The BLOK-Chain Monthly - Amplify ETFs
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AMPLIFY TRANSFORMATIONAL
DATA SHARING ETF
The BLOK-Chain Monthly
July 2021
Staying Up-to-date with the Rapidly Evolving
Blockchain and Crypto Ecosystem
By Dan Weiskopf and Mike Venuto, Toroso Investments, LLC
Co-Portfolio Managers of the Amplify Transformational Data
Sharing ETF (BLOK)
Toroso is the Sub-Adviser for BLOK Amplify
ETFsTHE MANDATE TOP 10 HOLDINGS As Of 7/31/2021
Ticker Company % Weight
The Amplify Transformational Data Sharing ETF (BLOK) is
the first actively-managed ETF, seeking to identify the leading MSTR MICROSTRATEGY INC 6.26%
companies focused on the transformation and development SQ SQUARE INC 4.94%
of the blockchain and cryptocurrency markets. The managers PYPL PAYPAL HLDGS INC 4.82%
focus on how companies can capture the growth, innovation and
MARA MARATHON DIGITAL HOLDINGS INC 3.72%
disruption of the blockchain paradigm shift. The evolution of the
internet changed how people communicate. We believe growth HUT CN HUT 8 MNG CORP NEW 3.68%
companies that embrace the blockchain evolution will capture NVDA NVIDIA CORPORATION 3.68%
secular growth trends that are accelerating, and disrupt core
COIN COINBASE GLOBAL INC 3.67%
processes in business. According to MarketsandMarkets, the size
GLXY CN GALAXY DIGITAL HOLDINGS LTD 3.56%
of the blockchain market is expected to grow from $3 billion in
2020 to $39.7 billion by 2025 – a compound annual growth rate ARB LN ARGO BLOCKCHAIN PL 3.46%
(CAGR) of 67.3%. 8473 JP SBI HOLDINGS INC 3.44%
Holdings and allocations are subject to change at any time and should not be
considered a recommendation to buy or sell any security.
JULY MONTHLY HIGHLIGHTS
We encourage investors in BLOK to think long-term, reflect on the evidence of institutional adoption of blockchain, and look beyond
price action for validation of the investment thesis. Will July 2021 prove to be the month that certain investors capitulated? We saw
signs of this in the trading volume in many of the stocks we hold.
Despite researching many different opportunities each week, and our universe expanding to over 200 publicly-traded companies, we
made only 4 direct changes in the month of July. These changes include selling 100% of Intercontinental Exchange Inc (ICE), trimming
Digital Garage (4819JP), and increasing positions in RIOT Blockchain (RIOT) and the Grayscale Bitcoin Trust (GBTC). This decision was
made after a site visit to the RIOT Whinstone facility in Texas. As active portfolio managers in the industry that is made up of bricks
and mortar, we believe meeting in-person with management is an important part of our due diligence process. Too often people look
at Bitcoin and blockchain as just an asset class, and fail to appreciate the complicated foundational ecosystem behind the disruption.
Investors should also note that we made tax-efficient changes to the portfolio by optimizing the ETF creation and redemption process.
We saw significant changes in the companies listed in the top 10 holdings in the portfolio in July. This came mostly as a result of market
volatility. We manage this kind of volatility and risk through diversification. In the monthly attribution analysis below, investors can see
which stocks reduced returns and which stocks added to returns for the month. Given recently reported results, it is clear that growth
is being delivered by these companies.
• Marathon Digital, a top 10 holding, reported that mined Bitcoin increased from 265.6 in June to 442.2 in July. As mentioned in the
report last month, we believe the miners will show accelerating revenue and cash flow growth as their facilities launch more mining
equipment online.
• In July, platfom companies like Voyager and Silvergate showed further short-term weakness in their stock price despite some
positive developments in each company. On July 15, Voyager reported sequential quarterly growth in the range of 65-75%.
Silvergate recently announced in their Second Quarter Report that their Silvergate Exchange Network handled an impressive
$239.6 billion in U.S. dollar transfers. Identifying companies early is what excites us about our research! Platform exposure, as a
portfolio segment in BLOK (i.e. Square, PayPal and MOGO), represents 31.58% as of 7/31/21, down from 32.53% as of 6/30/21.
• HIVE Blockchain (HIVE) announced on July 30 that its revenues are now at a $200 million run rate. Hive was the first Bitcoin miner
to go public in 2018. Miners that also reported good business momentum include Bitfarms Ltd (BITF), HUT8 Mining Corp (HUT),
Cleanspark Inc (CLSK) and Argo Blockchain (ARB LN). The mining industry exposure is now almost 25% as of 7/31/21, up from
23.64% as of 6/30/21.
The BLOK-Chain Monthly • July 2021 p2We have highlighted in red those stocks that were weakest in terms of attribution to the performance of BLOK in July. The Grayscale
Bitcoin Trust (GBTC) was up 16.52% during the month, and has been highlighted in green. The short-term trading range seen in the
price of Bitcoin and crypto in general created a multiple contraction in the group, but again, that does not mean evolution in blockchain
slowed down.
