What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-15 compared with 2024-11-12 · 192 added, 179 removed, 38 unchanged (91% of the section changed)

Management’s Discussion and Analysis

of Financial Condition and Results of Operations.

The following discussion and

analysis of our financial condition and results of operations should be read together with, and is qualified in its entirety by reference

to, our financial statements and related notes included elsewhere in this Quarterly Report, which have been prepared in accordance with

generally accepted accounting principles in the United States (“U.S.

This Quarterly Report contains

“forward-looking statements” with respect to the Trust’s financial conditions, results of operations, plans, objectives,

future performance and business.

Statements preceded by, followed by or that include words such as “may,” “might,”

“will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”

“predict,” “potential” or “continue,” the negative of these terms and other similar expressions are

intended to identify some of the forward-looking statements.

All statements (other than statements of historical fact) included in this

Quarterly Report that address activities, events or developments that will or may occur in the future, including such matters as changes

in market prices and conditions (for bitcoin and the Shares), the Trust’s operations, the Sponsor’s plans and references to

the Trust’s future success and other similar matters are forward-looking statements.

These statements are only predictions.

events or results may differ materially.

These statements are based on certain assumptions and analyses the Sponsor made based on its

perception of historical trends, current conditions and expected future developments, as well as other factors appropriate in the circumstances.

Whether or not actual results and developments will conform to the Sponsor’s expectations and predictions, however, is subject to

a number of risks and uncertainties, including:

Management’s Discussion

and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis

of our financial condition and results of operations should be read together with, and is qualified in its entirety by reference

to, our financial statements and related notes included elsewhere in this Quarterly Report, which have been prepared in accordance

with generally accepted accounting principles in the United States (“U.S.

This Quarterly Report contains “forward-looking

statements” with respect to the Trust’s financial conditions, results of operations, plans, objectives, future performance

and business.

Statements preceded by, followed by or that include words such as “may,” “might,” “will,”

“should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”

“predict,” “potential” or “continue,” the negative of these terms and other similar expressions

are intended to identify some of the forward-looking statements.

All statements (other than statements of historical fact) included

in this Quarterly Report that address activities, events or developments that will or may occur in the future, including such matters

as changes in market prices and conditions (for bitcoin and the Shares), the Trust’s operations, the Sponsor’s plans

and references to the Trust’s future success and other similar matters are forward-looking statements.

These statements are

only predictions.

Actual events or results may differ materially.

These statements are based on certain assumptions and analyses

the Sponsor made based on its perception of historical trends, current conditions and expected future developments, as well as

other factors appropriate in the circumstances.

Whether or not actual results and developments will conform to the Sponsor’s

expectations and predictions, however, is subject to a number of risks and uncertainties, including:

● the special considerations discussed in this Quarterly Report;

● general economic, market and business conditions;

· the use of technology by us and our vendors, including the Custodians, in conducting our business, including

disruptions in our computer systems and data centers and our transition to, and quality of, new technology platforms;

· changes in laws or regulations, including those concerning taxes, made by governmental authorities or

regulatory bodies;

● the use of technology by us and our vendors, including the Custodians, in conducting our business, including disruptions in

our computer systems and data centers and our transition to, and quality of, new technology platforms;

● changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies;

● the costs and effects of any litigation or regulatory investigations;

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● other world economic and political developments.

Consequently, all the forward-looking

statements made in this Quarterly Report are qualified by these cautionary statements, and there can be no assurance that the actual results

or developments the Sponsor anticipates will be realized or, even if substantially realized, that they will result in the expected consequences

to, or have the expected effects on, the Trust’s operations or the value of the Shares.

Should one or more of these risks discussed

in the Quarterly Report or other uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary

materially from those described in forward-looking statements.

Forward-looking statements are made based on the Sponsor’s beliefs,

estimates and opinions on the date the statements are made and neither the Trust nor the Sponsor is under a duty or undertakes an obligation

to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, other than as required

by applicable laws.

Moreover, neither the Trust, the Sponsor, nor any other person assumes responsibility for the accuracy and completeness

of any of these forward-looking statements.

Investors are therefore cautioned against placing undue reliance on forward-looking statements.

