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Item 7. Management’s Discussion and Analysis

2025-03-26 compared with 2024-03-26 · 100 added, 92 removed, 85 unchanged (69% of the section changed)

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Condition and Results of Operations

This annual report on Form

10-K, including this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains

“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E

of the Securities Exchange Act of 1934, as amended, and such forward-looking statements involve risks and uncertainties.

All statements

(other than statements of historical fact) included in this Form 10-K that address activities, events or developments that may occur in

the future, the Trust’s operations, the Sponsor’s plans and references to the Trust’s future success and other similar

matters are forward-looking statements.

Words such as “could,” “would,” “may,” “expect,”

“intend,” “estimate,” “predict,” and variations on such words or negatives thereof, and similar expressions

that reflect our current views with respect to future events and Trust performance, are intended to identify such forward-looking statements.

These forward-looking statements are only predictions, subject to risks and uncertainties that are difficult to predict and many of which

are outside of our control, and actual results could differ materially from those discussed.

Forward-looking statements involve risks

and uncertainties that could cause actual results or outcomes to differ materially from those expressed therein.

This information should

be read in conjunction with the financial statements and notes included in Item 15 of Part IV of this annual report on Form 10-K (this

“Form 10-K”).

This Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities

Act and Section 21E of the Exchange Act, and such forward-looking statements involve risks and uncertainties.

All statements (other than

statements of historical fact) included in this Form 10-K that address activities, events or developments that may occur in the future,

the Trust’s operations, the Sponsor’s plans and references to the Trust’s future success and other similar matters are

forward-looking statements.

Words such as “could,” “would,” “may,” “expect,” “intend,”

“estimate,” “predict,” and variations on such words or negatives thereof, and similar expressions that reflect

our current views with respect to future events and Trust performance, are intended to identify such forward-looking statements.

forward-looking statements are only predictions, subject to risks and uncertainties that are difficult to predict and many of which are

outside of our control, and actual results could differ materially from those discussed.

Forward-looking statements involve risks and

uncertainties that could cause actual results or outcomes to differ materially from those expressed therein.

We express our estimates,

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are based on assumptions about many important factors that could cause actual results to differ materially from those in the forward-looking

Such factors are discussed in:

Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results

of Operations of this Form 10-K;

Part I, Item 1A.

Risk Factors of this Form 10-K, and other parts of this Form 10-K.

We do not intend

to update any forward-looking statements even if new information becomes available or other events occur in the future, except as required

by the federal securities laws.

We do not intend to update any forward-looking statements even if new information becomes available or other events occur

in the future, except as required by the federal securities laws.

Organization and Trust Overview

The ARK 21Shares Bitcoin ETF

(the “Trust”) is a Delaware statutory trust, formed on June 22, 2021, pursuant to the Delaware Statutory Trust Act (“DSTA”).

The Trust operates pursuant to an Amended and Restated Trust Agreement (the “Trust Agreement”).

The Trust is a Delaware statutory

trust, formed on June 22, 2021, pursuant to the DSTA.

The Trust operates pursuant to the Trust Agreement.

The Trust is not registered

as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”) and is not a

commodity pool for purposes of the Commodity Exchange Act (“CEA”).

The Trust is managed and controlled by 21Shares US LLC

(the “Sponsor”).

The Sponsor is a limited liability company formed in the state of Delaware on June 16, 2021, and is a wholly

owned subsidiary of Jura Pentium Inc., whose ultimate parent company is Amun Holdings Limited.

The Sponsor is not subject to regulation

by the Commodity Futures Trading Commission (“CFTC”) as a commodity pool operator with respect to the Trust, or a commodity

trading advisor with respect to the Trust.

The Trust is an exchange-traded fund (“ETF”) that issues units of beneficial interest

(the “Shares”) representing fractional undivided beneficial interests in its net assets that trade on the Cboe BZX Exchange,

(the “Exchange”).

as an investment company under the 1940 Act and is not a commodity pool for purposes of the CEA.

The Trust is managed and controlled by

The Sponsor is a limited liability company formed in the state of Delaware on June 16, 2021, and is a wholly owned subsidiary

of Jura Pentium Inc., whose ultimate parent company is 21co Holdings Limited (formerly known as Amun Holdings Limited).

The Sponsor is

not subject to regulation by the CFTC as a commodity pool operator with respect to the Trust, or a commodity trading advisor with respect

to the Trust.

The Trust is an exchange-traded fund that issues units of beneficial interest representing fractional undivided beneficial

interests in its net assets that trade on the Exchange.

The Shares are listed for trading on the Exchange under a ticker symbol “ARKB”.

