CoinShares Bitcoin ETF 10-K

Item 8. Financial Statements and Supplementary Data. INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm 20 Statements of Financial Condition at December 31, 2024 and 2023 21 Schedules of Investment at December 31, 2024 and 2023 22 Statements of Operations for the year ended December 31, 2024 and the period December 21, 2023 (date of seed audit) through December 31, 2023 23 Statement of Changes in Net Assets for the year ended December 31, 2024 and the period December 21, 2023 (date of seed audit) through December 31, 2023 24 Notes to Financial Statements 25 19 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Sponsor and Shareholders of CoinShares Valkyrie Bitcoin Fund Opinion on the Financial Statements We have audited the accompanying statements of financial condition of CoinShares Valkyrie Bitcoin Fund (the “Trust”), including the schedules of investment, as of December 31, 2024 and 2023, the related statements of operations and changes in net assets for the year ended December 31, 2024, and for the period from December 21, 2023 (date of seed audit) through December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Trust as of December 31, 2024 and 2023, the results of its operations and changes in its net assets, for the year ended December 31, 2024, and for the period from December 21, 2023 (date of seed audit) through December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Trust’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of cash and digital assets owned as of December 31, 2024 and 2023, by correspondence with the custodians. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. We have served as the Trust’s auditor since 2023 . COHEN & COMPANY, LTD . Towson, Maryland 925 March 27, 2025 20 CoinShares Valkyrie Bitcoin Fund Statements of Financial Condition December 31, 2024 December 31, 2023 Assets Investments in bitcoin, at fair value (cost $ 563,456,383 and $ 0 at December 31, 2024 and December 31, 2023, respectively) $ 826,306,338 $ 0 Total assets $ 826,306,338 $ 0 Liabilities Sponsor fees payable $ 190,348 $ 0 Total liabilities $ 190,348 $ 0 Net assets $ 826,115,990 $ 0 Shares issued and outstanding, no par value, Unlimited shares authorized 31,260,000 0 Net asset value per Share $ 26.43 $ 0 The accompanying notes are an integral part of the financial statements. 21 CoinShares Valkyrie Bitcoin Fund Schedules of Investment December 31, 2024 Bitcoin Cost Fair Value % of Net Assets Investment in bitcoin 8,849 $ 563,456,383 $ 826,306,338 100.0 % Total investment $ 563,456,383 $ 826,306,338 100.0 % Other assets and liabilities, net ( 190,348 ) ( 0.0 )% (a) Net Assets $ 826,115,990 100.0 % December 31, 2023 Bitcoin Cost Fair Value % of Net Assets Investment in bitcoin 0 $ 0 $ 0 0.0 % Total investment $ 0 $ 0 0.0 % Other assets and liabilities, net 0 100.0 % Net Assets $ 0 100.0 % (a) Represents less than 0.05 % of net assets. The accompanying notes are an integral part of the financial statements. 22 CoinShares Valkyrie Bitcoin Fund Statements of Operations For the Year Ended December 31, 2024 For the Period December 21, 2023 (date of seed audit) through December 31, 2023 (a) Expenses Sponsor fee (Note 4) $ 1,263,370 $ 0 Less: Sponsor fee waiver ( 150,399 ) 0 Total expenses 1,112,971 0 Net investment income (loss) ( 1,112,971 ) 0 Net realized and change in unrealized gain (loss) on investment Net realized gain (loss) from investment 45,222,195 0 Net change in unrealized gain (loss) on investment 262,849,955 0 Net realized and change in unrealized gain (loss) on investment 308,072,150 0 Net income (loss) $ 306,959,179 $ 0 Net income (loss) per share $ 11.59 $ 0.00 Weighted average number of shares outstanding 26,491,896 0 (a) The Trust had not commenced operations as of December 31, 2023. The accompanying notes are an integral part of the financial statements. 23 CoinShares Valkyrie Bitcoin Fund Statements of Changes in Net Assets For the Year Ended December 31, 2024 For the Period December 21, 2023 (date of seed audit) through December 31, 2023 (a) Net Assets – Opening Balance $ 0 $ 0 Creations 632,095,951 0 Redemptions ( 112,939,140 ) 0 Net investment income (loss) ( 1,112,971 ) 0 Net realized gain (loss) from investment 45,222,195 0 Net change in unrealized gain (loss) on investment 262,849,955 0 Net Assets – Ending Balance $ 826,115,990 $ 0 (a) The Trust had not commenced operations as of December 31, 2023. The accompanying notes are an integral part of the financial statements. 24 CoinShares Valkyrie Bitcoin Fund Notes to the Financial Statements December 31, 2024 1. Organization CoinShares Valkyrie Bitcoin Fund, formerly known as Valkyrie Bitcoin Fund (the “Trust”), was organized as a Delaware statutory trust on January 20, 2021. The fiscal year for the Trust is December 31 st . The trustee is CSC Delaware Trust Company f/k/a Delaware Trust Company (the “Trustee”). On June 14, 2024, CoinShares Co., a Delaware corporation (the “Sponsor”), succeeded Valkyrie Digital Assets LLC, a Delaware limited liability company (the “Initial Sponsor”), as the sponsor of the Trust. The Sponsor is responsible for the day-to-day administration of the Trust. The Trust is governed by the provisions of the Trust Agreement, as amended (the “Trust Agreement”), executed by the Initial Sponsor and the Trustee. The Trust is an exchange-traded fund that issues common shares of beneficial interest (“Shares”) representing units of fractional undivided beneficial interests in its net assets. There are an unlimited number of authorized shares. The investment objective of the Trust is for the Shares to reflect the performance of the value of a bitcoin as represented by the CME CF Bitcoin Reference Rate - New York Variant (the “Index”), less the Trust’s liabilities and expenses. In seeking to achieve its investment objective, the Trust holds bitcoin and values its Shares daily based on the value of bitcoin as reflected by the Index, which is an independently calculated value based on an aggregation of executed trade flow of major bitcoin spot exchanges. The offering of the Trust’s Shares is registered with the Securities and Exchange Commission (“SEC”) in accordance with the Securities Act of 1933. 