Consequently, all the forward-looking statements

made in this Quarterly Report are qualified by these cautionary statements, and there can be no assurance that the actual results

or developments the Sponsor anticipates will be realized or, even if substantially realized, that they will result in the expected

consequences to, or have the expected effects on, the Trust’s operations or the value of the Shares.

Should one or more of

these risks discussed in the Quarterly Report or other uncertainties materialize, or should underlying assumptions prove incorrect,

actual outcomes may vary materially from those described in forward-looking statements.

Forward-looking statements are made based

on the Sponsor’s beliefs, estimates and opinions on the date the statements are made and neither the Trust nor the Sponsor

is under a duty or undertakes an obligation to update forward-looking statements if these beliefs, estimates and opinions or other

circumstances should change, other than as required by applicable laws.

Moreover, neither the Trust, the Sponsor, nor any other

person assumes responsibility for the accuracy and completeness of any of these forward-looking statements.

Investors are therefore

cautioned against placing undue reliance on forward-looking statements.

Overview of the Trust

CoinShares Valkyrie Bitcoin Fund,

formerly Valkyrie Bitcoin Fund (the “Trust”), is a Delaware statutory trust formed on January 20, 2021.

CoinShares Valkyrie Bitcoin Fund, formerly

Valkyrie Bitcoin Fund (the “Trust”), is a Delaware statutory trust formed on January 20, 2021.

The Trust issues common

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The Shares of the Trust are listed on The Nasdaq Stock Market, LLC (“Nasdaq” or the “Exchange”).

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.

As of September 30, 2024, CoinShares Co.

the sponsor of the Trust, and Delaware Trust Company is the trustee of the Trust (the “Trustee”).

The operations of the Trust

are governed by the Amended and Restated Trust Agreement of the Trust, among the Trustee, the Sponsor, and the shareholders from time

to time thereunder (the “Shareholders”), as may be amended from time to time (the “Trust Agreement”).

is an exchange-traded product.

When the Trust sells or redeems its Shares, it will do so in blocks of 5,000 Shares (a “Basket”)

based on the quantity of bitcoin attributable to each Share of the Trust (net of accrued but unpaid expenses and liabilities).

registered broker-dealers that have previously entered into an agreement with the Sponsor governing the terms and conditions of such issuance

(such broker-dealers, the “Authorized Participants”), can place orders to receive Baskets in exchange for cash.

be redeemed by the Trust in exchange for the cash proceeds from selling the amount of bitcoin corresponding to their redemption value.

Shares of the Trust trade on Nasdaq

under the ticker symbol BRRR.

The Sponsor maintains a website

(www.valkyrieinvest.com/BRRR), through which the Trust’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports

on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934,

as amended (the “1934 Act”), can be accessed free of charge, as soon as reasonably practicable after such material is electronically

CoinShares Co., a Delaware corporation, is the sponsor of the Trust (the “Sponsor”), and CSC Delaware Trust Company

is the trustee of the Trust (the “Trustee”).

The operations of the Trust are governed by the Amended and Restated Trust

Agreement of the Trust, among the Trustee, the Sponsor, and the shareholders from time to time thereunder (the “Shareholders”),

as may be amended from time to time (the “Trust Agreement”).

The Trust is an exchange-traded product.

When the Trust

sells or redeems its Shares, it will do so in blocks of 5,000 Shares (a “Basket”) based on the quantity of bitcoin

attributable to each Share of the Trust (net of accrued but unpaid expenses and liabilities).

registered broker-dealers that have previously entered into an agreement with the Sponsor governing the terms and conditions of

such issuance (such broker-dealers, the “Authorized Participants”), can place orders to receive Baskets in exchange

Baskets may be redeemed by the Trust in exchange for the cash proceeds from selling the amount of bitcoin corresponding

to their redemption value.

Shares of the Trust trade on Nasdaq under

the ticker symbol BRRR.

The Sponsor maintains a website (www.valkyrieinvest.com/BRRR),

through which the Trust’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments

to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the

“1934 Act”), can be accessed free of charge, as soon as reasonably practicable after such material is electronically

file with, or furnished to, the U.S.

Securities and Exchange Commission (the “SEC”).