Attribution Detail (All Securities) 6/30/21 – 7/31/21
% Average Weight Total Return (%) Contribution to Return (%)
AMPLIFY TRANSFORMATIONAL DATA SHARING ETF 100.00 -5.84 -5.84
Information Technology 65.11 -4.91 -3.10
MICROSTRATEGY INC-CL A 5.92 -5.79 -0.34
PAYPAL HOLDINGS INC 5.23 -5.47 -0.27
SQUARE INC - A 4.95 1.42 0.10
DIGITAL GARAGE INC 3.86 -8.29 -0.32
NVIDIA CORP 3.73 -2.52 -0.10
MARATHON DIGITAL HOLDINGS IN 3.64 -11.92 -0.47
HUT 8 MINING CORP 3.45 11.26 0.34
VOYAGER DIGITAL LTD 3.36 -20.77 -0.79
HIVE BLOCKCHAIN TECHNOLOGIES 3.21 -8.88 -0.29
GMO INTERNET INC 3.14 -3.85 -0.13
ARGO BLOCKCHAIN PLC 2.92 9.81 0.33
RIOT BLOCKCHAIN INC 2.89 -12.53 -0.26
BITFARMS LTD/CANADA 2.53 5.39 0.14
NORTHERN DATA AG 2.35 -11.39 -0.27
CLEANSPARK INC 2.30 -18.87 -0.47
INTL BUSINESS MACHINES CORP 2.13 -3.84 -0.08
ORACLE CORP 1.91 12.35 0.20
ACCENTURE PLC-CL A 1.82 8.07 0.13
CANAAN INC 1.46 -15.58 -0.26
EBANG INTERNATIONAL HLDGS-A 1.13 -28.25 -0.37
ADVANCED MICRO DEVICES 1.09 13.05 0.14
TAIWAN SEMICONDUCTOR-SP ADR 0.99 -2.93 -0.03
BIGG DIGITAL ASSETS INC 0.58 -2.65 -0.01
SAMSUNG ELECTRONICS CO LTD 0.51 -4.74 -0.02
Financials 21.09 -7.45 -1.69
COINBASE GLOBAL INC -CLASS A 3.62 -6.60 -0.22
SBI HOLDINGS INC 3.44 0.59 0.01
SILVERGATE CAPITAL CORP-CL A 3.42 -9.28 -0.28
GALAXY DIGITAL HOLDINGS LTD 3.32 -11.13 -0.42
MOGO INC 2.08 -26.81 -0.65
CME GROUP INC 1.97 -0.26 0.00
DIGINEX LTD 0.96 -18.78 -0.20
WISDOMTREE INVESTMENTS INC 0.93 -0.32 -0.01
VONTOBEL HOLDING AG-REG 0.76 13.03 0.09
INTERCONTINENTAL EXCHANGE IN 0.59 -0.54 -0.01
The BLOK-Chain Monthly • July 2021 p3Attribution Detail (All Securities) 6/30/21 – 7/31/21
% Average Weight Total Return (%) Contribution to Return (%)
Not Classified 5.24 4.34 0.25
GRAYSCALE BITCOIN TRUST BTC 1.82 16.52 0.42
MUDRICK CAPITAL ACQUISITIO-A 1.10 -13.64 -0.15
VPC IMPACT ACQUISITION HLD-A 1.05 -1.70 -0.02
STIT GOVT & AGENCY-INST 0.91 0.00 0.00
NOCTURNE ACQUISITION CORP 0.35 0.88 0.00
Consumer Discretionary 4.75 -19.44 -0.96
OVERSTOCK.COM INC 3.03 -24.47 -0.78
ALIBABA GROUP HOLDING-SP ADR 1.11 -13.93 -0.16
RAKUTEN GROUP INC 0.61 -2.99 -0.02
Communication Services 3.81 -9.14 -0.35
Z HOLDINGS CORP 1.79 -0.75 -0.02
SOFTBANK GROUP CORP 0.80 -11.07 -0.09
BAIDU INC - SPON ADR 0.63 -19.56 -0.13
TENCENT HOLDINGS LTD 0.59 -18.04 -0.11
Holdings and allocations are subject to change at any time and should not be considered a recommendation to buy or sell any security.
THE CRYSTAL BALL AND MANAGING RISK
What’s the right premium or discount for the Grayscale Bitcoin Trust (GBTC)? Will the SEC approve a better exchange-traded product
(ETP), and thereby open the floodgates to mass approval in 2021 or 2022? Based upon SEC Chairman Gary Gensler’s comments, the
narrowing of the discount suggests that the probability is high, but in the form of a futures-based ETP. According to a recent CNBC
article, “Mr. Gensler said he anticipates companies will file for ETFs under the existing 1940 Investment Company Act, which regulates
mutual funds and closed-end funds, and which ‘provides significant investor protections. Given these important protections, I look
forward to the staff’s review of such filings, particularly if those are limited to these CME-traded bitcoin futures.’” ¹
What people may be missing, however, is that this does not necessarily mean that GBTC immediately converts to an ETF in 2021, nor
that institutional investors will not seek alternative products while they wait. Note, his comments were made after we increased our
exposure to GBTC. To many, the decision to allow futures-based ETPs rather than a trust structure makes no sense. However, such
an approval allows for the commission to move incrementally on its playbook while forming good regulations around the asset class.