2. Basis of Presentation and Summary of Significant Accounting Policies The Trust qualifies as an investment company solely for accounting purposes and not for any other purpose and follows the accounting and reporting guidance under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, Financial Services – Investment Companies, but is not registered, and is not required to be registered, as an investment company under the Investment Company Act of 1940, as amended. The Trust is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). The Trust will cease to be an “emerging growth company” upon the earliest of (i) it having $1.235 billion or more in annual revenues, (ii) at least $700 million in market value of Shares being held by non-affiliates, (iii) it issuing more than $1.0 billion of non-convertible debt over a three-year period or (iv) the last day of the fiscal year following the fifth anniversary of its initial public offering. For as long as the Trust is an emerging growth company, unlike other public companies, it will not be required to provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002; or comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the SEC determines otherwise. The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of financial statements. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). (a) Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. (b) Investment Transactions The Trust purchases bitcoin upon the net creation of Shares and sells bitcoin upon the net redemption of Shares. Transactions are recorded on a trade-date basis. Realized gains (losses) and changes in unrealized gains (losses) on open positions are determined on a specific identification basis and are recognized in the statement of operations in the period in which the sale occurred or the changes in unrealized occurred. 25 The Trust utilizes an exchange traded price from the principal market for bitcoin as of 4:00 p.m. ET on the Trust’s financial statement measurement date to value the bitcoin held by the Trust at fair value. The Sponsor determines in its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP. The Trust engages a third-party vendor to obtain a price from a principal market for bitcoin, which is determined and designated by such third-party vendor daily based on its consideration of several exchange characteristics, including the volume and frequency of trades. (c) Indemnifications The Sponsor and its affiliates (each a “Covered Person”) will be indemnified by the Trust and held harmless against any loss, judgment, liability, expense incurred or amount paid in settlement of any claim sustained by it in connection with the Covered Person’s activities for the Trust, without fraud, gross negligence, bad faith, willful misconduct or a material breach of the Trust Agreement on the part of such indemnified party arising out of or in connection with the performance of its obligations under the Trust Agreement and under each other agreement entered into by the Sponsor in furtherance of the administration of the Trust (including, without limiting the scope of the foregoing, any Participant Agreement) or any actions taken in accordance with the provisions of the Trust Agreement. The Trustee and any of the officers, directors, employees and agents of the Trustee shall be indemnified by the Trust as primary obligor and held harmless against any loss, damage, liability, claim, action, suit, cost, expense, disbursement (including the reasonable fees and expenses of counsel), tax or penalty of any kind and nature whatsoever, arising out of, imposed upon or asserted at any time against such indemnified person in connection with the performance of its obligations under the Trust Agreement, the creation, operation or termination of the Trust or the transactions contemplated therein; provided, however, that neither the Trust nor the Sponsor shall be required to indemnify any such indemnified person for any such expenses which are a result of the willful misconduct, bad faith or gross negligence of such indemnified person. The Trust’s maximum exposure under these arrangements is unknown because it involves future potential claims against the Trust, which cannot be predicted with any certainty. (d) Federal Income Taxes The Sponsor intends to take the position that the Trust will be treated as a grantor trust under the Internal Revenue Code of 1986, as amended. If so qualified, the Trust will not be subject to U.S. federal income tax to the extent it distributes substantially all of its investment income and capital gains to shareholders. Therefore, no federal income tax provision is required. Rather, a pro rata portion of the Trust’s income, gain, losses and deductions will “flow through” to each beneficial owner of Shares. 