Additional information regarding the

Trust may also be found on the SEC’s EDGAR database at www.sec.gov.

Additional information regarding

the Trust may also be found on the SEC’s EDGAR database at www.sec.gov .

Investment Objectives and Principal Investment Strategies

Investment Objectives

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 –

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.

Principal Investment Strategies

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

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 Index currently uses substantially

the same methodology as the CME CF Bitcoin Reference Rate (“BRR”), including utilizing the same bitcoin exchanges, which is

the underlying rate to determine settlement of CME bitcoin futures contracts, except that the Index is calculated as of 4:00 p.m.

whereas the BRR is calculated as of 4:00 p.m.

There can be no assurance that the Trust will achieve its investment objective.

The Sponsor is authorized under the Trust Agreement to substitute an alternative index, reference rate, or other methodology for valuing

bitcoin for the Index for purposes of the Trust’s investment objective and valuation policies at its sole discretion and without

Shareholder approval.

The Shares are designed to provide investors with a cost-effective and convenient way to invest in bitcoin.

the same methodology as the CME CF Bitcoin Reference Rate (“BRR”), including utilizing the same bitcoin exchanges,

which is the underlying rate to determine settlement of CME bitcoin futures contracts, except that the Index is calculated as of

ET, whereas the BRR is calculated as of 4:00 p.m.

There can be no assurance that the Trust will achieve

its investment objective.

The Sponsor is authorized under the Trust Agreement to substitute an alternative index, reference rate,

or other methodology for valuing bitcoin for the Index for purposes of the Trust’s investment objective and valuation policies

at its sole discretion and without Shareholder approval.

The Shares are designed to provide investors with a cost-effective and

convenient way to invest in bitcoin.

Valuation of Bitcoin;

Use of the CME CF Bitcoin Reference Rate –

New York Variant

On each day other than a Saturday

or a Sunday, or a day on which Nasdaq is closed for regular trading (a “Business Day”), as soon as practicable after 4:00

Use of the CME CF Bitcoin Reference

Rate – New York Variant

On each day other than a Saturday or a

Sunday, or a day on which Nasdaq is closed for regular trading (a “Business Day”), as soon as practicable after 4:00

ET, the Trust evaluates the bitcoin held by the Trust as reflected by the CME CF Bitcoin Reference Rate – New York Variant

for the Bitcoin – U.S.

Dollar trading pair (the “CF Benchmarks Index”) and determines the net asset value of the Trust

and the net asset value per Share (“NAV”).

CF Benchmarks Index is calculated

as of 4:00 p.m.

The CF Benchmarks Index is designed based on the IOSCO Principles for Financial Benchmarks and is a Registered Benchmark

under UK Benchmark Regulations (“BMR”).

The administrator of the CF Benchmarks Index is CF Benchmarks Ltd.

Administrator”) a UK incorporated company, authorized and regulated by the Financial Conduct Authority (“FCA”) of the

UK as a Benchmark Administrator, under UK BMR.

Results of Operations for the Three Months Ended September 30, 2024

The Trust’s net asset value

increased from $518,313,439 at June 30, 2024, to $569,655,239 at September 30, 2024.

Dollar trading pair (the “Index”) and determines the net asset value of the Trust and

the net asset value per Share (“NAV”).

The Index is calculated as of 4:00 p.m.

The Index is designed based on the IOSCO Principles for Financial Benchmarks and is a Registered Benchmark under UK Benchmark

Regulations (“BMR”).

The administrator of the Index is CF Benchmarks Ltd.

(the “Index Administrator”) a

UK incorporated company, authorized and regulated by the Financial Conduct Authority (“FCA”) of the UK as a Benchmark

Administrator, under UK BMR.

Results of Operations for the Three Months Ended March 31,

2025 and the period ended March 31, 2024

The Trust’s net asset value decreased

from $826,115,990 at December 31, 2024, to $480,386,204 at March 31, 2025.

The change in the Trust’s net assets resulted

from an increase in outstanding Shares, which grew from 29,545,000 at June 30, 2024, to 31,720,000 at September 30, 2024, as a result

of 2,730,000 Shares (546 Baskets) being created and 555,000 Shares (111 Baskets) being redeemed during the quarter, and an increase

in the value of bitcoin, which appreciated 2.4% from $61,910 at June 30, 2024, to $63,418 at September 30, 2024.

