The BLOK-Chain Monthly - Amplify ETFs
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AMPLIFY TRANSFORMATIONAL
DATA SHARING ETF
The BLOK-Chain Monthly
June 2021
Staying Up-to-date with the Rapidly Evolving
Blockchain and Crypto Ecosystem
By Dan Weiskopf and Mike Venuto, Toroso Investments, LLC
Portfolio Managers of the Amplify Transformational Data
Sharing ETF (BLOK)
Toroso is the Sub-Adviser for BLOK Amplify
ETFs
THE MANDATE TOP 10 HOLDINGS As Of 6/30/2021
Ticker Company % Weight
The Amplify Transformational Data Sharing ETF (BLOK) is the
first actively managed ETF seeking to identify leading companies MSTR MICROSTRATEGY INC 6.35%
which are focused on the blockchain and cryptocurrency PYPL PAYPAL HLDGS INC 4.80%
markets. The managers focus on how companies may capture SQ SQUARE INC 4.59%
the growth, innovation and disruption of the blockchain
MARA MARATHON DIGITAL HLDGS 3.89%
paradigm shift. The internet evolution changed how people
communicate. We believe growth companies that embrace the HIVE CN HIVE BLOCKCHAIN 3.58%
blockchain evolution will capture secular growth trends that HUT CN HUT 8 MINING CORP 3.11%
are accelerating, and which disrupt core processes in business.
4819 JP DIGITAL GARAGE 3.69%
According to MarketsandMarkets, the size of the blockchain
GLXY CN GALAXY DIGITAL HOLDINGS 3.82%
market is expected to grow from $3 billion in 2020 to $39.7 billion
by 2025 – a compound annual growth rate (CAGR) of 67.3%. VYGR CN VOYAGER DIGITAL 3.85%
NVDA NVIDIA CORP 3.55%
Holdings and allocations are subject to change at any time and should not be
considered a recommendation to buy or sell any security.
JUNE MONTHLY HIGHLIGHTS
In the month of June, BLOK rebounded by 4.04% (market price, as of 6/30/21) against some challenging price action in Bitcoin (See
chart below). This performance was achieved while we trimmed both Square and PayPal and sold the position in Opera. We remain
bullish on the price action for Bitcoin despite the recent headwinds, and used the decline in price to further increase our exposure
to mining and further diversify our holdings in the transactional platform segment. Specifically, we increased our ownership in HIVE
Blockchain and added BIGG Blockchain. We believe that the disruption coming out of China will find some balance soon, and we are
optimistic that miners who are in a position to substantially bring more capacity online in 2021 and early 2022 will reward their
stockholders with big returns, but management experience and capital will now overtake flash and hype. There was a period where
every announcement about dilution and equipment orders was followed by stock prices going higher, but in this next phase,
different business models will distinguish operators from one another. This is a competitive and innovative bunch whose role and
importance in building out the core infrastructure of the blockchain is somewhat underappreciated in our view.
Bitcoin vs BLOK
The performance data
quoted represents past
performance. Past
performance does not
guarantee future results.
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, was attributable
XBTUSD shows the recent price movements of Bitcoin; the Fund does not invest directly in Bitcoin; however, it currently has indirect to unusually favorable
exposure through an investment in the Grayscale Bitcoin Trust – GBTC. The Fund does not track the spot price of bitcoin. Bitcoin conditions that are likely
performance is provided for informational purposes only and does not represent the Fund. Past performance does not guarantee future
not sustainable, and such
results. Short-term performance may often reflect conditions that are likely not sustainable, and thus such performance may not be
repeated in the future. conditions might not
continue to exist. An
investment should not be
For performance data current to the most recent month-end, please call 855-267-3837 or visit BLOKETF.com. made based solely on
Brokerage commissions will reduce returns. BLOK's gross expense ratio is 0.71% returns.
