Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | May 01, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Document Period End Date | Mar. 31, 2020 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Registrant Name | Grayscale Bitcoin Trust (BTC) | |
Entity Central Index Key | 0001588489 | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Common Stock, Shares Outstanding | 336,251,000 | |
Entity Shell Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity File Number | 000-56121 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 46-7019388 | |
Entity Address, Address Line One | c/o Grayscale Investments, LLC | |
Entity Address, Address Line Two | 250 Park Avenue South | |
City Area Code | 212 | |
Local Phone Number | 668-1427 | |
Entity Address, City or Town | New York | |
Entity Address, Postal Zip Code | 10003 | |
Entity Address, State or Province | NY |
Statements of Assets and Liabil
Statements of Assets and Liabilities - USD ($) | Mar. 31, 2020 | Dec. 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 | 0 | 0 |
Total liabilities | 0 | 0 |
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 |
Net assets | $ 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 |
Statements of Assets and Liab_2
Statements of Assets and Liabilities (Parenthetical) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
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) | $ 1,223,309,388 | $ 839,093,484 |
Schedules of Investment
Schedules of Investment | Mar. 31, 2020USD ($)Bitcoin | Dec. 31, 2019USD ($)Bitcoin |
Schedule of Investments [Line Items] | ||
Cost | $ 1,223,309,388 | $ 839,093,484 |
Fair Value | $ 1,972,244,030 | $ 1,866,217,842 |
Percent of Net Assets | 100.00% | 100.00% |
Investment in Bitcoin [member] | ||
Schedule of Investments [Line Items] | ||
Number of Bitcoin | Bitcoin | 304,631.31046282 | 261,192.14022299 |
Cost | $ 1,223,309,388 | $ 839,093,484 |
Fair Value | $ 1,972,244,030 | $ 1,866,217,842 |
Percent of Net Assets | 100.00% | 100.00% |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Investment income: | ||
Investment income | $ 0 | $ 0 |
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 |
Statement of Changes in Net Ass
Statement of Changes in Net Assets - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 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 | $ 23,305,160 |
Net change in unrealized (depreciation) appreciation on investment in Bitcoin | (278,189,716) | 86,536,075 | 663,245,720 |
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 | 751,622,174 |
End of period | $ 1,972,244,030 | $ 877,972,256 | $ 1,866,217,842 |
Change in Shares outstanding: | |||
Shares outstanding at beginning of period | 269,445,300 | 206,559,100 | 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 | 269,445,300 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | 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 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 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 – Investment Companies 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, 820-10 820-10 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 First, the Trust reviews a list of Digital Asset Markets and excludes any Digital Asset Markets that are non-accessible non-Digital 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 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 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. 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 $ — |
Fair Value of Bitcoin
Fair Value of Bitcoin | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Bitcoin | 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). 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 |
Creations and Redemptions of Sh
Creations and Redemptions of Shares | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Creations and Redemptions of Shares | 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”). |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 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. 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” “more-likely-than-not” “more-likely-than-not” “more-likely-than-not” on-going 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. |
Related Parties
Related Parties | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Parties | 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. The Trust may incur certain extraordinary, non-recurring 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. |
Risks and Uncertainties
Risks and Uncertainties | 3 Months Ended |
Mar. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Risks and Uncertainties | 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 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. |
Financial Highlights Per Share
Financial Highlights Per Share Performance | 3 Months Ended |
Mar. 31, 2020 | |
Investment Company, Financial Highlights [Abstract] | |
Financial Highlights Per Share Performance | 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 . |
Indemnifications
Indemnifications | 3 Months Ended |
Mar. 31, 2020 | |
Indemnifications Disclosure [Abstract] | |