The net asset value per Share

increased 2.4% from $17.54 at June 30, 2024 to $17.96 at September 30, 2024.

The net asset value per Share

of $19.22 at July 22, 2024 was the highest during the quarter, compared with a low of $15.05 at August 5, 2024.

The increase in net assets from

operations for the quarter ended September 30, 2024 was $12,632,292, resulting from an increase in unrealized gain on the Trust’s

bitcoin investment of $10,981,879, realized gains on the disposition of bitcoin of $1,994,668, and Sponsor Fees incurred of $344,255.

from a decrease in outstanding Shares, which fell from 31,260,000 at December 31, 2024, to 20,450,000 at March 31, 2025, as a result

of 610,000 Shares being created and 11,420,000 Shares being redeemed during the quarter, and a decrease in the value of bitcoin,

which depreciated 11.1% from $93,381 at December 31, 2024, to $83,057 at March 31, 2025.

The net asset value per Share decreased

11.1% from $26.43 at December 31, 2024 to $23.49 at March 31, 2025.

The net asset value per Share of $30.17

at January 21, 2025 was the highest during the quarter, compared with a low of $22.21 at March 10, 2025.

The decrease in net assets from operations

for the quarter ended March 31, 2025 was $76,612,819, resulting from a decrease in unrealized gain on the Trust’s bitcoin

investment of $181,830,142, realized gains on the disposition of bitcoin of $105,677,876, and Sponsor Fees incurred of $460,553.

The Trust’s net asset value increased

from $0 at December 31, 2023 to $543,197,988 at March 31, 2024.

The change in the Trust’s net assets resulted from an increase

in outstanding Shares, which grew from 0 at December 31, 2023 to 27,075,000 at March 31, 2024 as a result of 27,080,000 Shares

being created (5,416 Baskets) and 5,000 Shares (1 Basket) being redeemed during the quarter, and an increase in the value

of bitcoin, which appreciated 54.3% from $45,823 at January 10, 2024, the date of the Trust’s initial bitcoin purchase,

to $70,764 at March 31, 2024.

The net asset value per Share increased

54.3% from $13.00 at January 10, 2024 to $20.06 at March 31, 2023.

The net asset value per Share of $20.73

at March 13, 2024 was the highest during the quarter, compared with a low of $11.12 at January 23, 2024.

The increase in net assets from operations

for the quarter ended March 31, 2021 was $90,673,839, resulting from a change in unrealized gain on the Trust’s bitcoin investment.

Cash Resources and Liquidity

The Trust does not hold a cash

balance except in connection with the creation and redemption of Baskets or to pay expenses not assumed by the Sponsor.

To the extent

the Trust does not have available cash to facilitate redemptions or pay expenses not assumed by the Sponsor, the Trust will sell bitcoin.

When selling bitcoin on behalf of the Trust, the Sponsor endeavors to minimize the Trust’s holdings of assets other than bitcoin.

As a consequence, the Sponsor expects that the Trust will have an immaterial amount of cash flow from its operations and that its cash

balance will be insignificant at the end of each reporting period.

The Trust’s only sources of cash are proceeds from the sale of

Baskets and bitcoin.

The Trust does not hold a cash balance

except in connection with the creation and redemption of Baskets or to pay expenses not assumed by the Sponsor.

To the extent the

Trust does not have available cash to facilitate redemptions or pay expenses not assumed by the Sponsor, the Trust will sell bitcoin.

When selling bitcoin on behalf of the Trust, the Sponsor endeavors to minimize the Trust’s holdings of assets other than

As a consequence, the Sponsor expects that the Trust will have an immaterial amount of cash flow from its operations and

that its cash balance will be insignificant at the end of each reporting period.

The Trust’s only sources of cash are proceeds

from the sale of Baskets and bitcoin.

The Trust will not borrow to meet liquidity needs.

In exchange for the Sponsor Fee,

the Sponsor has agreed to assume most of the expenses incurred by the Trust.

The Sponsor Fee accrues at an annual rate of 0.25% of the

Trust’s Bitcoin Holdings.

