
High
 
 
Date
 
 
Low
 
 
Date
 
 
End of
period
 
 
Last
business
day
 
Twelve months ended March 31, 2016
  $
311.86
    $
459.52
     
12/18/2015
    $
211.86
     
8/25/2015
    $
414.70
    $
414.70
 
Twelve months ended March 31, 2017
  $
719.90
    $
1,279.00
     
3/6/2017
    $
416.00
     
4/1/2016
    $
1,056.48
    $
1,056.48
 
Twelve months ended March 31, 2018
  $
6,242.51
    $
18,756.45
     
12/18/2017
    $
1,056.48
     
4/1/2017
    $
6,990.70
    $
7,580.80
 
Twelve months ended March 31, 2019
  $
5,863.11
    $
9,650.29
     
5/4/2018
    $
3,228.07
     
12/14/2018
    $
4,088.08
    $
4,056.31
 
Twelve months ended March 31, 2020
  $
8,441.28
    $
12,681.53
     
7/10/2019
    $
4,118.78
     
4/1/2019
    $
6,466.48
    $
6,466.48
 
                                                         
September 25, 2013 (the inception of the Trust’s operations) to March 31, 2020
  $
3,422.74
    $
18,756.45
     
12/18/2017
    $
117.03
     
10/3/2013
    $
6,466.48
    $
6,466.48
 
 
The following table illustrates the movements in the price of Bitcoin, as reported on the Trust’s principal market, from the beginning of the Trust’s operations on September 25, 2013 to March 31, 2020. Since the beginning of the Trust’s operations, the price of Bitcoin has ranged from $110.83 to $19,433.21, with the straight average being $3,437.86:
                                                         
Period
 
Average
 
 
High
 
 
Date
 
 
Low
 
 
Date
 
 
End of
period
 
 
Last
business
day
 
Twelve months ended March 31, 2016
  $
311.91
    $
469.00
     
11/4/2015
    $
216.24
     
8/24/2015
    $
416.43
    $
416.43
 
Twelve months ended March 31, 2017
  $
721.53
    $
1,290.01
     
3/10/2017
    $
415.59
     
4/1/2016
    $
1,084.70
    $
1,084.70
 
Twelve months ended March 31, 2018
  $
6,307.72
    $
19,433.21
     
12/16/2017
    $
1,082.07
     
4/1/2017
    $
7,055.00
    $
7,337.16
 
Twelve months ended March 31, 2019
  $
5,865.26
    $
9,815.55
     
5/5/2018
    $
3,164.61
     
12/14/2018
    $
4,094.99
    $
4,078.82
 
Twelve months ended March 31, 2020
  $
8,472.15
    $
13,849.81
     
6/26/2019
    $
4,133.74
     
4/1/2019
    $
6,474.20
    $
6,474.20
 
                                                         
September 25, 2013 (the inception of the Trust’s operations) to March 31, 2020
  $
3,437.86
    $
19,433.21
     
12/16/2017
    $
110.83
     
10/2/2013
    $
6,474.20
    $
6,474.20
 
 
19

Item 3.
Quantitative and Qualitative Disclosures about Market Risk
 
The Trust Agreement does not authorize the Trustee to borrow for payment of the Trust’s ordinary expenses. The Trust does not engage in transactions in foreign currencies which could expose the Trust or holders of Shares to any foreign currency related market risk. The Trust does not invest in derivative financial instruments and has no foreign operations or long-term debt instruments.
Item 4.
Controls and Procedures
 
The Trust maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Principal Executive Officer and Chief Financial Officer of the Sponsor, and to the audit committee of the Board of Directors of the Sponsor, as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of the Principal Executive Officer and the Chief Financial Officer of the Sponsor, the Sponsor conducted an evaluation of the Trusts disclosure controls and procedures, as defined under Exchange Act Rule
13a-15(e).
 Based on this evaluation, the Principal Executive Officer and the Chief Financial Officer of the Sponsor concluded that the Trust’s disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
There was no change in the Trust’s internal controls over financial reporting that occurred during the Trust’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, these internal controls.
PART II – OTHER INFORMATION:
Item 1.
Legal Proceedings
 
None.
Item 1A.
Risk Factors
 
Except for the following new Risk Factor, there have been no material changes to the Risk Factors last reported under Part I, Item 1A of the registrant’s Annual Report on Form
10-K.
The Trust faces risks related to the novel coronavirus
(COVID-19)
outbreak, which could negatively impact the value of the Trust’s holdings and significantly disrupt its operations.
The novel coronavirus
(“COVID-19”)
will in the short-term, and may over the longer term, adversely affect the economies and financial markets of many countries, resulting in an economic downturn that may adversely affect demand for digital assets generally and impact the value of, and demand for, the digital assets held by the Trust. Although the magnitude of the impact of the
COVID-19
outbreak or the occurrence of other epidemics or pandemics on the digital assets held by the Trust remains uncertain, the continued spread of
COVID-19
and the imposition of related public health measures and travel and business restrictions have resulted in, and will continue to result in, increased volatility and uncertainty in the Digital Asset Markets. In addition, we rely on third party service providers to perform certain functions essential 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 could have an adverse impact on the Trust’s ability to access critical services and would be disruptive to the operation of the Trust.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
  a) Information has been previously included in the Trust’s Current Reports on Form
8-K
during the period covered by this report.
 
  b) Not applicable.
 
  c) None.
 