On December 12, 2023, the

Sponsor, in its capacity as Seed Capital Investor, subject to conditions, purchased Seed Creation Baskets comprising 2 Shares at a per-Share

price of $50.00, as described in “Seed Capital Investor.” Total proceeds to the Trust from the sale of these Seed Creation

Baskets were $100.

Sponsor, in its capacity as Seed Capital Investor, subject to conditions, purchased the initial Seed Creation Baskets comprising 2 Shares

at a per-Share price of $50.00, as described in “Seed Capital Investor.” Total proceeds to the Trust from the sale of these

Seed Creation Baskets were $100.

Delivery of the Seed Creation Baskets was made on December 12, 2023.

These Seed Creation Baskets were redeemed for

cash on or about January 5, 2024.

These Seed Creation Baskets were

redeemed for cash on or about January 5, 2024.

On January 9, 2024 (the “Seed

Capital Purchase Date”), the Seed Capital Investor purchased the initial Seed Creation Baskets comprising 10,000 Shares (the “Initial

Capital Purchase Date”), the Seed Capital Investor purchased Seed Creation Baskets comprising 10,000 Shares (the “Initial

Seed Creation Baskets”) at a per-share price of $46.88.

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objective is to seek to track the performance of bitcoin, as measured by the performance of the CME CF Bitcoin Reference Rate—New

York Variant (the “Index”), adjusted for the Trust’s expenses and other liabilities.

York Variant, adjusted for the Trust’s expenses and other liabilities.

CF Benchmarks Ltd.

is the administrator

for the Index (the “Index Provider”).

is the administrator for the Index (the

“Index Provider”).

The Index is designed to reflect the performance of bitcoin in U.S.

to achieve its investment objective, the Trust holds bitcoin at its Custodian and values its Shares daily based on the Index.

is a passive investment vehicle and is not a leveraged product.

In seeking to achieve its

investment objective, the Trust holds bitcoin at its Custodians and values its Shares daily based on the Index.

The Trust is a passive

investment vehicle and is not a leveraged product.

The Sponsor does not actively manage the bitcoin held by the Trust.

The Trust issues Shares only

in Creation Units of 5,000 or multiples thereof.

Creation Units are issued and redeemed in exchange for cash.

Individual Shares will not

be redeemed by the Trust but are listed and traded on the Exchange under the ticker symbol “ARKB.” The Trust issues Shares

in Creation Units on a continuous basis at the applicable NAV per Share on the creation order date.

in Creation Baskets of 5,000 or multiples thereof.

Creation Baskets are issued and redeemed in exchange for cash.

Individual Shares will

not be redeemed by the Trust but are listed and traded on the Exchange under the ticker symbol “ARKB”.

The Trust issues Shares

in Creation Baskets on a continuous basis at the applicable NAV per Share on the creation order date.

The Trust pays the unitary

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performed under the Trust Agreement.

The Sponsor is waiving the entire Sponsor Fee for (i) a six-month period which commenced on January

11, 2024 (the day the Trust’s Shares were initially listed on the Exchange), or (ii) the first $1 billion of Trust assets, whichever

The Sponsor agreed to waive the entire Sponsor Fee for (i) a nine-month period which commenced on

January 11, 2024 (the day the Trust’s Shares were initially listed on the Exchange), or (ii) the first $1 billion of Trust assets,

whichever came first.

The Trust assets exceeded $1 billion in April 2024, at which time the waiver period ended.

The aggregate Sponsor

Fee paid to the Sponsor for the fiscal year ended December 31, 2024 was $[*].

The Trust is an “emerging

growth company” as that term is used in the Securities Act of 1933, as amended (the “Securities Act”), and, as such,

the Trust may elect to comply with certain reduced public company reporting requirements.

growth company” as that term is used in the Securities Act, and, as such, the Trust may elect to comply with certain reduced public

company reporting requirements.

The NAV of the Trust is used

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number of outstanding Shares.

For purposes of making these calculations, a business day means any day other than a day when the Exchange

is closed for regular trading.

In addition to calculating

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The financial statements and

accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America.

The preparation

of these financial statements relies on estimates and assumptions that impact the Trust’s financial position and results of operations.

These estimates and assumptions affect the Trust’s application of accounting policies.

Below is a summary of accounting policies

on cash and investment valuation.

There were no material estimates involving a significant level of estimation uncertainty that had or

are reasonably likely to have had a material impact on the Trust’s financial condition used in the preparation of the financial

In addition, please refer to Note 2 to the Financial Statements included in this report for further discussion of the Trust’s

accounting policies.

accompanying notes are prepared in accordance with GAAP.