In exchange for the Sponsor Fee, the Sponsor

has agreed to assume most of the expenses incurred by the Trust.

The Sponsor Fee accrues at an annual rate of 0.25% of the Trust’s

Bitcoin Holdings.

As a result, the only ordinary expense of the Trust is the Sponsor Fee.

The Trust is not aware of any

trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs.

The Trust is not aware of any trends,

demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs.

Off Balance Sheet Arrangements and Contractual Obligations

The Trust has not used, nor does

it expect to use in the future, special purpose entities to facilitate off balance sheet financing arrangements and have no loan guarantee

arrangements or off balance sheet arrangements of any kind other than agreements entered into in the normal course of business, which

may include indemnification provisions related to certain risks service providers undertake in performing services for the Trust.

the Trust’s exposure under such indemnification provisions cannot be estimated, these general business indemnifications are not

expected to have a material impact on a Trust’s financial position.

Sponsor Fee payments made to the

Sponsor are calculated as a fixed percentage of the Trust’s Bitcoin Holdings.

The Trust has not used, nor does it expect

to use in the future, special purpose entities to facilitate off balance sheet financing arrangements and have no loan guarantee

arrangements or off balance sheet arrangements of any kind other than agreements entered into in the normal course of business,

which may include indemnification provisions related to certain risks service providers undertake in performing services for the

While the Trust’s exposure under such indemnification provisions cannot be estimated, these general business indemnifications

are not expected to have a material impact on a Trust’s financial position.

Sponsor Fee payments made to the Sponsor

are calculated as a fixed percentage of the Trust’s Bitcoin Holdings.

As such, the Sponsor cannot anticipate the payment

amounts that will be required under these arrangements for future periods as the Trust’s net assets are not known until a future

amounts that will be required under these arrangements for future periods as the Trust’s net assets are not known until a

Critical Accounting Policies

Principal Market and Fair Value Determination

periodic financial statements may not utilize the net asset value of the Trust determined by reference to the Index to the extent the

methodology used to calculate the Index is deemed not to be consistent with GAAP.

The Trust’s periodic financial statements will

be prepared in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 820,

“Fair Value Measurements and Disclosures” (“ASC Topic 820”) and utilize an exchange-traded price from the Trust’s

The Trust’s periodic

financial statements may not utilize the net asset value of the Trust determined by reference to the Index to the extent the methodology

used to calculate the Index is deemed not to be consistent with GAAP.

The Trust’s periodic financial statements will be prepared

in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 820, “Fair

Value Measurements and Disclosures” (“ASC Topic 820”) and utilize an exchange-traded price from the Trust’s

principal market for bitcoin on the Trust’s financial statement measurement date.

The Sponsor will determine at its sole discretion

the valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP.

The Trust intends to

engage a third-party vendor to obtain a price from a principal market for bitcoin, which will be determined and designated by such third-party

vendor daily based on its consideration of several exchange characteristics, including oversight, and the volume and frequency of trades.

Under GAAP, such a price is expected to be deemed a Level 1 input in accordance with the ASC Topic 820 because it is expected to be a

The Sponsor will determine at its sole

discretion the valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP.

GAAP, such a price is expected to be deemed a Level 1 input in accordance with the ASC Topic 820 because it is expected to be a

quoted price in active markets for identical assets or liabilities.

To determine which

market is the Trust’s principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating

To determine which market

is the Trust’s principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating

the Trust’s financial statements, the Trust follows ASC 820-10, which outlines the application of fair value accounting.

determines fair value to be the price that would be received for bitcoin in a current sale, which assumes an orderly transaction between

market participants on the measurement date.

ASC 820-10 requires the Trust to assume that bitcoin is sold in its principal market to market

participants or, in the absence of a principal market, the most advantageous market.

Market participants are defined as buyers and sellers

in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.

The Trust may transact

through digital asset brokers or dealers, in multiple markets, and its application of ASC 820-10 reflects this fact.

The Trust anticipates

that, while multiple venues and types of markets will be available to the digital asset brokers or dealers from whom the Sponsor acquires

or disposes of the Trust’s bitcoin, the principal market in each scenario is determined by looking at the market-based level of

volume and bitcoin trading activity.