The BLOK-Chain Monthly • June 2021 p2
THE MAIN POINTS
1. Twists and turns out of China make it 28% easier for everyone mining Bitcoin.
2. The Bitcoin Mining Council (BMC) address ESG concerns about mining.
3. Active management balances risk while delivering long term rewards with high active share.
CHINA MAKES IT 28% MORE EFFICIENT FOR EVERYONE MINING BITCOIN
The month of June was especially eventful in the Blockchain and Crypto market, with many twists related to Chinese government
intervention intending to shut down miners and make trading on exchanges more difficult. However, such action proved how
decentralization is the best defense from control. Arguably, the effort played to the strength of Bitcoin. The massive decline in mining
out of China, reflected in a decrease in hash rate (Hash reflects the number of mines operating online – see definitions in footnotes),
led to the largest change in the difficulty for miners to find Bitcoin. This change reflects the economic incentive for the system to
reward mining operators securing the system. Prior to June, Chinese miners were believed to be operating mining equipment that
controlled about 65% of the processing of Bitcoin. Today, due to the shutdown, there is evidence that this number will be below 50%
very soon. The Bitcoin Mining Council (BMC) points out these new locations are very much emphasizing carbon neutrality. We also
expect more decentralization. Transparency around who is processing the security of the Bitcoin network will only expand confidence
in the protocol, and thus will accelerate adoption by institutions.
Ironically, the China crackdown highlighted the importance of the miners to the Bitcoin infrastructure. As the miners in China unplugged,
the hash power collapsed, with the price of Bitcoin also plunging from $43,000 to $29,000, about where price support was anticipated.
It is reasonable to assume that some Bitcoin liquidation came out of China. More important than price, though, was the speed with
which processing declined. Bitcoin was designed for new blocks to be added to the blockchain roughly every ten minutes, but with far
fewer miners at work, block times rose to more than 20 minutes apart at one point in June. However, as math keeps the system honest,
pursuant to the Satoshi algorithm, the difficulty level on July 3rd was adjusted to make it 28% easier to process and find blocks. This
adjustment was the largest change in history and should show a substantially higher level of gross margin. Bitcoin is about 3x higher
than where it was when the difficulty levels were at current operating metrics. The difficulty level is adjusted after about two weeks,
or 2,016 blocks. As a result, we expect processing speeds will return to normal levels and miners operating during this period should be
well rewarded. Put simply, while the China miners are on the sidelines, other miners operating in the network are being rewarded
with 28% better efficiency.
Bitcoin Network Hash Rate 82.11M TH/s for 7/4/2021
Source: YCharts. Bitcoin Network
Hash Rate performance is provided
for informational purposes only
and does not represent the Fund.
Bitcoin Average Difficulty 14.36 T for 7/4/2021
Source: YCharts. Bitcoin
Average Difficulty is provided for
informational purposes only and
does not represent the Fund.
The BLOK-Chain Monthly • June 2021 p3
BMC SAYS BITCOIN MINING IS ABOUT ESG Bitcoin Mining Energy Use vs Total Global Energy Use
The Bitcoin Mining Council (BMC) is an association of independent
firms focused on providing education and data for anyone
interested in learning about Bitcoin. The leadership and founding
members are not about changing the principles of Bitcoin. In
the Council’s latest discussion, the leadership highlighted the
following:
• The Council, as an association, is open to anyone and
everyone globally and seeks only to be a common voice
around providing education, facts and the established
principles behind the foundation that Satoshi wrote about in
the protocol paper.
• They believe energy use by Bitcoin Mining vs total global energy use is minimal.
• The BMC also believes Bitcoin mining can be considered ESG.
Whether ESG investors agree or disagree with the details presented by the BMC is less of an issue than the fact that, unlike other
industries, this group is anything but passive about the premise behind trying to do good in a transparent manner.
THE CRYSTAL BALL AND MANAGING RISK
Bitcoin vs BLOK YTD
(XBTUSD shows the recent price movements of Bitcoin; the Fund does not invest directly in Bitcoin; however, it currently has indirect exposure through an investment
in the Grayscale Bitcoin Trust – GBTC. The Fund does not track the spot price of bitcoin. Bitcoin performance is provided for informational purposes only and does not
represent the Fund. Past performance does not guarantee future results. Short-term performance may often reflect conditions that are likely not sustainable, and thus such
performance may not be repeated in the future).
A “Crypto Crystal ball” does not exist, and volatility sometimes can shake convictions. But, change is about disruptive technology, and
venture capitalists increased their exposure to crypto companies in 2021 to $17 billion, far above $5.5 billion in all of 2020.¹ To that
point, in this latest period we were able to also increase the direct exposure even further. The Top 20 holdings now represent 70.83%
of the portfolio, a sequential increase from 69% in May, and a further increase from 67% from April. We would not expect this number
to eclipse 75%. Currently, the portfolio holds 47 names, and at times may hold between 40-60 positions.
The universe of names is now around 200 companies and expanding regularly. Depending on levels of purity, we score companies
differently between core and non-core. We see an expanding universe of companies adopting blockchain as evidence of the opportunity
The BLOK-Chain Monthly • June 2021 p4
before us. While the media may focus on well-known U.S.
“unicorns” like Coinbase and Robinhood, we see the opportunity
as much more global. We hope, as an actively-managed fund,
we continue to identify those companies, like Galaxy, Marathon
and Voyager, that potentially are at early stages of development
and may offer exponential returns. We also wanted to
highlight in this report that the following 3 companies in the
portfolio were recently “up-listed” to the NASDAQ: HUT 8
(HUT), Bitfarms Ltd (BITF) and HIVE Blockchain (HVBT). While
BLOK investors have benefited by being early shareholders in
these companies, it is expected that more U.S. investors can
now access these names. Marathon Digital and Riot
Blockchain were also added to the Russell 2000.
3+ YEAR TRACK RECORD Top 20 Contribution to Return Since Inception as of 6/30/21
% Average Total Contribution
Readers of the BLOK-Chain Monthly will remember that the Company Weight Return (%) to Return (%)
commentary in May highlighted companies that were down
Amplify Transformational
the most during the month, and what contribution they made 100.00 150.93 150.93
Data Sharing ETF
to performance. As an active fund focused on blockchain, we
think the defense of downside capture is important in both the Galaxy Digital Hold 2.59 936.85 21.46
short term and the long term. However, in this month’s segment, Silvergate Capital Corp 1.36 619.49 17.34
we thought we would balance the discussion out and show the
attribution from the Top 20 contributing stocks to BLOK’s Square Inc – A 4.13 520.04 15.44
performance since its inception on 1/17/2018. Marathon Digital Hold 0.72 1,397.37 15.36
Since inception, the Fund is up 150.93% (cumulative market
Microstrategy Inc 1.02 384.89 11.01
price, as of 6/30/2021). Many of these names today are very
recognizable, but back in 2018 when BLOK launched, most were Advanced Micro Devices 2.14 688.66 9.64
not very well-known and their vision was unclear to most
Kakao Corp 2.4 423.81 7.68
investors. In addition, we take special pride in managing the
tax consequences in the fund by optimizing the ETF wrapper Riot Blockchain Inc 0.51 693.55 6.53
by trimming core positions when they eclipse certain
NVIDIA Corp 2.42 266.76 6.25
weighting in the portfolio, and also buying back positions
based upon our analysis and investment process. Canaan Inc 0.74 33.17 6.23
SUMMARY Voyager Digital Ltd 0.51 479.1 6.13
Docusign Inc 1.01 324.7 5.66
The price momentum of Bitcoin and Crypto should be expected
to be volatile, but evidence of the adoption rate continues to JD.com Inc-Adr 1.59 92.82 4.57
be strong. In June, the BLOK portfolio was up 4.04% (market Microsoft Corp 2.17 199.77 4.36
price, as of 6/30/21), and remained correlated with Bitcoin. The
overweighting towards Digital Transaction/Platforms remained Taiwan Semiconducto 2.98 219.34 3.74
high at 32.53%, down from 35.38% due to some trimming in Z Holdings Corp 2.6 58.48 3.62
PayPal, Square, and a 16% decline Voyager stock. Price action in
the mining segment, BLOK’s second largest exposure at 23.64%, Naver Corp 0.87 224.64 3.41
provided a net positive to the performance led by positions
Grayscale Bitcoin Trust Btc 0.49 117.43 3.4
in RIOT Blockchain and Marathon Digital, and an increase in
the holdings in HIVE Blockchain. According to data from the GMO Internet Inc 4.4 49.03 3.31
Bitcoin Mining Council, concerns about ESG in the mining space
Paypal Holdings Inc 0.79 43.49 2.85
are misleading. We believe the portfolio is positioned to
benefit from the disruption in China. The long-term vision for Inception date: 1/17/18. Holdings and allocations are subject to change at any
BLOK since 2018 remains to find and research undiscovered time and should not be considered a recommendation to buy or sell any security.
companies whose mission is to capitalize and benefit from the Data for period 1/17/18 - 6/30/21
global evolution of the blockchain and crypto disruption. We Short-term performance may reflect conditions that are unsustainable and thus are
are excited to report that this universe continues to robustly unlikely to be repeated in the future.
expand.