Item 3.
Defaults Upon Senior Securities
 
None.
20

Item 4.
Mine Safety Disclosures
Not applicable.
Item 5.
Other Information
None.
Item 6.
Exhibits
         
Exhibit
Number
 
 
Exhibit Description
         
 
  31.1*
   
         
 
  31.2*
   
         
 
  32.1*
   
         
 
  32.2*
   
         
 
101.INS*
   
XBRL Instance Document
         
 
101.SCH*
   
XBRL Taxonomy Extension Schema Document
         
 
101.CAL*
   
XBRL Taxonomy Extension Calculation Linkbase Document
         
 
101.LAB*
   
XBRL Taxonomy Extension Label Linkbase Document
         
 
101.PRE*
   
XBRL Taxonomy Extension Presentation Linkbase Document
         
 
101.DEF*
   
XBRL Taxonomy Extension Definition Linkbase Document
         
 
104.1
   
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.
 
* Pursuant to Rule 406T of Regulation
S-T,
these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
21

Glossary of Defined Terms
In this Quarterly Report, each of the following quoted terms has the meanings set forth after such term:
Actual Exchange Rate
”—With respect to any particular asset, at any time, the price per single unit of such asset (determined net of any associated fees) at which the Trust is able to sell such asset for U.S. dollars (or other applicable fiat currency) at such time to enable the Trust to timely pay any Additional Trust Expenses, through use of the Sponsor’s commercially reasonable efforts to obtain the highest such price.
 
Additional Trust Expenses
”—Together, any expenses incurred by the Trust in addition to the Sponsor’s Fee that are not Sponsor-paid Expenses, including, but not limited to, (i) taxes and governmental charges, (ii) 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), (iii) any indemnification of the Custodian or other agents, service providers or counterparties of the Trust, (iv) 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 (v) extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters.
Administrator
”—Any Person from time to time engaged by the Sponsor to assist in the administration of the Shares.
Administrator Fee
”—The fee payable to the Administrator for services it provides to the Trust, which the Sponsor will pay the Administrator as a Sponsor-paid Expense.
Agent
”—A Person appointed by the Trust to act on behalf of the Shareholders in connection with any distribution of Incidental Rights and/or IR Virtual Currency.
Authorized Participant
”—Certain eligible financial institutions that have entered into an agreement with the Trust and the Sponsor concerning the creation of Shares. Each Authorized Participant (i) is a registered broker-dealer, (ii) has entered into a Participant Agreement with the Sponsor and (iii) owns an Authorized Participant Self-Administered Account.
Authorized Participant Self-Administered Account
”—A Bitcoin wallet address that is known to the Custodian as belonging to the Authorized Participant.
Basket
”—A block of 100 Shares.
Basket Amount
”—On any trade date, the number of Bitcoins required as of such trade date for each Creation Basket, as determined by dividing (x) the number of Bitcoins owned by the Trust at 4:00 p.m., New York time, on such trade date, after deducting the number of Bitcoins representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust (converted using the Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one
one-hundred-millionth
of one Bitcoin (
i.e.
, carried to the eighth decimal place)), and multiplying such quotient by 100.
Bitcoin
” or “
BTC
”—A type of digital asset based on an open-source cryptographic protocol existing on the Bitcoin Network, comprising units that constitute the assets underlying the Trust’s Shares.
Bitcoin Network
”—The online,
end-user-to-end
-user
network hosting the public transaction ledger, known as the Bitcoin Blockchain, and the source code comprising the basis for the cryptographic and algorithmic protocols governing the Bitcoin Network.
Blockchain” or “Bitcoin Blockchain”
—The public transaction ledger of the Bitcoin Network on which miners or mining pools solve algorithmic equations allowing them to add records of recent transactions (called “blocks”) to the chain of transactions in exchange for an award of Bitcoins from the Bitcoin Network and the payment of transaction fees, if any, from users whose transactions are recorded in the block being added.
Creation Basket
”—Basket of Shares issued by the Trust in exchange for deposits of the Basket Amount required for each such Creation Basket.
Custodial Services
”—the Custodian’s services that (i) allow Bitcoins to be deposited from a public blockchain address to the Trust’s Digital Asset Account and (ii) allow the Trust and the Sponsor to withdraw Bitcoin from the Trust’s Bitcoin Account to a public blockchain address the Trust or the Sponsor controls pursuant to instructions the Trust or the Sponsor provides to the Custodian.
22