Digital asset brokers or dealers may transact in a Brokered Market, a Dealer Market, Principal-to-Principal

Markets and Exchange Markets (each as defined in the FASB ASC Master Glossary).

Based on information reasonably available to the Trust,

Exchange Markets have the greatest volume and level of activity for the asset.

The Trust therefore looks to accessible Exchange Markets

as opposed to the Brokered Market, Dealer Market and Principal-to-Principal Markets to determine its principal market.

As a result of

the aforementioned analysis, an Exchange Market has been selected as the Trust’s principal market.

The Trust determines its principal

market (or in the absence of a principal market the most advantageous market) on a quarterly basis to determine which market is its Principal

Market for the purpose of calculating fair value for the creation of quarterly and annual financial statements.

The process that

the Sponsor has developed for identifying a principal market, as prescribed in ASC 820-10, which outlines the application of fair value

ASC 820-10 determines fair value to be the price that would be received for bitcoin in a current sale, which assumes an orderly

transaction between market participants on the measurement date.

ASC 820-10 requires the Trust to assume that bitcoin is sold in

its principal market to market participants or, in the absence of a principal market, the most advantageous market.

Market participants

are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing

and able to transact.

The Trust may transact through digital asset brokers or dealers, in multiple markets, and its application

of ASC 820-10 reflects this fact.

The Trust anticipates that, while multiple venues and types of markets will be available to the

digital asset brokers or dealers from whom the Sponsor acquires or disposes of the Trust’s bitcoin, the principal market

in each scenario is determined by looking at the market-based level of volume and bitcoin trading activity.

Digital asset brokers

or dealers may transact in a Brokered Market, a Dealer Market, Principal-to-Principal Markets and Exchange Markets (each as defined

in the FASB ASC Master Glossary).

Based on information reasonably available to the Trust, Exchange Markets have the greatest volume

and level of activity for the asset.

The Trust therefore looks to accessible Exchange Markets as opposed to the Brokered Market,

Dealer Market and Principal-to-Principal Markets to determine its principal market.

As a result of the aforementioned analysis,

an Exchange Market has been selected as the Trust’s principal market.

The Trust determines its principal market (or in the

absence of a principal market the most advantageous market) on a quarterly basis to determine which market is its Principal Market

for the purpose of calculating fair value for the creation of quarterly and annual financial statements.

The Sponsor has developed

a process for identifying a principal market, as prescribed in ASC 820-10, which outlines the application of fair value accounting.

The process begins by identifying publicly available, well-established and reputable bitcoin trading venues (Exchange Markets,

as defined in the FASB ASC Master Glossary), which are selected by the Sponsor and its affiliates at their sole discretion.

Those markets

include Binance, Bitstamp, Coinbase, itBit, Kraken, Gemini, and LMAX.

The Sponsor then, through a service provider, calculates on

each valuation period, the highest volume venue during the 60-minute period prior to 4:00 ET for bitcoin.

The Sponsor then identifies

that market as the principal market for bitcoin during that period and uses the price for bitcoin from that venue at 4:00 ET as the principal

market price.

Sponsor then identifies the principal market for bitcoin during that period and uses the price for bitcoin from that venue at

4:00 ET as the principal market price.

Investment Company Considerations

The Trust is an

investment company for GAAP purposes and follows accounting and reporting guidance in accordance with the FASB ASC Topic 946, Financial

Services – Investment Companies.

The Trust is an investment

company for GAAP purposes and follows accounting and reporting guidance in accordance with the FASB ASC Topic 946, Financial Services

– Investment Companies.

The Trust uses fair value as its method of accounting for Bitcoin in accordance with its classification

as an investment company for accounting purposes.

The Trust is not a registered investment company under the Investment Company Act of

GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying

The Trust is not a registered investment company under the Investment Company

GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements

and accompanying notes.

Actual results could differ from those estimates and these differences could be material.

Quantitative and Qualitative Disclosures

About Market Risk.

Not applicable to Smaller Reporting

Quantitative and Qualitative

Disclosures About Market Risk.

Not applicable to Smaller Reporting Companies.

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-Q

Item 2. Management’s Discussion and Analysis