CoinShares Valkyrie Bitcoin Fund, an exchange-traded product organized as a Delaware statutory trust, has released its 2024 Form 10-K report. The Trust aims to reflect the performance of bitcoin as represented by the CME CF Bitcoin Reference Rate – New York Variant, less liabilities and expenses. The report highlights significant financial gains, strategic initiatives focused on bitcoin investment, and the challenges and risks associated with the volatile cryptocurrency market.

Financial Highlights

Net Income: The Trust reported a net income of $306.96 million, driven by an increase in unrealized gain on the Trust’s bitcoin investment of $262.85 million and realized gains on the disposition of bitcoin amounting to $45.22 million.

Net Income Per Share: The net income per share was $11.59, calculated by dividing the net income by the weighted average number of shares outstanding.

Business Highlights

Trust Overview: CoinShares Valkyrie Bitcoin Fund is designed to reflect the performance of bitcoin, less liabilities and expenses. The Trust issues shares representing units of fractional undivided beneficial interest and operates with CoinShares Co. as the sponsor, CSC Delaware Trust Company as the trustee, and U.S. Bancorp Fund Services as the transfer agent and administrator.

Bitcoin Custody and Trading: The Trust holds bitcoin in custody with Coinbase Custody Trust Company, BitGo Trust Company, and Komainu. It engages in bitcoin transactions through approved Bitcoin Trading Counterparties, including BitGo Prime LLC and Coinbase Inc.

Investment Strategy: The Trust’s strategy involves holding bitcoin and valuing its shares daily based on the CME CF Bitcoin Reference Rate – New York Variant. The Sponsor has the discretion to substitute an alternative index or methodology for valuing bitcoin.

Creation and Redemption of Shares: Shares are created and redeemed in blocks of 5,000, known as Baskets, through authorized participants. These transactions are settled in cash, and the Trust conducts bitcoin transactions to facilitate these processes.

Management Discussion and Analysis: The Trust’s net asset value increased significantly in 2024 due to an increase in outstanding shares and the appreciation of bitcoin value. The Trust’s operations are primarily focused on maintaining bitcoin holdings and managing creation and redemption activities.

Future Outlook: The Trust anticipates continued operations with a focus on reflecting bitcoin’s performance and managing expenses through the Sponsor’s fee structure. The Trust remains vigilant about regulatory changes that could impact its operations.

Strategic Initiatives

Strategic Initiatives: The Trust’s strategic initiatives are centered around providing investors with a cost-effective and convenient way to invest in bitcoin. This is achieved by holding bitcoin and valuing its shares daily based on the CME CF Bitcoin Reference Rate. The Trust’s investment objective is to reflect the performance of bitcoin, less liabilities and expenses. The Trust also focuses on minimizing holdings of assets other than bitcoin to maintain its strategic focus on digital assets.

Capital Management: The Trust does not hold a cash balance except for the creation and redemption of Baskets or to pay expenses not assumed by the Sponsor. The Sponsor Fee, which is the only ordinary expense, accrues at an annual rate of 0.25% of the Trust’s Bitcoin Holdings. The Trust’s capital management activities include the creation and redemption of shares, with 36,635,000 shares created and 5,373,000 shares redeemed during the year ended December 31, 2024. The Trust’s net asset value increased significantly due to the appreciation of bitcoin and the increase in outstanding shares.

Future Outlook: The Trust does not anticipate any material changes to its liquidity needs and expects to continue its current strategy of holding bitcoin and valuing shares based on the CME CF Bitcoin Reference Rate. The Trust will continue to focus on its investment objective and maintain its strategic initiatives related to digital asset investment. The Sponsor will also continue to assume most of the Trust’s expenses, ensuring that the Trust’s capital management remains efficient.

Challenges and Risks

Challenges and Risks: The Trust’s operations are heavily reliant on the performance and valuation of bitcoin, which is subject to significant volatility and market fluctuations. The Trust’s investment strategy is to reflect the performance of bitcoin as represented by the CME CF Bitcoin Reference Rate – New York Variant, which may be impacted by changes in the bitcoin market and trading platforms.

As a smaller reporting company, the Trust is not required to provide detailed risk factors. However, the Trust’s reliance on bitcoin exposes it to market risks, including price volatility, regulatory changes, and potential security breaches in the bitcoin network. The decentralized nature of bitcoin and its lack of central authority make it susceptible to various forms of attack, such as a 51% attack, which could significantly impact the Trust’s operations and the value of its Shares.

The Trust’s net asset value is directly tied to the value of bitcoin, which appreciated significantly in 2024. However, this also means that any adverse changes in the bitcoin market could negatively affect the Trust’s financial condition. The Trust does not hold significant cash reserves, relying instead on bitcoin sales to cover expenses, which could be challenging in a declining market. The Trust’s financial statements are prepared in accordance with US GAAP, and any discrepancies between the Index methodology and GAAP could affect reported values.

The Trust is exposed to market risks associated with bitcoin price fluctuations, which can impact the net asset value of the Shares. The Trust’s strategy to mitigate these risks includes using the CME CF Bitcoin Reference Rate – New York Variant for valuation, but this does not eliminate the inherent volatility and market risks associated with bitcoin investments.

SEC Filing: CoinShares Valkyrie Bitcoin Fund [ BRRR ] – 10-K – Mar. 27, 2025