10-K: CoinShares Valkyrie Bitcoin Fund Reports Strong Growth in First Year of Operations

CoinShares Valkyrie Bitcoin Fund's net asset value soared to $826.1 million in 2024, driven by increased share issuance and bitcoin's price surge.

Summary

• CoinShares Valkyrie Bitcoin Fund (BRRR) reported its financial results for the year ended December 31, 2024.
• The Trust's net asset value increased from $0 at the end of 2023 to $826,115,990 by the end of 2024.
• This growth was fueled by an increase in outstanding shares to 31,260,000 and a 103.7% appreciation in the value of bitcoin.
• The net asset value per share rose from $13.00 on January 10, 2024, to $26.43 on December 31, 2024.
• The Trust experienced net income from operations of $306,959,179, primarily due to unrealized gains on bitcoin investments ($262,849,955) and realized gains on bitcoin disposition ($45,222,195).
• The Sponsor Fee incurred was $1,112,971.
• The Trust creates and redeems shares in blocks of 5,000 (Baskets) for cash.
• The investment objective 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 Trusts liabilities and expenses.

Sentiment

Score: 8

Explanation: The document presents a positive outlook for the CoinShares Valkyrie Bitcoin Fund, highlighting significant growth in net asset value and share price. The fund's performance is driven by the appreciation of bitcoin, and the management expresses confidence in its investment strategy. However, the document also acknowledges the risks associated with bitcoin investments, such as price volatility and regulatory uncertainty.

Positives

• Significant growth in net asset value and share price during the year.
• Strong performance driven by bitcoin's price appreciation.
• Clear investment objective and strategy focused on tracking the CME CF Bitcoin Reference Rate New York Variant.
• Effective disclosure controls and procedures were maintained.
• The Trust maintained effective internal control over financial reporting as of December 31, 2024.

Negatives

• The Trust is exposed to the volatility of bitcoin prices.
• The Trust relies on third-party custodians and prime brokers for safekeeping of its assets.
• The Trust is subject to regulatory risks associated with bitcoin and digital assets.
• The Sponsor Fee reduces the overall return for investors.

Risks

• The value of the Shares is directly related to the value of bitcoin, which is highly volatile.
• Cybersecurity threats could compromise the Trust's or its service providers' systems.
• Regulatory changes could negatively impact the Trust's operations or the value of bitcoin.
• The Trust's reliance on a single index (CME CF Bitcoin Reference Rate New York Variant) for valuation purposes.
• Potential for forks in the Bitcoin Network could create uncertainty and impact the value of bitcoin.

Future Outlook

The Trust aims to provide investors with a cost-effective and convenient way to invest in bitcoin, tracking the performance of the CME CF Bitcoin Reference Rate New York Variant.

Industry Context

The announcement reflects the growing interest in and institutionalization of bitcoin as an investment asset, with exchange-traded products like BRRR providing regulated access to the cryptocurrency market.

Comparison to Industry Standards

• The CoinShares Valkyrie Bitcoin Fund is similar to other Bitcoin ETFs such as the Grayscale Bitcoin Trust (GBTC), iShares Bitcoin Trust (IBIT), and Fidelity Wise Origin Bitcoin Fund (FBTC).
• These ETFs all aim to track the price of Bitcoin, but they may differ in terms of fees, custody arrangements, and trading volume.
• The Sponsor Fee of 0.25% is competative with other Bitcoin ETFs.
• The CME CF Bitcoin Reference Rate New York Variant is a common benchmark used by Bitcoin ETFs.

Related Party Transactions

• Certain officers of the Trust are affiliated with the Sponsor.
• The Initial Sponsor agreed to waive Sponsor fees for the first three months of the Trusts operations, through April 10, 2024.
• 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.
• As of December 31, 2024, affiliates of the Sponsor owned 18,140,000 Shares of the Trust.

Stakeholder Impact

• Shareholders benefited from the increase in net asset value and share price.
• Authorized Participants facilitated the creation and redemption of shares.
• Service providers, such as custodians and administrators, played a crucial role in the Trust's operations.

Key Dates

Keywords

Bitcoin, CoinShares Valkyrie Bitcoin Fund, BRRR, Cryptocurrency, ETF, Net Asset Value, CME CF Bitcoin Reference Rate, Digital Assets, Investment, Blockchain