Grayscale Ethereum Trust Reports $2.77B Gain in Ether Investments for 2024

Grayscale Ethereum Trust ETF (formerly Grayscale Ethereum Trust (ETH)) reported a net realized and unrealized gain on its investment in Ether of $2,767,727,000 for the year ended December 31, 2024. This figure includes a realized gain of $157,557,000 from transferring Ether to pay the Sponsor’s Fee, a realized gain of $3,108,025,000 from Ether sales to meet redemptions, and a realized gain of $888,140,000 from Ether sales related to an initial distribution to Grayscale Ethereum Mini Trust ETF. A net change in unrealized appreciation on the investment in Ether of ($1,385,995,000) also contributed to the overall gain. The net increase in net assets resulting from operations was $2,585,133,000, reflecting the net gain less the Sponsor’s Fee of $182,594,000. Net assets decreased by 30% to $4,735,980,000 during the year, primarily due to redemptions and the initial distribution.

Significant changes compared to the previous fiscal year (2023) include a decrease in net assets from $6,758,054,000 to $4,735,980,000, and a lower net realized and unrealized gain on Ether investments ($2,767,727,000 in 2024 versus $3,243,340,000 in 2023). The 2023 increase in net assets (85%) was driven by Ether price appreciation, partially offset by the Sponsor’s Fee. In contrast, the 2024 decrease resulted from redemptions, the initial distribution, and the Sponsor’s Fee, partially offset by Ether price appreciation and creations. The 2022 fiscal year showed a net realized and unrealized loss on Ether investments of ($7,549,251,000), resulting in a 68% decrease in net assets.

A key operational development was the uplisting of the Trust's Shares to the NYSE Arca on July 23, 2024, following SEC approval. Prior to this date, Shares traded on OTCQX, exhibiting substantial premiums and discounts to net asset value (NAV). Post-uplisting, from July 23, 2024 to December 31, 2024, the maximum premium was 1.6%, the average premium 0.1%, the maximum discount 0.2%, and the average discount 0.1%. The Trust also completed a pro rata distribution of shares in Grayscale Ethereum Mini Trust ETF on July 23, 2024, transferring 292,262.98913350 Ether as consideration. The number of Shares outstanding decreased from 310,158,500 at the end of 2023 to 169,098,500 at the end of 2024.

The Trust's activities are limited to issuing and redeeming Shares in Baskets (10,000 Shares), transferring Ether to cover fees and expenses, and engaging in administrative and security procedures. The Trust does not engage in staking of Ether. As of December 31, 2024, the Trust held approximately 1.2% of the circulating Ether supply, valued at approximately $401 billion. The Trust's primary expense is the Sponsor's Fee, set at an annual rate of 2.5% of the NAV Fee Basis Amount. The Sponsor is Grayscale Investments Sponsors, LLC, following a reorganization effective January 1, 2025. Coinbase Custody Trust Company, LLC serves as custodian, and Coinbase, Inc. as prime broker.

The filing includes extensive discussion of risk factors, including the volatility of Ether prices, regulatory uncertainty surrounding digital assets, cybersecurity threats, reliance on third-party service providers, and potential conflicts of interest. The company's outlook is not explicitly stated beyond the description of its investment objective and the acknowledgement of inherent risks associated with the digital asset market.