Indemnifications | 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. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 10. Subsequent Events As of the close of business on May 1 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. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Principal Market and Fair Value Determination | 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, 820-10 820-10 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 First, the Trust reviews a list of Digital Asset Markets and excludes any Digital Asset Markets that are non-accessible non-Digital 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 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 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 | 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. |
Fair Value Measurement | 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 $ — |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Fair Value Estimates | 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 $ — |
Fair Value of Bitcoin (Tables)
Fair Value of Bitcoin (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Investment Holdings, Schedule of Investments | 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 |
Financial Highlights Per Shar_2
Financial Highlights Per Share Performance (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Investment Company, Financial Highlights [Abstract] | |
Summary of per share data | 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 % |
Organization - Additional Infor
Organization - Additional Information (Detail) | Mar. 31, 2020shares |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Common Units Issued, Minimum Basket | 100 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Summary of valuation techniques and observable inputs can vary by investment (Detail) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Investment in Bitcoin | $ 1,972,244,030 | $ 1,866,217,842 | $ 751,622,174 |
Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Investment in Bitcoin | 0 | 0 | |
Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Investment in Bitcoin | 1,972,244,030 | 1,866,217,842 | |
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Investment in Bitcoin | $ 0 | $ 0 |
Fair Value of Bitcoin - Summary
Fair Value of Bitcoin - Summary of changes in quantity of Bitcoin and the respective fair value (Detail) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020USD ($)Number | Mar. 31, 2019USD ($)Number | Dec. 31, 2019USD ($)Number | |
Fair Value Disclosures [Abstract] | |||
Investment Owned ,Balance | Number | 261,192.14022299 | 204,277.35165345 | 204,277.35165345 |
Bitcoin contributed | Number | 44,867.71207927 | 61,555.82798061 | |
Bitcoin distributed for Sponsor's Fee, related party | Number | (1,428.54183944) | (4,641.03941107) | |
Investment Owned ,Balance | Number | 304,631.31046282 | 261,192.14022299 | |
Investment Owned, at Fair Value | $ 1,866,217,842 | $ 751,622,174 | $ 751,622,174 |
Bitcoin contributed | 389,529,126 | 462,775,143 | |
Bitcoin distributed for Sponsor's Fee, related party | (11,793,388) | (34,730,355) | |
Net change in unrealized appreciation on investment in Bitcoin | (278,189,716) | 86,536,075 | 663,245,720 |
Net realized gain on investment in Bitcoin | 6,480,166 | $ 1,844,077 | 23,305,160 |
Investment Owned, at Fair Value | $ 1,972,244,030 | $ 1,866,217,842 |
Fair Value of Bitcoin - Additon
Fair Value of Bitcoin - Additonal information (Detail) | May 01, 2020$ / shares | Mar. 31, 2020Bitcoin$ / shares | Dec. 31, 2019Bitcoin$ / shares |
Fair Value Disclosures [Abstract] | |||
Investment owned balance shares held by custodian | Bitcoin | 304,631.31046282 | 261,192.14022299 | |
Bitcoin Fair Value Per Share | $ / shares | $ 8,731.74 | $ 6,474.20 | $ 7,145 |
Creations and Redemptions of _2
Creations and Redemptions of Shares - Additional Information (Detail) - shares | Mar. 31, 2020 | Dec. 31, 2019 |
Equity [Abstract] | ||
Share reprsented as bitcoin | 0.0010 | 0.0010 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Federal income tax rate | 21.00% |
Related Parties - Additional In
Related Parties - Additional Information (Detail) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | |||
Shares of the Trust, held by related parties | 11,213,392 | 12,617,869 | |
Related party sponsor fee percentage | 2.00% | ||
Sponsor's Fees incurred | $ 11,793,388 | $ 3,862,438 | |
Accrued and unpaid Sponsor's Fees | $ 0 | $ 0 | |
Sponsor's Parent | Coinbase Inc | |||
Related Party Transaction [Line Items] | |||
Percentage of minority interest owned | 1.00% | ||
Sponsor | |||
Related Party Transaction [Line Items] | |||
Related party maximum transaction in a fiscal year | $ 600,000 | ||
Non Sponsor Paid Expenses | |||
Related Party Transaction [Line Items] | |||
Related party maximum transaction in a fiscal year | $ 600,000 |
Financial Highlights Per Shar_3
Financial Highlights Per Share Performance - Summary of per share data (Detail) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Per Share Data: | ||
Net asset value, beginning of period | $ 6.93 | $ 3.64 |
Net (decrease) increase in net assets from investment operations: | ||
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%) |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) - $ / shares | May 01, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | |||
Bitcoin fair value per share | $ 8,731.74 | $ 6,474.20 | $ 7,145 |