The BLOK-Chain Monthly - Amplify ETFs
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AMPLIFY TRANSFORMATIONAL
DATA SHARING ETF
The BLOK-Chain Monthly
October 2021
Staying Up-to-date with the Rapidly Evolving
Blockchain and Crypto Ecosystem
By Dan Weiskopf and Mike Venuto
Co-Portfolio Managers of the Amplify Transformational Data
Sharing ETF (BLOK)
Amplify
ETFsTHE MANDATE TOP 10 HOLDINGS As Of 9/30/2021
Ticker Company % Weight
The Amplify Transformational Data Sharing ETF (BLOK) is
the first actively managed fund seeking to identify the leading HUT CN HUT 8 MNG CORP NEW COM 5.65%
companies focused on the transformation and development MSTR MICROSTRATEGY INC 5.51%
of the blockchain and cryptocurrency markets. The managers SQ SQUARE INC 4.57%
focus on how companies can capture the growth, innovation, and
PYPL PAYPAL HLDGS INC 4.55%
disruption of the blockchain paradigm shift. The evolution of the
internet changed how people communicate. We believe growth MARA MARATHON DIGITAL HOLDINGS INC 4.25%
companies that embrace the blockchain evolution will capture COIN COINBASE GLOBAL INC 4.02%
secular growth trends that are accelerating and disrupt core
NVDA NVIDIA CORPORATION 3.90%
processes in business. According to MarketsandMarkets, the size
SI SILVERGATE CAP CORP 3.82%
of the blockchain market is expected to grow from $3 billion in
2020 to $39.7 billion by 2025 – a compound annual growth rate 8473 JP SBI HOLDINGS INC 3.58%
(CAGR) of 67.3%. HIVE CN HIVE BLOCKCHAIN TECHNOLOGIES 3.56%
Holdings and allocations are subject to change at any time and should not be
considered a recommendation to buy or sell any security.
SEPTEMBER MONTHLY HIGHLIGHTS
The Fund was up 27.62% year to date (market price, as of 9/30/21). However, a 9.82% decline in September offsets a 10.8% positive
return in August. These numbers reflect the volatility of the blockchain and crypto markets, but of equal importance is the fact that
spending on the blockchain industry continues to steadily move forward. For better or worse, the price action will remain the most
transparent investor metric to measure. As such, expect volatility, despite behind-the-scenes clear evidence of mainstream adoption
accelerating. We believe the rewards and potential benefits of blockchain far outweigh the cost to implement.
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 to unusually favorable conditions that are likely not sustainable, and such conditions might not
continue to exist. 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%.
BLOK PORTFOLIO UPDATE
We made some subtle adjustments during the month, and one material purchase. Pursuant to our risk discipline, we trimmed back our
exposure in Hut 8 Mining (HUT), which through capital appreciation had still earned its way to becoming the Fund’s largest holding at
5.89% as of 9/30/21. The return on Hut 8 has been lumpy, as the company chose to hold most of its coins at the expense of shareholder
dilution. Part of the benefit of a diversified strategy in our allocation to the mining sector is that we can absorb the punches when
companies seek to raise capital for expansion plans. In an effort to move in a conservative manner, we trimmed back what little exposure
we had to China to below 3%. The one major purchase we made during the month was in Power & Digital Infrastructure Acquisition
(XPDI)/Core Scientific. The transaction involves XPDI as the special purpose acquisition company (SPAC) acquiring Core Scientific. This
came after months of due diligence and two site visits by both me and Mike Venuto. You can see this position in two separate line items
in the list of Fund holdings, which together represent about 2.5% exposure.
We are excited by the opportunity to invest in Core, because it meets many key investment considerations and offers the
opportunity for fund investors to participate in a unique convertible note. Most importantly, our decision-making process also
confirms why we believe a fund investing in blockchain companies should be actively managed. Key consideration that impressed us
about Core include the management talent, led by its Co-Chairman Michael Levitt and Darin Feinstein, and the flexibility and balance
of how this business model has dynamically scaled and evolved. The foundation of a durable, “moat-like business” comes through
management experience that is leveraged through the rigors of execution in both easy and challenging periods.