3. Investment Valuation and Calculation of Net Asset Value (“NAV”) FASB Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures, provides a single definition of fair value, a hierarchy for measuring fair value and expanded disclosures about fair value adjustments. GAAP defines fair value as the price the Trust would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Trust’s policy is to value its investments at fair value. Various inputs are used in determining the fair value of assets and liabilities. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The level of a value determined for an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are as follows: Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and Level 3 — Inputs that are unobservable for the asset or liability, including the Trust’s assumptions used in determining the fair value of investments. 26 The following table presents information about the Trust’s assets and liabilities measured at fair value: December 31, 2024 Level 1 Level 2 Level 3 Total Bitcoin $ 826,306,338 — — $ 826,306,338 Total Investments $ 826,306,338 — — $ 826,306,338 December 31, 2023 (a) Level 1 Level 2 Level 3 Total Bitcoin — — — — Total Investments — — — — (a) The Trust had not commenced operations as of December 31, 2023. There were no transfers between Level 1 and other Levels for the year ended December 31, 2024. The Trust fair values investments for financial statement purposes, categorizing those investments using the hierarchy as described above. The Trust’s NAV is calculated by subtracting all accrued fees, expenses and other liabilities from the fair value of its bitcoin and other assets. The Trust’s NAV per share is calculated by taking the Trust’s NAV divided by the total amount of Shares outstanding. 4. Trust Expenses The Trust pays to the Sponsor a Sponsor fee (the “Sponsor Fee”) in accordance with the Trust Agreement. The Sponsor Fee accrues daily by applying an annual rate of 0.25 % to the Trust’s bitcoin holdings. The Sponsor Fee is paid in bitcoins at such times as determined in the Sponsor’s sole discretion. The Trust is not responsible for paying any fees or costs associated with the transfer of bitcoin to the Sponsor or the sale of bitcoin for costs not included in the Sponsor Fee. The Sponsor is obligated to assume and pay the following fees and expenses of the Trust: the Marketing Agent fee, the Administrator fee, the Custodian fee, the Cash Custodian fee, the Transfer Agent fee, the Trustee fee, applicable license fees, including the licensing fees related to the Index License Agreement, fees and expenses related to trading of Shares on Nasdaq (including marketing, legal and audit fees and expenses), legal expenses, audit fees, regulatory fees, including any fees relating to the registration of the Shares with the SEC, printing and mailing costs and costs of maintaining the Trust’s website. U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”), an indirect subsidiary of U.S. Bancorp, serves as the Trust’s fund accountant, fund administrator and the transfer agent of the Trust, pursuant to certain fund accounting servicing, fund administration servicing and transfer agent servicing agreements. U.S. Bank N.A., a subsidiary of U.S. Bancorp and parent company of Fund Services, serves as the Trust’s cash custodian pursuant to a custody agreement. Paralel Distributors LLC (the “Marketing Agent”) serves as the Trust’s marketing agent pursuant to a marketing agent agreement. Coinbase Custody Trust Company, LLC, BitGo Trust Company, Inc., and Komainu (Jersey) Limited (the “Custodians”) are custodians of the Trust. 5. Creation and Redemption of Creation Units The Trust issues Shares on an ongoing basis, but only in one or more blocks of 5,000 Shares (a “Basket”). The Trust issues Baskets of Shares to certain authorized participants on an ongoing basis and redeems Shares in Baskets on an ongoing basis from Authorized Participants. Authorized participants are the only persons that may place orders to create and redeem Baskets. Authorized participants must be (1) registered broker-dealers or other securities market participants, such as banks or other financial institutions, that are not required to register as broker-dealers to engage in securities transactions as described below, and (2) Depository Trust Company participants. Authorized participants pay the transfer agent a fee for each order they place to create or redeem one or more Baskets. In addition, an authorized participant is required to reimburse the Trust or the Sponsor, as applicable, for any operational processing and brokerage costs, transfers fees, network fees, stamp taxes and part or all of the spread between the expected bid and offer side of the market related to the bitcoin being purchased or sold in connection with such order (the “Execution Charges”, and collectively with the Transfer Agent Fee, the “Transaction Fees”). The Transaction Fees may be reduced, increased or otherwise changed by the Sponsor. 