# Bitwise Bitcoin ETF: Form 10-Q for the period ended Jun 30, 2024

- Company: [Bitwise Bitcoin ETF](/companies/bitb.md) (CIK 1763415)
- Form: 10-Q
- Filed: 2024-08-08
- Accepted by EDGAR: Aug 8, 2024, 12:50 ET
- Period: 2024-06-30
- Accession: 0000950170-24-093606
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1763415/000095017024093606/bitb-20240630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1763415/000095017024093606/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | −$399.2m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-10 to 2024-06-30 | $225.6m | us-gaap:NetIncomeLoss |
| Operating cash flow | 6 months, 2024-01-10 to 2024-06-30 | −$2.02bn | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Share repurchases | 6 months, 2024-01-10 to 2024-06-30 | $210.8m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-06-30 | $0 | us-gaap:Cash |
| Total assets | at 2024-06-30 | $2.25bn | us-gaap:Assets |
| Total liabilities | at 2024-06-30 | $241.0k | us-gaap:Liabilities |

## Management's discussion and analysis

As filed, 12,546 characters.

*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 unaudited 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. GAAP”). The following discussion may contain forward-looking statements based on assumptions we believe to be reasonable. Our actual results could differ materially from those discussed in these forward-looking statements.*

### Trust Overview

Bitwise Bitcoin ETF (the “Trust”) is a Delaware statutory trust formed on August 29, 2019.The Trust issues common shares (“Shares”), which represent units of fractional undivided beneficial interest in and ownership of the Trust. The Shares are listed on the NYSE Arca Inc. (the “Exchange”) under the ticker symbol “BITB.” The Trust’s commencement of operations was January 11, 2024.

The Trust’s investment objective is to seek to provide shareholders of the Trust (“Shareholders”) with exposure to the value of bitcoin held by the Trust that is reflective of the actual bitcoin market in which investors can purchase or sell bitcoin, less the expenses of the Trust’s operations and other liabilities. In seeking to achieve its investment objective, the Trust holds bitcoin and establishes its net asset value (“NAV") by reference to the CME CF Bitcoin Reference Rate - New York Variant (“BRRNY”). The BRRNY was designed to provide a daily, 4:00 p.m. New York time reference rate of the U.S. dollar price of one bitcoin and is calculated by CF Benchmarks Ltd. (the “Benchmark Provider”) based on an aggregation of executed trade flow of several large bitcoin trading platforms (“Constituent Platforms”).

The Shares may trade at a premium over, or a discount to, the NAV per Share as a result of price volatility, trading volume and closings of the exchanges on which the Sponsor purchases bitcoins on behalf of the Trust due to fraud, failure, security breaches or otherwise, and the fact that supply and demand forces at work in the secondary trading market for Shares are related, but not identical, to the supply and demand forces influencing the market price of bitcoin. As a result of the foregoing, the price of the Shares as quoted on NYSE has varied from the value of the Trust’s NAV per Share since the Shares were approved for quotation on January 11, 2024.

The following charts show the percentage of Premium/(Discount) of the Shares as quoted on the Exchange and the Trust’s NAV and a comparison of the NAV of the Trust vs the market price as quoted on the Exchange.

From January 11, 2024 to June 30, 2024, the Shares of the Trust traded at an average premium, based on closing prices at 4:00 p.m. ET, and estimated, unaudited, NAV per Share of 0.01%. During that same period, the highest premium was 1.17% on May 20, 2024, and the lowest premium was 0.01% on January 18, 2024. During that same period, the highest discount was 1.79% on May 1, 2024, and the lowest discount was 0.002% on June 25, 2024.

The following chart shows the price of bitcoin for the period January 1, 2023 through June 30, 2024, as quoted by the Benchmark Provider, using the BRRNY.

### Results of Operations

As of June 30, 2024\* the Trust held a net closing balance of 37,528.2763 bitcoin with a total market value of $2,264,087,289 based on the BRRNY price of $60,330.17, used to determine the Trust's NAV. The total market value of the Trust's bitcoin held was $2,249,899,349 based on the price of a bitcoin (Lukka Prime Rate) in the principal market (Coinbase) of $59,952.11, used to determine the Trust's Principal Market NAV.

\* No comparative period presented as the Trust commenced operations on January 10, 2024.

#### For the Three Months Ended June 30, 2024\*^

Net realized and unrealized loss on investment in bitcoin for the three months ended June 30, 2024, was approximately $398,535 which includes a realized gain of $228 on the sale of bitcoins to pay the Sponsor Fee, net realized loss on investment in bitcoin sold for redemptions of $24,202 and net change in unrealized depreciation on investment in bitcoin of approximately $374,561. Net realized and unrealized loss on investment in bitcoin for the period was driven by bitcoin price depreciation from $70,761.62 per bitcoin as of March 31, 2024 to $60,330.17 per bitcoin as of June 30, 2024. Net decrease in net assets resulting from operations was approximately $399,185 for the three months ended June 30, 2024, which consisted of the net realized and unrealized loss on investment in bitcoin of $398,535, plus the Sponsor Fee of $650. Net assets increased to approximately $2,249,658 on June 30, 2024, a 15.51% increase in NAV for the period. The increase in net assets resulted from net capital share transactions of approximately $404,590, and was reduced by the withdrawal of $650 worth of bitcoin to pay the foregoing Sponsor Fee and the aforementioned bitcoin price depreciation.