The BLOK-Chain Monthly • June 2021 p5APPENDIX: Monthly Detailed Performance Contribution Chart As Of 6/30/2021
% Average Weight Total Return (%) Contribution to Return (%)
AMPLIFY TRANSFORMATIONAL DATA SHARING ETF 100.00 4.04 4.04
Information Technology 64.59 5.63 3.56
MICROSTRATEGY INC-CL A 5.40 41.38 1.91
PAYPAL HOLDINGS INC 4.86 12.10 0.56
SQUARE INC - A 4.59 9.56 0.40
VOYAGER DIGITAL LTD 4.02 -16.75 -0.84
ARGO BLOCKCHAIN PLC 3.64 -25.72 -1.10
DIGITAL GARAGE INC 3.61 9.78 0.34
MARATHON DIGITAL HOLDINGS IN 3.56 26.65 0.87
NVIDIA CORP 3.29 23.16 0.70
GMO INTERNET INC 3.11 1.01 0.03
HIVE BLOCKCHAIN TECHNOLOGIES 3.03 14.31 0.43
HUT 8 MINING CORP 2.93 5.58 0.18
BITFARMS LTD/CANADA 2.82 -9.74 -0.29
RIOT BLOCKCHAIN INC 2.66 38.85 0.89
NORTHERN DATA AG 2.48 -14.35 -0.40
CLEANSPARK INC 2.28 -0.72 -0.02
INTL BUSINESS MACHINES CORP 2.13 1.98 0.04
CANAAN INC 2.01 -2.98 -0.06
ORACLE CORP 1.71 -1.14 -0.02
ACCENTURE PLC-CL A 1.61 4.48 0.07
EBANG INTERNATIONAL HLDGS-A 1.54 6.57 0.09
TAIWAN SEMICONDUCTOR-SP ADR 0.95 2.77 0.03
ADVANCED MICRO DEVICES 0.95 17.30 0.16
SAMSUNG ELECTRONICS CO LTD 0.53 -0.65 0.00
OPERA LTD-ADR 0.47 -14.59 -0.24
BIGG DIGITAL ASSETS INC 0.40 -17.99 -0.18
Financials 21.82 0.47 0.10
GALAXY DIGITAL HOLDINGS LTD 3.78 2.93 0.10
SBI HOLDINGS INC 3.43 -6.24 -0.23
SILVERGATE CAPITAL CORP-CL A 3.36 1.72 0.06
COINBASE GLOBAL INC -CLASS A 3.07 7.09 0.23
MOGO INC 2.37 -4.73 -0.12
CME GROUP INC 1.95 -2.37 -0.05
DIGINEX LTD 1.15 11.97 0.13
INTERCONTINENTAL EXCHANGE IN 1.06 5.46 0.06
WISDOMTREE INVESTMENTS INC 0.96 -7.46 -0.07
VONTOBEL HOLDING AG-REG 0.70 -0.44 0.00
The BLOK-Chain Monthly • June 2021 p6APPENDIX: Monthly Detailed Performance Contribution Chart As Of 6/30/2021
% Average Weight Total Return (%) Contribution to Return (%)
Not Classified 5.63 -18.74 -1.03
GRAYSCALE BITCOIN TRUST BTC 1.66 -1.36 -0.03
MUDRICK CAPITAL ACQUISITIO-A 1.11 -8.72 -0.11
VPC IMPACT ACQUISITION HLD-A 1.04 -1.86 -0.02
STIT GOVT & AGENCY-INST 0.92 0.00 0.00
NOCTURNE ACQUISITION CORP 0.35 0.10 0.00
US DOLLAR 0.00 0.00 0.00
Consumer Discretionary 4.79 6.24 0.30
OVERSTOCK.COM INC 3.07 7.92 0.24
ALIBABA GROUP HOLDING-SP ADR 1.11 5.99 0.07
RAKUTEN GROUP INC 0.60 -1.51 -0.01
Communication Services 3.72 0.84 0.04
Z HOLDINGS CORP 1.61 6.66 0.11
SOFTBANK GROUP CORP 0.83 -7.17 -0.06
BAIDU INC - SPON ADR 0.64 3.89 0.03
TENCENT HOLDINGS LTD 0.63 -5.71 -0.04
Holdings and allocations are subject to change at any time and should not be considered a recommendation to buy or sell any security.