27 Activity in the number and value of Shares created and redeemed for the year ended December 31, 2024 are as follows: Number of Shares Value of Shares Creations 36,635,000 $ 632,095,951 Redemptions ( 5,375,000 ) $ ( 112,939,140 ) Net change in Shares created and redeemed 31,260,000 $ 519,156,811 6. Investment Transactions For the year ended December 31, 2024, the cost of purchases and proceeds from sales of bitcoin by the Trust, were as follows: Purchases Sales $ 632,012,875 $ 113,778,687 7. Related Party Transactions Certain officers of the Trust are affiliated with the Sponsor and are not paid any fees by the Trust for serving in such capacities. The Initial Sponsor agreed to waive Sponsor fees for the first three months of the Trust’s operations, through April 10, 2024. For the year ended December 31, 2024, the Trust incurred $ 1,263,370 in Sponsor Fees, of which, $ 150,399 was waived by the Initial Sponsor. On January 10, 2024, Valkyrie Funds LLC, at such time an affiliate of the Initial Sponsor, purchased 40,000 Shares at a per-Share price of $ 13.00 . Delivery of these Shares was made on January 11, 2024. Total proceeds to the Trust from the sale of these Shares was $ 520,000 . On March 15, 2024, the Trust entered into an agreement with CoinShares Co., a Delaware corporation, to act as Co-Sponsor of the Trust in an advisory capacity. Effective June 14, 2024 (the “Effective Date”), the Initial Sponsor withdrew as Co-Sponsor to the Trust. Pursuant to Section 6.9 of the Trust Agreement, on the Effective Date of the Initial Sponsor’s withdrawal as Co-Sponsor to the Trust, CoinShares Co. automatically and without further action by the Co-Sponsor, Trustee or the Shareholders (as defined in the Trust Agreement) became the successor Sponsor and has all the powers, rights, duties and obligations of the Sponsor under the Trust Agreement. Prior to CoinShares Co. assuming the role of Co-Sponsor and Sponsor, CoinShares Captial Markets (Jersey) Limited, an affiliate of the Sponsor, served as a Bitcoin Trading Counterparty of the Trust. In such role, CoinShares Captial Markets (Jersey) Limited fulfilled orders from the Trust for the purchase and sale of bitcoin. No orders for the purchase or sale of bitcoin were executed with CoinShares Captial Markets (Jersey) Limited on or since March 15, 2024, the date on which CoinShares Co. became a Co-Sponsor to the Trust. During the period that CoinShares Captial Markets (Jersey) Limited was a Bitcoin Trading Counterparty of the Trust, CoinShares Captial Markets (Jersey) Limited fulfilled purchase orders with an approximate value of $ 295 million. As of December 31, 2024, affiliates of the Sponsor owned 18,140,000 Shares of the Trust. 8. Commitments and Contingencies In the normal course of business, the Trust may enter into contracts that contain a variety of general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust which have not yet occurred and cannot be predicted with any certainty. However, the Sponsor believes the risk of loss under these arrangements to be remote. 28 9. Segment Reporting The Trust adopted Financial Accounting Standards Board Update 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures (“ASU 2023-07”) during the period. The Trust’s adoption of the new standard impacted financial statement disclosures only and did not affect the Trust’s financial position or results of operations. The Sponsor acts as the Trust’s Chief Operating Decision Maker (“CODM’) and is responsible for assessing performance and allocating resources with respect to the Trust. The CODM has concluded that the Trust operates as a single operating segment since the Trust has a single investment strategy as disclosed in its prospectus, against which the CODM assesses performance. The financial information provided to and reviewed by the CODM is presented within the Trust’s financial statements. 10. Financial Highlights The Trust is presenting the following financial highlights related to investment performance and operations of a Share outstanding for the period from January 10, 2024 (the initial share purchase date) through December 31, 2024. As the Trust had not yet commenced operations before this period, no comparative period is presented. The total return at NAV is based on the change in NAV of a Share during the period and the total return at market value is based on the change in market value of a Share on the Nasdaq Stock Market, LLC during the period. An individual investor’s return and ratios may vary based on the timing of capital transactions. Financial Highlights For the period January 10, 2024 (initial share purchase date) through December 31, 2024 Period Ended December 31, 2024 Net Asset Value Net Asset Value per Share, beginning of period $ 13.00 Net investment income (loss) ( 0.04 ) Net realized and change in unrealized gain (loss) (4) 13.47 Net income (loss) 13.43 Net asset value per Share, end of period $ 26.43 Market Value per Share, beginning of period $ 13.00 Market Value per Share, end of period $ 26.45 Ratio to average net assets Net investment income (loss) (1) ( 0.22 )% Gross expenses (1) 0.25 % Net expenses (1)(3) 0.22 % Total return, at net asset value (2) 103.31 % Total return, at market value (2) 103.46 % (1) Annualized (2) Not annualized (3) Includes voluntary reimbursement of sponsor fees of 0.03 % (4) The amount reported represents a balancing figure derived from the other amounts in the financial highlights table that captures all other changes affecting net asset value per share for a Share outstanding and may not correlate to aggregate net realized and change in unrealized gain (loss) on investment presented on the Statement of Operations for the period due to the timing of Share transactions in relation to the fluctuating fair value of the Trust’s underlying investment. 11. Subsequent Events The Sponsor has evaluated all subsequent events through the issuance of the financial statements and has noted no events requiring adjustment or additional disclosure in the financial statements. 29 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. Not applicable.