Custodian
”—Coinbase Custody Trust Company, LLC.
Custodian Agreement
”—The Custodial Services Agreement by and between the Trust and the Sponsor and Custodian that governs the Trust’s and the Sponsor’s use of the Custodial Services provided by the Custodian as a fiduciary with respect to the Trust’s assets.
Custodian Fee
”—Fee payable to the Custodian for services it provides to the Trust, which the Sponsor shall pay to the Custodian as a Sponsor-paid Expense.
DCG
”—Digital Currency Group, Inc.
Digital Asset Account
”—A segregated custody account controlled and secured by the Custodian to store private keys, which allow for the transfer of ownership or control of the Trust’s Bitcoin on the Trust’s behalf.
Digital Asset Exchange
”—An electronic marketplace where exchange participants may trade, buy and sell Bitcoins based on
bid-ask
trading. The largest Digital Asset Exchanges are online and typically trade on a
24-hour
basis, publishing transaction price and volume data.
Digital Asset Exchange Market
”—The global exchange market for the trading of Bitcoins, which consists of transactions on electronic Digital Asset Exchanges.
Digital Asset Holdings
”—The aggregate value, expressed in U.S. dollars, of the Trust’s assets (other than U.S. dollars or other fiat currency), less its liabilities (which include estimated accrued but unpaid fees and expenses) calculated in the manner set forth under “Valuation of Bitcoin and Determination of the Trust’s Bitcoin Holdings” in our Annual Report on Form
10-K.
See also “Key Operating Metrics” in our Annual Report on Form
10-K
for a description of the Trust’s NAV, as calculated in accordance with GAAP.
Digital Asset Holdings Fee Basis Amount
”—The amount on which the Sponsor’s Fee for the Trust is based, as calculated in the manner set forth under “Valuation of Bitcoin and Determination of Bitcoin Holdings” in our Annual Report on Form
10-K.
Digital Asset Market
”—A dealer market, brokered market,
principal-to-principal
market or exchange market on which Bitcoins are bought and sold.
Distribution and Marketing Agreement
”—The agreement among the Sponsor and the Distributor and Marketer, which sets forth the obligations and responsibilities of the Distributor and Marketer.
Distributor
”—Genesis, or any other person from time to time, who is engaged by the Sponsor to assist in the distribution of the Shares.
DSTA
”—The Delaware Statutory Trust Act, as amended.
DTC
”—The Depository Trust Company. DTC is a limited purpose trust company organized under New York law, a member of the U.S. Federal Reserve System and a clearing agency registered with the SEC. DTC will act as the securities depository for the Shares.
Exchange Act
”—The Securities Exchange Act of 1934, as amended.
GAAP
”—United States generally accepted accounting principles.
Genesis
”—Genesis Global Trading, Inc., a wholly owned subsidiary of Digital Currency Group, Inc., which as of the date of this Quarterly Report, is the only acting Authorized Participant.
Incidental Rights
”—Rights to acquire, or otherwise establish dominion and control over, any virtual currency or other asset or right, which rights are incident to the Trust’s ownership of Bitcoins and arise without any action of the Trust, or of the Sponsor or Trustee on behalf of the Trust.
Index
”—The TradeBlock XBX Index.
Index License Agreement
”—The license agreement entered into by the Index Provider and the Sponsor governing the Sponsor’s use of the Index for calculation of the Index Price.
23