BLOK 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 AmplifyETFs.com/BLOK. Brokerage commissions
will reduce returns. BLOK’s gross expense ratio is 0.71%.
¹ Bloomberg, June 18, 2021: “Venture Capital Makes a Record $17 Billion Bet on Crypto World”
Glossary
Bitcoin Network Hash Rate: “Hash rate” refers to the total combined computational power that is being used to mine and process transactions on a Proof-of-Work
blockchain, such as Bitcoin and Ethereum. A “hash” is a fixed-length alphanumeric code that is used to represent words, messages and data of any length.
Bitcoin Average Difficulty: Bitcoin’s difficulty is measured using an internal score that began at 1, when Satoshi Nakamoto (the name used for the anonymous person
or people who wrote first white paper about Bitcoin) started mining at the easiest level. It is programmed to increase or decrease incrementally depending on how
many miners are competing on the network.
The BLOK-Chain Monthly • June 2021 p7Carefully consider the Fund’s invest- returns for any company in which the Fund in- cause the Fund to trade at a premium or discount
vests. to NAV. Many significant aspects of the U.S. fed-
ment objectives, risk factors, charges,
eral income tax treatment of investments in cryp-
and expenses before investing. This and The Fund invests at least 80% of the Fund’s net tocurrencies are uncertain and such investments,
additional information can be found in assets in equity securities of companies actively even indirectly, may produce non-qualifying in-
Amplify Funds statutory and summary involved in the development and utilization of come for purposes of the favorable U.S. federal
blockchain technologies. Such investments may income tax treatment generally accorded to reg-
prospectus, which may be obtained above be subject to the following risks: the technolo- ulated investment companies.
or by calling 855-267-3837, or by visiting gy is new and many of its uses may be untested;
AmplifyETFs.com. Read the prospectus theft, loss or destruction; competing platforms Amplify Investments LLC is the Investment Ad-
carefully before investing. and technologies; cybersecurity incidents; de- viser to the Fund, and Toroso Investments, LLC
velopmental risk; lack of liquid markets; possible serves as the Investment Sub-Adviser.
Click HERE for BLOK’s top 10 holdings. manipulation of blockchain-based assets; lack of
regulation; third party product defects or vulner- Amplify ETFs are distributed by Foreside Fund
Click HERE for BLOK’s prospectus. abilities; reliance on the Internet; and line of busi- Services, LLC.
ness risk. The investable universe may include
Investing involves risk, including the possible loss of companies that partner with or invest in other
principal. Shares of any ETF are bought and sold at companies that are engaged in transformation-
market price (not NAV), may trade at a discount or al data sharing or companies that participate in
premium to NAV and are not individually redeemed blockchain industry consortiums. The Fund will
from the Fund. The Fund’s return may not match or
achieve a high degree of correlation with the return
of the underlying Index.The Fund is subject to man-
invest in the securities of foreign companies. Se-
curities issued by foreign companies present risks
beyond those of securities of U.S. issuers.
Amplify ETFs
agement risk because it is actively managed. Nar-
rowly focused investments typically exhibit high- The Fund may have exposure to cryptocurren- QUESTIONS?
er volatility. A portfolio concentrated in a single cies such as bitcoin indirectly through investment
industry, such as companies actively engaged in funds, including through an investment in the Visit AmplifyETFs.com/BLOK
blockchain technology, makes it vulnerable to Bitcoin Investment Trust (“GBTC”), a privately of-
factors affecting the companies. The Fund may fered, open-end investment vehicle. Even when Phone 855-267-3837
face more risks than if it were diversified broadly held indirectly, investment vehicles like GBTC
over numerous industries or sectors. Blockchain may be affected by the high volatility associated Email info@AmplifyETFs.com
technology may never develop optimized trans- with cryptocurrency exposure. Holding a private-
actional processes that lead to realized economic ly offered investment vehicle in its portfolio mayYou can also read
