Item 1.01. Entry into a Material Definitive Agreement.
On February 1, 2022, Grayscale Investments, LLC, the sponsor
(the “Sponsor”) of Grayscale Bitcoin Trust (BTC) (the “Trust”), and
CoinDesk Indices, Inc., formerly known as TradeBlock Inc. (the
“Index Provider”), entered into an Index License Agreement (the
“Index License Agreement“) governing the Sponsor’s use of the
CoinDesk Bitcoin Price Index (XBX) (the “Index”) to calculate the
Index Price (as defined below), among other things.
The foregoing description is a summary, does not purport to be a
complete description of the Index License Agreement, and is
qualified in its entirety by reference to the Index License
Agreement, which is filed as Exhibit 10.1 hereto and is
incorporated by reference herein.
Item 1.02. Termination of a Material Definitive Agreement.
On January 31, 2022, in connection with the entry into the
Index License Agreement, the Sponsor and the Index Provider agreed
to terminate that certain Index License Agreement, dated
February 28, 2019, between the Sponsor and the Index Provider,
that governed the Sponsor’s use of the Index to calculate the Old
Index Price (as defined below).
Item 8.01. Other Events.
Grayscale Bitcoin Trust (BTC) (the “Trust”) has historically valued
its Bitcoins for operational purposes by reference to a
volume-weighted average index price (the “Old Index Price”) of a
Bitcoin in U.S. dollars calculated by applying a weighting
algorithm to the price and trading volume data for the immediately
preceding 24-hour period as
of 4:00 p.m., New York time derived from the selected digital asset
exchanges that are reflected in the Index on such trade date. The
methodology used exclusively by Grayscale and calculated by the
Index Provider to calculate the Old Index Price overlaid an
additional averaging mechanism to the price produced, resulting in
the Old Index Price reflecting an average price for the
24-hour period. The Old
Index Price was provided to the Sponsor once per day at 4:00 p.m.,
New York time.
Effective February 1, 2022, the Trust will value its Bitcoins
for operational purposes by reference to the index price (the
“Index Price”) of a Bitcoin in U.S. dollars calculated by applying
the same methodology to the price and trading volume data for the
immediately preceding 24-hour period as of 4:00 p.m.,
New York time derived from the selected digital asset exchanges
that are reflected in the Index on such trade date without the
additional averaging mechanism being applied to the Index Price.
The methodology used to calculate the Index Price is consistent
with the publicly available Bitcoin price that is published by the
Index Provider continuously throughout the day, and as a result the
Sponsor believes that using the Index Price will provide more
transparency to investors. There will be no change to the Index
used to determine the Index Price or the criteria used to select
the digital asset exchanges included in the Index. The Index Price
is calculated using non-GAAP methodology and is not used in
the Trust’s financial statements.
Historical Digital Asset Holdings
and Bitcoin Prices
For the period from January 1, 2019 and December 31,
2021, the average difference in price between the Old Index Price
and the Index Price and the average difference in Digital Asset
Holdings of the Trust as calculated using the Old Index Price and
the Index Price of was 0.31%.
The following chart illustrates the movement in the Index Price,
the Old Index Price, the Trust’s Digital Asset Holdings per Share
based on the Old Index Price and the Index Price and the Trust’s
net asset value per share as calculated in accordance with GAAP
from September 25, 2013 to December 31, 2021. For more
information on the determination of the Trust’s Digital Asset
Holdings, see “Item 1. Business—Overview of the Bitcoin Industry
and Market—Bitcoin Value—The Index and the Index Price” in the
Trust’s Annual Report on Form 10-K for the year ended
December 31, 2020, as filed with the Securities and Exchange
Commission on March 5, 2021 (the “Annual Report”).