Grayscale’s GBTC Annual Revenue Exceeds 268 million USD, What Makes Its Profitability Far Surpass Other Bitcoin Spot ETFs?

According to Cointelegraph,nearly 16 months after the launch of the spot Bitcoin ETF, Grayscale’s GBTC still dominates in revenue generation, with an implied annual income exceeding $268 million— this figure exceeds all othersBitcoin ETFs combined revenue (which is $211 million). This data may surprise many, as the rules for Bitcoin spot ETFs regarding management fees, liquidity, and other aspects are better than those of GBTC, yet their profitability lags far behind it. This article will interpret this from the following five aspects.

1. The main source of annual income: management fees

High management fees

Grayscale’s GBTC the main source of revenue is its 2% annual management fee。

• calculation method: Management fees are calculated based on the total assets (AUM, asset management scale) under GBTC management. For example, if the Bitcoin held by GBTC is valued at $13.4 billion (hypothetically), then the 2% management fee would be $268 million($13.4 billion × 2%).
• Comparison with the market: In contrast, most Bitcoin spot ETFs have management fees typically below 1%, while Grayscale’s fees are significantly higher than the industry average.

IncomeContribution analysis: Management fees are the core driver of GBTC’s income, with a 2% rate generating considerable revenue stably under its large asset management scale, without considering market fluctuations.

2. Large asset management scale (AUM)

GBTC’s market position

• Market leadership advantage: GBTC was one of the earliest launched Bitcoin trust funds and has long been viewed by investors as a primary tool for entering the Bitcoin market. This leading position has allowed it to accumulate a substantial asset management scale (AUM).
• Market demand: Before the launch of spot Bitcoin ETFs, GBTC was the preferred tool for institutional and high-net-worth individual investors to indirectly invest in Bitcoin. Even after the launch of spot ETFs, GBTC’s first-mover advantage and brand effect have still maintained a significant amount of funds.

The amplifying effect of AUM on annual income

• Bitcoin price fluctuations: GBTC’s AUM fluctuates with Bitcoin price changes. When Bitcoin prices rise, GBTC’s AUM automatically increases, and the management fees rise accordingly.
• Investor base: Although the market may be more interested in spot ETFs recently, the investors and trust shares that GBTC has accumulated over the long term still contribute significantly to income.

3. The indirect impact of premiums and discounts

Premiums and discounts

• Premium history: In the early days, due to strong market demand for Bitcoin trusts, GBTC’s market trading price was long above its intrinsic value (NAV). This allowed Grayscale to raise a large amount of funding by issuing new shares, thereby further expanding its AUM.
• Current discount situation: In recent years, due to the launch of spot ETFs and increased market competition, there has been a significant discount in the trading of GBTC shares (i.e., the market price is lower than its NAV). Nevertheless, the discount does not directly affect Grayscale’s management fee income, as management fees are always calculated based on the total scale of trust assets (not market trading price).

Indirect impact: Although discounts have reduced investor confidence, they have not weakened Grayscale’s income sources, as management fees are still calculated based on the market value of Bitcoin assets, not the market price of the shares.

4. Continuing demand from institutional investors

Demand for lock-up from institutional investors

GBTC’s target user base mainly includes institutional investors and high-net-worth individuals, who typically choose GBTC for the following reasons:

• Compliance: As a regulated trust fund, GBTC provides institutions with a legitimate channel to enter the Bitcoin market.
• Custody convenience: GBTC offers secure custody services, eliminating the technical and security risks of investors directly holding crypto assets.
• Tax advantages: Institutional investors can enjoy certain tax optimization through GBTC’s structure, which is particularly important before the launch of spot Bitcoin ETFs.

Income accumulation from long-term holding

Some institutional investors choose to hold GBTC shares for the long term, resulting in higher stability in their management fee revenue. This characteristic of long-term lock-up enables Grayscale to maintain a relatively stable income source even amid increased market competition.

5. Uniqueness of product structure

Closed-end trust fee strategy

As a closed-end trust, GBTC’s shares cannot be redeemed directly, and this structure guarantees Grayscale greater control over the total size of trust assets. Compared to the stability of asset size in open-end fund ETFs, this allows Grayscale to consistently collect management fees.

First-mover advantage

• Brand effectAs one of the first Bitcoin investment tools introduced, GBTC has gained widespread recognition and acceptance in the market, attracting a large number of investors.
• Market inertiaMany early investors still choose GBTC over switching to lower-fee spot ETFs. This market inertia provides a continuous source of income for Grayscale.

Summary: Grayscale GBTCIncomeCore sources

Based on the above analysis, the implied annual revenue of Grayscale GBTC primarily comes from the following aspects: $268 million Main sources include:

1. High management feesThe 2% annual management fee is the core source of revenue, benefiting from the large asset management scale (AUM) of GBTC.
2. Large asset management scaleThe price volatility of Bitcoin and the funding support from long-term investors keep the AUM at a high level.
3. Stability of product structureThe characteristics of a closed-end trust ensure the continuity of income, and the discount issue has not significantly affected the calculation of management fees.
4. First-mover advantage and market inertiaAs one of the earliest Bitcoin investment tools, GBTC maintains a high market share through its brand effect and market inertia.
5. Support from institutional investorsThe long-term lock-up demand from institutional investors enhances the stability of income.

Although the launch of spot Bitcoin ETFs has brought lower-cost, high-liquidity competitive products to the market, Grayscale GBTC still holds an important position due to its first-mover advantage and unique product structure. However, in the future, as market competition intensifies, Grayscale may need to further optimize its product structure (such as transitioning to a spot ETF) and fee strategy to maintain its market leadership.