The BLOK-Chain Monthly • October 2021 p2In the mining space, we have focused on how the management teams in the portfolio decide to access the capital markets versus selling their crypto holdings to fund their expansion plans. To that point, we would highlight that Argo Blockchain PLC (ARB.LN) during the month went through an up-listing process to IPO its ADRs on the NASDAQ (ARBK). In times where gross margins are in the 80-90% rate, tapping the equity markets may seem difficult. But when times are less good, and capital markets less friendly, we believe that having a strong balance sheet to achieve optimal scale will prove critical. Furthermore, as these companies’ operations grow to have more scale, we see opportunity for financial leverage. Hut 8 and Marathon Digital are two examples of companies which have borrowed against their crypto holdings and equipment. At times, we have found that we are on both sides of the trade in the Fund’s holdings. For example, Silvergate Bank loaned Marathon Digital $100 million, and Galaxy Digital was early in this business with loans it made to Hut 8. MicroStrategy (MSTR) was early in its ability to use the convertible and debt markets, and we have seen other examples of companies finding the debt markets helpful for their business prospects. In September, Coinbase Global (COIN) raised $2 billion in two separate 144A promissory notes. While Coinbase may be exceptional in many ways, this reflects a paradigm shift in how institutions are looking at these companies. For a list of BLOK’s holdings, click HERE. THE CRYSTAL BALL AND MANAGING RISK We seek to benefit from the decisions we get right and are humbled by the decisions we get wrong. In our last monthly report, we highlighted that we increased our position in Voyager Digital (VOYG). While one month is not a trend, and the stock was down an additional 32% for the month of September (as of 9/30/21), we should add that we continue to size the positions appropriately, and believe in the long-term future of the company. However, in October, the fact is that despite seeing 29% growth in funded accounts, Voyager reported that revenue for the quarter would be about $63 to $67 million, down sequentially by 40%. On a positive note, they now expect a new revenue stream in the December quarter to add $40-$50 million in revenue, and these dollars should be more predictable, as they are from reward and yield revenues from “staking” from the firm’s large crypto balance sheet. The Voyager platform has grown from 23,400 funded accounts to 860,000 since September 30, 2020. These are mostly small retail accounts who wish to trade alt-coins, so the revenue flows should be volatile. In the future, there are near-term plans to offer many additional services to augment the trading revenues that align with their client base. Coinbase, another holding, which until recently only offered the largest of crypto coins, is also a position we recently increased, more in line with larger accounts and institutional adoption. As of September 30, 2021, the exposure to the Transactional/Digital Platform and Miners segments remains overweighted at 29.7% and 28.43% across 16 and 9 positions, respectively. We remain optimistic that the trends in blockchain adoption are accelerating, so that overweighting these areas of the crypto/blockchain infrastructure makes sense. Ultimately, it all comes down to the utility value of the blockchain ecosystem, which we believe will reflect in the price action in the long term. SUMMARY The weakness in September reflects a short-term pullback and not the overall trend in blockchain adoption, which is evidently accelerating. Institutional buying of blockchain companies and/or bitcoin is ubiquitous. It is no longer about whether institutions will embrace Bitcoin and/or the blockchain to make their businesses more efficient. Today and into 2022, it is about the rate at which this adoption will accelerate, and how it will become a competitive advantage and disruptor for those who have embraced it. We recognize that this space is dynamic and welcome any and all inquires. The BLOK-Chain Monthly • October 2021 p3
APPENDIX: Monthly Detailed Performance Contribution Chart As Of 9/30/2021
% Average Weight Total Return (%) Contribution to Return (%)
AMPLIFY TRANSFORMATIONAL DATA SHARING ETF 100.00 -9.76 -9.76
Information Technology 65.48 -12.77 -8.39
HUT 8 MINING CORP 5.89 7.18 0.43
MICROSTRATEGY INC-CL A 5.59 -16.69 -0.96
MARATHON DIGITAL HOLDINGS IN 4.62 -22.20 -1.08
PAYPAL HOLDINGS INC 4.54 -9.86 -0.46
SQUARE INC - A 4.54 -10.53 -0.48
NVIDIA CORP 3.86 -7.46 -0.29
HIVE BLOCKCHAIN TECHNOLOGIES 3.73 -15.72 -0.58
ARGO BLOCKCHAIN PLC 3.58 -15.25 -0.55
BITFARMS LTD/CANADA 3.31 -27.92 -0.99
RIOT BLOCKCHAIN INC 3.19 -31.14 -1.08
GMO INTERNET INC 2.96 -1.64 -0.08
VOYAGER DIGITAL LTD 2.87 -32.00 -1.03
DIGITAL GARAGE INC 2.78 0.39 0.00
NORTHERN DATA AG 2.03 -1.16 -0.02
INTL BUSINESS MACHINES CORP 1.92 -1.00 -0.01
ORACLE CORP 1.83 -2.24 -0.04
ACCENTURE PLC-CL A 1.83 -4.94 -0.09
CANAAN INC 1.57 -35.00 -0.61
ADVANCED MICRO DEVICES 1.16 -7.06 -0.08
EBANG INTERNATIONAL HLDGS-A 0.95 -25.78 -0.26
CLEANSPARK INC 0.93 -16.01 -0.15