The preparation of these financial statements relies on estimates and assumptions

that impact the Trust’s financial position and results of operations.

These estimates and assumptions affect the Trust’s application

of accounting policies.

Below is a summary of accounting policies on cash and investment valuation.

There were no material estimates involving

a significant level of estimation uncertainty that had or are reasonably likely to have had a material impact on the Trust’s financial

condition used in the preparation of the financial statements.

In addition, please refer to Note 2 to the Financial Statements included

in this report for further discussion of the Trust’s accounting policies.

Cash includes non-interest

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that bitcoin is sold in its principal market to market participants (or in the absence of a principal market, the most advantageous market).

Results of Operations

The discussion below describes

our financial position as of December 31, 2023.

Since the Trust commenced operations on January 11, 2024, there is no comparative period

for this discussion.

As of December 31, 2023, the

Trust had not yet commenced operations.

The Trust did not engage in any investment activity during the year ended December 31, 2023.

its capacity as Seed Capital Investor, the Sponsor purchased $100 in Shares on December 12, 2023, and on December 12, 2023, took delivery

of 2 Shares at a per-Share price of $50.00.

The Trust did not buy, sell, or hold any bitcoin during the period December 12, 2023 (initial

seed creation date) through December 31, 2023.

Trust utilizes an exchange

traded price from the Trust’s principal market for bitcoin as of 4:00 p.m.

ET on the Trust’s financial statement measurement

Results of Operations (Amounts in thousands,

except Price of bitcoin and Shares outstanding)

For the Year Ended December

The Trust’s net

asset value increased to $4,352,288 on December 31, 2024, primarily from an increase in price of bitcoin and a net increase in the number

of shares outstanding of 46,690,000 from January 1, 2024 to December 31, 2024.

Net realized and change in

unrealized gain on investment in bitcoin for the year ended December 31, 2024, was $1,897,481 which includes a net change in unrealized

appreciation on investment in bitcoin of $1,274,778.

Net realized and unrealized gain on investment in bitcoin for the year was driven

by bitcoin price appreciation from $46,666.89 per bitcoin on January 11, 2024 to $93,390.22 per bitcoin on December 31, 2024.

in net assets resulting from operations was $1,891,649 for the year ended December 31, 2024, which consisted of a net increase in the

number of shares outstanding accompanied by the aforementioned net realized and change in unrealized gain on investment in bitcoin.

* No prior year comparative

period has been provided as this is the first year of the Trust’s operations.

Liquidity and Capital Resources

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of the Trust.

The Sponsor is waiving the entire Sponsor Fee for (i) a six-month period which commenced on January 11, 2024 (the day the

Trust’s Shares were initially listed on the Exchange), or (ii) the first $1 billion of Trust assets, whichever comes first.

for the Sponsor’s fee, the Sponsor has agreed to assume the ordinary fees and expenses incurred by the Trust, including but not

limited to the following:

fees charged by the Sub-Adviser, Administrator, the Custodians, Transfer Agent and the Trustee, the Marketing

Fee, Cboe BZX Exchange listing fees, typical maintenance and transaction fees of the DTC, SEC registration fees, printing and mailing

costs, website fees, tax reporting fees, audit fees, license fees and expenses, up to $100,000 per annum in ordinary legal fees and expenses.

The Sponsor bears expenses in connection with the Trust’s organization and initial offering costs.

The Sponsor agreed to waive the entire Sponsor Fee for (i) a nine-month period which commenced on January 11, 2024 (the

day the Trust’s Shares were initially listed on the Exchange), or (ii) the first $1 billion of Trust assets, whichever came first.

The Trust assets exceeded $1 billion in April 2024, at which time the waiver period ended.

The aggregate Sponsor Fee paid to the Sponsor

for the fiscal year ended December 31, 2024 was $[*].

In exchange for the Sponsor’s fee, the Sponsor has agreed to assume the ordinary

fees and expenses incurred by the Trust, including but not limited to the following:

fees charged by the Sub-Adviser, Administrator, the

Custodians, Transfer Agent and the Trustee, the Marketing Fee, the Exchange’s listing fees, typical maintenance and transaction

fees of the DTC, SEC registration fees, printing and mailing costs, website fees, tax reporting fees, audit fees, license fees and expenses,

up to $100,000 per annum in ordinary legal fees and expenses.

The Sponsor bears expenses in connection with the Trust’s organization

and initial offering costs.

The Sponsor is not required

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Quantitative and Qualitative Disclosures

about Market Risk

about Market Risks

We are a smaller reporting

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis