What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-13 compared with 2025-08-13 · 217 added, 252 removed, 6 unchanged (99% 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.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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.

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.

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 costs and effects of any litigation or regulatory investigations;

· our ability to maintain a positive reputation;

· 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.

Overview of the Trust

CoinShares Bitcoin ETF, formerly CoinShares

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

On July 25, 2025, the

Trust filed a Certificate of Amendment to its Certificate of Trust to change its name from CoinShares Valkyrie Bitcoin Fund to

CoinShares Bitcoin ETF.

The Trust issues common units of beneficial interest (“Shares”), which represent units of fractional

undivided beneficial interest in and ownership of the Trust.

The Shares of the Trust are listed on The Nasdaq Stock Market, LLC

(“Nasdaq” or the “Exchange”).

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”).

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,

special considerations discussed in this Quarterly Report;

economic, market and business conditions;

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;

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

or regulatory bodies;

costs and effects of any litigation or regulatory investigations;

ability to maintain a positive reputation;

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.

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.

Bitcoin ETF, formerly CoinShares Valkyrie Bitcoin Fund (the “Trust”), is a Delaware statutory trust formed on January

On July 25, 2025, the Trust filed a Certificate of Amendment to its Certificate of Trust to change its name from CoinShares

Valkyrie Bitcoin Fund to CoinShares Bitcoin ETF.

The Trust issues common units of beneficial interest (“Shares”),

which represent units of fractional undivided beneficial interest in and ownership of the Trust.

The Shares of the Trust are listed

on The Nasdaq Stock Market, LLC (“Nasdaq” or the “Exchange”).

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

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).

Only 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.

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 (coinshares.com/us/etf/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 .

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 –

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

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

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).

Only 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.

Baskets may be redeemed by the Trust in exchange

for the cash proceeds from selling the amount of bitcoin corresponding to their redemption value.

of the Trust trade on Nasdaq under the ticker symbol BRRR.

Sponsor maintains a website (coinshares.com/us/etf/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

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

Objectives and Principal Investment Strategies

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.

Investment Strategies

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.

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

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 “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”).

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.

Use of the CME CF Bitcoin Reference Rate – New York Variant

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 p.m.

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 “Index”) and determines

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

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

The Three Months Ended June 30, 2025 and 2024

The Trust’s net asset value increased

from $480,386,204 at March 31, 2025, to $625,787,170 at June 30, 2025.

The change in the Trust’s net assets resulted from

an increase in outstanding Shares, which rose from 20,450,000 at March 31, 2025, to 20,705,000 at June 30, 2025, as a result of

1,645,000 Shares being created and 1,390,000 Shares being redeemed during the quarter, and an increase in the value of bitcoin,

which appreciated 28.7% from $83,057 at March 31, 2025, to $106,930 at June 30, 2025.

The net asset value per Share increased 28.7%

from $23.49 at March 31, 2025, to $30.22 at June 30, 2025.

The net asset value per Share of $31.54

at May 22, 2025 was the highest during the quarter, compared with a low of $21.70 at April 8, 2025.

The increase in net assets from operations

for the three months ended June 30, 2025 was $141,141,457, resulting from an increase in unrealized gain on the Trust’s bitcoin

investment of $130,366,125, realized gains on the disposition of bitcoin of $11,139,128, and Sponsor Fees incurred of $363,796.

The Trust’s net asset value decreased

from $543,197,988 at March 31, 2024, to $518,313,439 at June 30, 2024.

The change in the Trust’s net assets resulted from

an increase in outstanding Shares, which grew from 27,075,000 at March 31, 2024, to 29,545,000 at June 30, 2024, as a result of

4,960,000 Shares (992 Baskets) being created and 2,490,000 Shares (498 Baskets) being redeemed during the quarter, and a decrease

in the value of bitcoin, which depreciated 12.5% from $70,764 at March 31, 2024, to $61,910 at June 30, 2024.

The net asset

value per Share decreased 12.6% from $20.06 at March 31, 2024 to $17.54 at June 30, 2024.

The net asset value per Share of $20.36

at April 8, 2024 was the highest during the quarter, compared with a low of $16.42 at May 1, 2024.

The decrease in net assets from operations

for the quarter ended June 30, 2024 was $69,741,963, resulting from a decrease in unrealized gain on the Trust’s bitcoin

investment of $82,428,503, realized gains on the disposition of bitcoin of $12,977,021, and Sponsor Fees incurred of $290,481.

The Six Months Ended June 30, 2025 and 2024

The Trust’s net asset value decreased

from $826,115,990 at December 31, 2024, to $625,787,170 at June 30, 2025.

The change in the Trust’s net assets resulted from

a decrease in outstanding Shares, which fell from 31,260,000 at December 31, 2024, to 20,705,000 at June 30, 2025, and an increase

in the value of bitcoin, which appreciated 14.5% from $93,381 at December 31, 2024, to $106,930 at June 30, 2025.

The net asset

value per Share increased 14.3% from $26.43 at December 31, 2024, to $30.22 at June 30, 2025.

The increase in net assets from operations

for the six months ended June 30, 2025 was $64,528,638, resulting from a decrease in unrealized gain on the Trust’s bitcoin

investment of $51,464,017, realized gains on the disposition of bitcoin of $116,817,004, and Sponsor Fees incurred of $824,349.

The Trust’s net asset value decreased

from $0 at December 31, 2023, to $518,313,439 at June 30, 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 29,545,000 at June 30, 2024, and an increase in the value of

bitcoin, which appreciated 35.0% from $ 45,853 at January 10, 2024 (the

initial share purchase date) , to $61,910 at June 30, 2024.

The net asset value per Share increased 34.9% from $13.00 at

January 10, 2024 (the initial share purchase date), to $17.54 at June

The increase in net assets from operations

for the six months ended June 30, 2024 was $20,931,876, resulting from an increase in unrealized gain on the Trust’s bitcoin

investment of $8,245,336, realized gains on the disposition of bitcoin of $12,977,021, and Sponsor Fees incurred of $290,481.

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

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 “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.

of Operations

Three Months Ended September 30, 2025 and 2024

Trust’s net asset value increased from $625,905,470 at June 30, 2025, to $682,460,646 at September 30, 2025.

in the Trust’s net assets resulted from an increase in outstanding Shares, which rose from 20,705,000 at June, 2025, to

21,120,000 at September 30, 2025, as a result of 1,160,000 Shares being created and 745,000 Shares being redeemed during the quarter,

and an increase in the value of bitcoin, which appreciated 7.0% from $106,930 at June 30, 2025, to $114,394 at September 30, 2025.

The net asset value per Share increased 6.9% from $30.22 at June 30, 2025, to $32.31 at September 30, 2025.

net asset value per Share of $34.56 at August 13, 2025 was the highest during the quarter, compared with a low of $29.85 at July

Trust’s net asset value increased from $518,313,439 at June 30, 2024, to $569,655,239 at September 30, 2024.

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 being created and 555,000 Shares 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

net asset value per Share increased 2.4% from $17.54 at June 30, 2024 to $17.96 at September 30, 2024.

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

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.

Nine Months Ended September 30, 2025 and 2024

Trust’s net asset value decreased from $826,115,990 at December 31, 2024, to $682,460,646 at September 30, 2025.

in the Trust’s net assets resulted from a decrease in outstanding Shares, which fell from 31,260,000 at December 31, 2024,

to 21,120,000 at September 30, 2025, and an increase in the value of bitcoin, which appreciated 22.5% from $93,381 at December

31, 2024, to $114,394 at September 30, 2025.

The net asset value per Share increased 22.2% from $26.43 at December 31, 2024, to

$32.31 at September 30, 2025.

increase in net assets from operations for the nine months ended September 30, 2025 was $107,856,285, resulting from a decrease

in unrealized gain on the Trust’s bitcoin investment of $16,289,482, realized gains on the disposition of bitcoin of $125,395,088,

and Sponsor Fees incurred of $1,249,321.

Trust’s net asset value increased from $0 at December 31, 2023, to $ 569,655,239 at September

The change in the Trust’s net assets resulted from an increase in outstanding Shares, which grew from 0 at December

31, 2023, to 31,720,000 at September 30, 2024, and an increase in the value of bitcoin, which

appreciated 38.3% from $ 45,853 at January 10, 2024 (the initial share purchase

date) , to $63,418 at September 30, 2024.

The net asset value per Share increased 38.2% from $13.00 at January

10, 2024 (the initial share purchase date), to $17.96 at September 30, 2024.

increase in net assets from operations for the nine months ended September 30, 2024 was $33,564,168, resulting from an increase

in unrealized gain on the Trust’s bitcoin investment of $19,227,215, realized gains on the disposition of bitcoin of $14,971,689,

and net Sponsor Fees incurred of $634,736.

Resources and Liquidity

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.

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.

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.

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

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

Critical Accounting Policies

Principal Market and Fair Value Determination

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

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.

Balance Sheet Arrangements and Contractual Obligations

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.

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

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 date.

Accounting Policies

Market and Fair Value Determination

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 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.

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

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

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.

The Sponsor then identifies the principal market for bitcoin during that period and uses the price for

bitcoin from that venue as of end of day Eastern time 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 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

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 Companies.

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

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.

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 quoted price in active markets for identical assets or liabilities.

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.

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 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

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.

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.

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.

The Sponsor then identifies the principal market for bitcoin during that period and

uses the price for bitcoin from that venue as of 4:00 p.m.

ET as the principal market price.

Company Considerations

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 1940.

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.

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