Index Price
”—The U.S. dollar value of a Bitcoin derived from the Digital Asset Exchanges that are reflected in the Index, calculated at 4:00 p.m., New York time, on each business day. See “Overview of the Bitcoin Industry and Market—Bitcoin Value—The Index and the Bitcoin Index Price” in our Annual Report on Form 10-K for a description of how the Index Price is calculated. For purposes of the Trust Agreement, the term Bitcoin Index Price shall mean the Index Price as defined herein.
Index Provider
”—TradeBlock, Inc., a Delaware corporation that publishes the Index
Investment Advisers Act
”—Investment Advisers Act of 1940, as amended.
Investment Company Act
”—Investment Company Act of 1940, as amended.
Investor
”—Any investor that has entered into a Subscription Agreement with an Authorized Participant, pursuant to which such Authorized Participant will act as agent for the investor.
IR Virtual Currency
”—Any virtual currency tokens, or other asset or right, acquired by the Trust through the exercise (subject to the applicable provisions of the Trust Agreement) of any Incidental Right.
IRS
”—The U.S. Internal Revenue Service, a bureau of the U.S. Department of the Treasury.
Marketer
”—Genesis or any other person from time to time engaged to provide marketing services or related services to the Trust pursuant to authority delegated by the Sponsor.
Marketing Fee
”—Fee payable to the Marketer for services it provides to the Trust, which the Sponsor will pay to the Marketer as a Sponsor-paid Expense.
NAV
”—The net asset value of the Trust determined on a GAAP basis.
OTCQX
”—The OTCQX tier of OTC Markets Group Inc.
Participant Agreement
”—An agreement entered into by an Authorized Participant with the Sponsor that provides the procedures for the creation of Baskets and for the delivery of Bitcoins required for Creation Baskets.
SEC
”—The U.S. Securities and Exchange Commission.
Secondary Market
”—Any marketplace or other alternative trading system, as determined by the Sponsor, on which the Shares may then be listed, quoted or traded, including but not limited to, the OTCQX tier of OTC Markets Group Inc.
Securities Act
”—The Securities Act of 1933, as amended.
Service Providers
”—Collectively, Grayscale Investments, LLC, Continental Stock Transfer & Trust Company, Genesis, TradeBlock, Inc., Coinbase Custody Trust Company, LLC and Digital Currency Group, Inc.
Shareholder
”—Any person that owns Shares.
Shares
”—Common units of fractional undivided beneficial interest in, and ownership of, the Trust.
Share Split
”—A
91-for-1
Share split of the Trust’s issued and outstanding Shares, which was effected on January 26, 2018 to Shareholders of record as of the close of business on January 22, 2018.
Sponsor
”—Grayscale Investments, LLC.
Sponsor-paid Expenses
”—The fees and expenses incurred by the Trust in the ordinary course of its affairs that the Sponsor is obligated to assume and pay, excluding taxes, but including: (i) the Marketing Fee, (ii) the Administrator Fee, (iii) the Custodian Fee, (iv) the Transfer Agent fee, (v) the Trustee fee, (vi) the fees and expenses related to the listing, quotation or trading of the Shares on any Secondary Market (including customary legal, marketing and audit fees and expenses) in an amount up to $600,000 in any given fiscal year, (vii) ordinary course, legal fees and expenses, (viii) audit fees, (ix) regulatory fees, including, if applicable, any fees relating to the registration of the Shares under the Securities Act or the Exchange Act, (x) printing and mailing costs, (xi) costs of maintaining the Trust’s website and (xii) applicable license fees, 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.
24

Sponsor’s Fee
”—A fee, payable in Bitcoins, which accrues daily in U.S. dollars at an annual rate of 2.0% of the Digital Asset Holdings Fee Basis Amount of the Trust as of 4:00 p.m., New York time, on each day;
provided
that for a day that is not a business day, the calculation of the Sponsor’s Fee will be based on Digital Asset Holdings Fee Basis Amount from the most recent business day, reduced by the accrued and unpaid Sponsor’s Fee for such most recent business day and for each day after such most recent business day and prior to the relevant calculation date.
Subscription Agreement
”—An agreement between an Investor and an Authorized Participant pursuant to which the Investor can subscribe for Shares.
Transfer Agency and Service Agreement
”—The agreement between the Sponsor and the Transfer Agent which sets forth the obligations and responsibilities of the Transfer Agent with respect to transfer agency services and related matters.
Transfer Agent
”—Continental Stock Transfer & Trust Company, a Delaware corporation.
Transfer Agent Fee
”—Fee payable to the Transfer Agent for services it provides to the Trust, which the Sponsor will pay to the Transfer Agent as a Sponsor-paid Expense.
Trust
”—Grayscale Bitcoin Trust (BTC), a Delaware statutory trust, formed on September 13, 2013 under the DSTA and pursuant to the Trust Agreement.
Trust Agreement
”—The Fifth Amended and Restated Declaration of Trust and Trust Agreement between the Trustee and the Sponsor establishing and governing the operations of the Trust, as amended by Amendment No. 1 thereto and as the same may be amended from time to time.
Trustee
”—Delaware Trust Company (formerly known as CSC Trust Company of Delaware), a Delaware trust company, is the Delaware trustee of the Trust.
U.S.
”—United States.
U.S. dollar
” or “
$
”—United States dollar or dollars.
25

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.
         

Grayscale Investments, LLCas Sponsor of Grayscale Bitcoin Trust (BTC)
     
By:
 
/s/ Barry E. Silbert
         
 
Name:
 
Barry E. Silbert
 
Title:
 
Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)*
By:
 
/s/ Simcha Wurtzel
 
Name:
 
Simcha Wurtzel
 
Title:
 
Member of the Board of Directors and Vice President, Finance (Principal Financial Officer and Principal Accounting Officer)*
 
Date: May 8, 2020
* The Registrant is a trust and the persons are signing in their capacities as officers or directors of Grayscale Investments, LLC, the Sponsor of the Registrant.
 
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