Getting the broad playbook right is more important to Chairman Gensler than just pleasing the markets. However, in approving a
derivative-based product that is based upon a pre-established derivative-based product, he buys himself some time to further establish
the regulatory roadmap. He also emphasized that “the crypto space is in dire need of additional regulation before it can move ahead.”
SUMMARY
July showed significant positive operating data for the miners, but a temporary lull in crypto trading may have indicated capitulation by
certain market participants. Despite clear evidence that the adoption continues to show business strength, the transactional segment
of the portfolio showed further dramatic price declines in certain holdings. A discipline around position sizing and internal rebalancing
continues to help the portfolio’s risk profile. We remain excited by the number of opportunities in our proprietary data base, eclipsing
200 names. In the long term, we see many transformative growth opportunities coming out of the blockchain disruption.
¹ CNBC.com, 8/3/21: “What the SEC Chair’s Comments on Crypto Mean for a Possible Bitcoin ETF”
The BLOK-Chain Monthly • July 2021 p4BLOK PERFORMANCE Quarter End as of June 30, 2021
Cumulative (%) Annualized (%)
1 Mo. 3 Mo. 6 Mo. YTD Since Inception 1 Yr. 3 Yr. Since Inception
Fund NAV 4.10% -14.54% 36.81% 36.81% 150.58% 139.62% 37.20% 30.49%
Closing Price 4.04% -14.63% 36.28% 36.28% 150.93% 140.66% 37.32% 30.54%
Fund inception date: (1/17/2018). The performance data quoted represents past performance. Past performance does not guarantee future results.
Recent short-term performance is attributable to unusually favorable conditions that are likely not sustainable, and such conditions might not continue to exist.
The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original
cost and current performance may be lower or higher than the performance quoted. Short-term performance, in particular, is not a good indication of the fund’s future
performance, and an investment should not be made based solely on returns. For performance data current to the most recent month-end please call 855-267-3837 or visit
BLOKETF.com. Brokerage commissions will reduce returns. BLOK’s gross expense ratio is 0.71%.
Carefully consider the Fund’s investment ob- tional processes that lead to realized economic re- at a premium or discount to NAV. Many significant
turns for any company in which the Fund invests. aspects of the U.S. federal income tax treatment
jectives, risk factors, charges, and expenses
of investments in cryptocurrencies are uncertain
before investing. This and additional infor- The Fund invests at least 80% of the Fund’s net assets and such investments, even indirectly, may produce
mation can be found in Amplify Funds statu- in equity securities of companies actively involved in non-qualifying income for purposes of the favorable
tory and summary prospectus, which may be the development and utilization of blockchain tech- U.S. federal income tax treatment generally accord-
nologies. Such investments may be subject to the ed to regulated investment companies.
obtained above or by calling 855-267-3837, following risks: the technology is new and many of
or by visiting AmplifyETFs.com. Read the its uses may be untested; theft, loss or destruction; Amplify Investments LLC is the Investment Adviser
prospectus carefully before investing. competing platforms and technologies; cyberse- to the Fund, and Toroso Investments, LLC serves as
curity incidents; developmental risk; lack of liquid the Investment Sub-Adviser.
Click HERE for BLOK’s top 10 holdings. markets; possible manipulation of blockchain-based
assets; lack of regulation; third party product de- Amplify ETFs are distributed by Foreside Fund Ser-
Click HERE for BLOK’s prospectus. fects or vulnerabilities; reliance on the Internet; and vices, LLC.
line of business risk. The investable universe may in-
Investing involves risk, including the possible loss of prin- clude companies that partner with or invest in other
cipal. Shares of any ETF are bought and sold at market companies that are engaged in transformational data
price (not NAV), may trade at a discount or premium to sharing or companies that participate in blockchain
NAV and are not individually redeemed from the Fund. industry consortiums. The Fund will invest in the
Amplify
The Fund’s return may not match or achieve a high de- securities of foreign companies. Securities issued by
gree of correlation with the return of the underlying In- foreign companies present risks beyond those of se-
dex. curities of U.S. issuers. ETFs
The Fund is subject to management risk because it The Fund may have exposure to cryptocurrencies QUESTIONS?
is actively managed. Narrowly focused investments such as bitcoin indirectly through investment funds,
typically exhibit higher volatility. A portfolio concen- including through an investment in the Bitcoin In- Visit AmplifyETFs.com/BLOK
trated in a single industry, such as companies actively vestment Trust (“GBTC”), a privately offered, open-
engaged in blockchain technology, makes it vulnera- end investment vehicle. Even when held indirectly, Phone 855-267-3837
ble to factors affecting the companies. The Fund may investment vehicles like GBTC may be affected by
face more risks than if it were diversified broadly the high volatility associated with cryptocurrency Email info@AmplifyETFs.com
over numerous industries or sectors. Blockchain exposure. Holding a privately offered investment
technology may never develop optimized transac- vehicle in its portfolio may cause the Fund to trade
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