TAIWAN SEMICONDUCTOR-SP ADR 0.92 -5.80 -0.05
BIGG DIGITAL ASSETS INC 0.46 17.79 0.09
SAMSUNG ELECTRONICS CO LTD 0.43 -5.39 -0.02
Financials 20.13 -5.73 -1.22
COINBASE GLOBAL INC -CLASS A 3.78 -12.17 -0.47
GALAXY DIGITAL HOLDINGS LTD 3.58 -1.97 -0.09
SBI HOLDINGS INC 3.42 1.79 0.03
SILVERGATE CAPITAL CORP-CL A 3.40 2.23 0.09
CME GROUP INC 2.17 -3.69 -0.04
MOGO INC 1.47 -18.38 -0.28
WISDOMTREE INVESTMENTS INC 0.84 -10.14 -0.09
VONTOBEL HOLDING AG-REG 0.78 -9.79 -0.08
DIGINEX LTD 0.68 -37.69 -0.29
Not Classified 7.45 -2.39 -0.18
STIT GOVT & AGENCY-INST 2.81 0.00 0.00
VPC IMPACT ACQUISITION HLD-A 1.01 1.20 0.01
BITCOIN ETF - USD 0.89 -8.02 -0.07
PURPOSE BITCOIN ETF 0.89 -8.16 -0.07
The BLOK-Chain Monthly • October 2021 p4APPENDIX: Monthly Detailed Performance Contribution Chart As Of 9/30/2021
% Average Weight Total Return (%) Contribution to Return (%)
3IQ COINSHARES BITCOIN ETF 0.81 -7.04 -0.06
MUDRICK CAPITAL ACQUISITIO-A 0.39 0.61 0.00
POWER & DIGITAL INFRAST-CL A 0.34 -0.39 0.00
NOCTURNE ACQUISITION CORP 0.31 0.68 0.00
US DOLLAR 0.01 0.00 0.00
Communication Services 3.71 -1.44 -0.05
Z HOLDINGS CORP 2.15 -1.47 -0.04
SOFTBANK GROUP CORP 0.66 3.53 0.01
TENCENT HOLDINGS LTD 0.48 -4.19 -0.02
BAIDU INC - SPON ADR 0.42 -0.29 0.00
Consumer Discretionary 3.23 2.32 0.08
OVERSTOCK.COM INC 2.40 8.00 0.18
RAKUTEN GROUP INC 0.47 -7.63 -0.04
ALIBABA GROUP HOLDING-SP ADR 0.35 -13.12 -0.06
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 September 30, 2021
Cumulative (%) Annualized (%)
1 Mo. 3 Mo. 6 Mo. YTD Since Inception 1 Yr. 3 Yr. Since Inception
Fund NAV -9.63% -5.76% -19.46% 28.93% 136.15% 87.11% 32.55% 26.11%
Closing Price -9.82% -6.36% -20.06% 27.62% 134.98% 85.56% 32.38% 25.94%
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%.
The BLOK-Chain Monthly • October 2021 p5Carefully consider the Fund’s invest- never develop optimized transactional process- ly offered investment vehicle in its portfolio may
es that lead to realized economic returns for any cause the Fund to trade at a premium or discount
ment objectives, risk factors, charges,
company in which the Fund invests. to NAV. Many significant aspects of the U.S. fed-
and expenses before investing. This and eral income tax treatment of investments in cryp-
additional information can be found in The Fund invests at least 80% of the Fund’s net tocurrencies are uncertain and such investments,
Amplify Funds statutory and summary assets in equity securities of companies actively even indirectly, may produce non-qualifying in-
involved in the development and utilization of come for purposes of the favorable U.S. federal
prospectus, which may be obtained above blockchain technologies. Such investments may income tax treatment generally accorded to reg-
or by calling 855-267-3837, or by visiting be subject to the following risks: the technolo- ulated investment companies.
AmplifyETFs.com. Read the prospectus gy is new and many of its uses may be untested;
carefully before investing. theft, loss or destruction; competing platforms Amplify Investments LLC is the Investment Ad-
and technologies; cybersecurity incidents; de- viser to the Fund, and Toroso Investments, LLC
Click HERE for BLOK’s top 10 holdings. velopmental risk; lack of liquid markets; possible serves as the Investment Sub-Adviser.
manipulation of blockchain-based assets; lack of
Click HERE for BLOK’s prospectus. regulation; third party product defects or vulner- Amplify ETFs are distributed by Foreside Fund
abilities; reliance on the Internet; and line of busi- Services, LLC.
Investing involves risk, including the possible loss of ness risk. The investable universe may include
principal. Shares of any ETF are bought and sold at companies that partner with or invest in other
market price (not NAV), may trade at a discount or companies that are engaged in transformation-
premium to NAV and are not individually redeemed al data sharing or companies that participate in
from the Fund. The Fund’s return may not match or
achieve a high degree of correlation with the return
of the underlying Index.
blockchain industry consortiums. The Fund will
invest in the securities of foreign companies. Se-
curities issued by foreign companies present risks
Amplify ETFs
beyond those of securities of U.S. issuers.
The Fund is subject to management risk because QUESTIONS?
it is actively managed. Narrowly focused invest- The Fund may have exposure to cryptocurren-
ments typically exhibit higher volatility. A port- cies such as bitcoin indirectly through investment Visit AmplifyETFs.com/BLOK
folio concentrated in a single industry, such as funds, including through an investment in the
companies actively engaged in blockchain tech- Bitcoin Investment Trust (“GBTC”), a privately of- Phone 855-267-3837
nology, makes it vulnerable to factors affecting fered, open-end investment vehicle. Even when
the companies. The Fund may face more risks held indirectly, investment vehicles like GBTC Email info@AmplifyETFs.com
than if it were diversified broadly over numerous may be affected by the high volatility associated
industries or sectors. Blockchain technology may with cryptocurrency exposure. Holding a private-You can also read