For the Six Months ended June 30, 2024\*^

Net realized and unrealized gain on investment in bitcoin for the six months ended June 30, 2024, was approximately $226,453 which includes a realized gain of $234 on the sale of bitcoins to pay the Sponsor Fee, net realized loss on investment in bitcoin sold for redemptions of $24,202 and net change in unrealized appreciation on investment in bitcoin of approximately $250,421. Net realized and unrealized gain on investment in bitcoin for the period was driven by bitcoin price appreciation from $45,852.66 per bitcoin as of January

10, 2024 (commencement of operations) to $60,330.17 per bitcoin as of June 30, 2024. Net increase in net assets resulting from operations was approximately $225,626 for the six months ended June 30, 2024, which consisted of the net realized and unrealized gain on investment in bitcoin of $226,453, less the Sponsor Fee of $827. Net assets increased to approximately $2,249,658 on June 30, 2024, a 30.68% increase in NAV for the period. The increase in net assets resulted from the aforementioned bitcoin price appreciation, net capital share transactions of approximately $2,024,032, and was reduced by the withdrawal of $827 worth of bitcoin to pay the foregoing Sponsor Fee.

\* No comparative period presented as the Trust commenced operations on January 10, 2024.

^ Amounts displayed are in the '000s, except for per share/coin references

### Liquidity and Capital Resources

The Sponsor waived the Sponsor Fee on the first $1 billion of Trust assets through July 10, 2024, and has been accruing at an annual rate of 0.20% of the Trust’s net assets since then. As a result, the only ordinary expense of the Trust is expected to be the Sponsor Fee. In exchange for the Sponsor Fee, the Sponsor has agreed to assume and pay the normal operating expenses of the Trust, which include the Trustee’s monthly fee and out-of-pocket expenses, the fees of the Trust’s regular service providers (Cash Custodian, Bitcoin Custodian, Prime Execution Agent, Marketing Agent, Transfer Agent and Administrator), Exchange listing fees, tax reporting fees, SEC registration fees, printing and mailing costs, audit fees and up to $500,000 per annum in ordinary legal fees and expenses. The Sponsor may determine in its sole discretion to assume legal fees and expenses of the Trust in excess of the $500,000 per annum. The Sponsor also agreed to pay the costs of the Trust’s organization.

The Trust may incur certain extraordinary, non-recurring expenses that are not assumed by the Sponsor, including but not limited to, taxes and governmental charges, any applicable brokerage commissions, financing fees, Bitcoin network fees and similar transaction fees, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust or the Shareholders (including, for example, in connection with any fork of the Bitcoin blockchain, any Incidental Rights and any IR Asset), any indemnification of the Cash Custodian, Bitcoin Custodian, Prime Execution Agent, Transfer Agent, Administrator or other agents, service providers or counterparties of the Trust, and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters.

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 pay for expenses not assumed by the Sponsor that are denominated in U.S. dollars, the Sponsor, on behalf of the Trust, may sell the Trust’s bitcoin as necessary to pay such expenses. The cash proceeds of the sale will be sent to the Sponsor, which will use such proceeds to pay the expenses. Any remaining cash will be distributed back to the Cash Custodian. 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.

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

As of December 31, 2023, 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 which are in the best interests of 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 position.

Sponsor Fee payments made to the Sponsor are calculated as a fixed percentage of the Trust’s NAV. As such, the Sponsor cannot anticipate the payment amounts that will be required under these arrangements for future periods as NAVs are not known until a future date.

No material changes have occurred during the six months ended June 30, 2024.

### Critical Accounting Policies

#### Principal Market and Fair Value Determination

The Trust’s periodic financial statements are prepared in accordance with the Financial Accounting Standards Board 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 determines in its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements in accordance with U.S. GAAP. The Trust intends to engage a third-party vendor to obtain a price from a principal market for bitcoin, which will be either the market the Trust normally transacts in for bitcoin or, if the Trust does not normally transact in any market or such market suffers an operational interruption and is unavailable, 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 U.S. 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.

#### Investment Company Considerations

The Trust is an investment company for U.S. 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. U.S. 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.

## Market risk

As filed, 183 characters.

As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, the Trust is not required to provide the information required by this item.

## Controls and procedures

As filed, 1,689 characters.

### Disclosure Controls and Procedures

The Trust maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to the Principal Executive Officer and Principal Financial Officer of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of the Principal Executive Officer and the Principal Financial Officer of the Sponsor, the Sponsor conducted an evaluation of the Trusts disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e). Based on this evaluation, the Principal Executive Officer and the Principal Financial Officer of the Sponsor concluded that, as of June 30, 2024, the Trust’s disclosure controls and procedures were effective.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.

### Changes in Internal Control over Financial Reporting

There were no changes in the Trust’s internal control over financial reporting that occurred during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Trust’s internal control over financial reporting.

Filed Aug 8, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-093606. Last ingested by Listed: Oct 24, 2026, 15:15 ET. No prices; not investment advice.