UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 10-Q

 

 

 

☒

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2024.

   
or
   
☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from______________________to______________________.

 

Commission file number: 001-41908 

 

 

 

VanEck Bitcoin Trust

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   85-6811021

(State or other jurisdiction of

incorporation or organization)

  

(I.R.S. Employer

Identification No.)

 

c/o VanEck Digital Assets, LLC

Jonathan R. Simon, Esq.

Matthew A. Babinsky, Esq.

666 Third Avenue, 9th Floor

New York, New York 10017

(Address of principal executive offices) (Zip Code)

 

(212) 293-2000

(Registrant’s telephone number, including area code)

 

Securities registered or to be registered pursuant to Section 12(b) of the Act.

 

Title of each class   Trading Symbol(s)   Name of each exchange
on which registered
Shares   HODL   Cboe BZX Exchange, Inc.

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes    ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes    ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer ☐   Accelerated Filer ☐
Non-Accelerated Filer ☒   Smaller Reporting Company         ☒
Emerging Growth Company              ☒      

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.). ☐ Yes    ☒ No

 

The registrant had 8,200,000 outstanding shares as of April 30, 2024.

 

 

VanEck Bitcoin Trust

Table of Contents

  Page
   
Part I. FINANCIAL INFORMATION. 1
   
Item 1. Unaudited Financial Statements. 1
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 10
   
Item 3. Quantitative and Qualitative Disclosure About Market Risk.

11

   
Item 4. Controls and Procedures.

11

   
Part II. OTHER INFORMATION.

12

   
Item 1. Legal Proceedings.

12

   
Item 1A. Risk Factors.

12

   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

12

   
Item 3. Defaults Upon Senior Securities.

12

   
Item 4. Mine Safety Disclosures.

12

   
Item 5. Other Information.

12

   
Item 6. Exhibits.

12

   
SIGNATURES.

14

 

Part I. FINANCIAL INFORMATION.

 

Item 1. Unaudited Financial Statements.

 

VANECK BITCOIN TRUST

Statements of Assets and Liabilities

 

 

   March 31, 2024 (Unaudited)  December 31, 2023
Assets        
Investment in Bitcoin, at fair value (cost $515,657,187 and $-, respectively)  $619,067,103   $— 
Cash   —    100,000 
Receivable for shares sold   20,018,933    — 
Total assets   639,086,036    100,000 
           
Liabilities          
Payable for investments in Bitcoin purchased   4,002,826    — 
Contribution received in advance   16,016,107    — 
Accrued sponsor fees, related party   17,075    — 
Total liabilities   20,036,008    — 
           
Net Assets  $619,050,028   $100,000 
           
Shares issued and outstanding (no par value, unlimited amount authorized)   7,700,000    2,000 
           
Net Asset Value per Share (Note 2)  $80.40   $50.00 

 

The accompanying notes are an integral part of these financial statements.

1

VANECK BITCOIN TRUST

Statement of Operations(a)

For the Three Months Ended March 31, 2024 (Unaudited)

 

 

Expenses    
Sponsor fee, related party  $122,669 
Total expenses   122,669 
Sponsor fee waiver, related party   (59,098)
Net expenses   63,571 
Net investment loss   (63,571)
      
Net realized gain and change in unrealized appreciation (depreciation)     
Net realized gain on:     
Bitcoin sold for redemption of shares   5,947,470 
Bitcoin distributed for Sponsor fee, related party   10,977 
Total realized gain   5,958,447 
Net change in unrealized appreciation (depreciation) on:     
Investment in Bitcoin   103,409,916 
Total net change in unrealized appreciation (depreciation)   103,409,916 
      
Net realized gain and change in unrealized appreciation (depreciation)   109,368,363 
      
Net increase in net assets resulting from operations  $109,304,792 

 

(a)No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2023.

 

The accompanying notes are an integral part of these financial statements.

2

VANECK BITCOIN TRUST

Statement of Changes in Net Assets(a)

For the Three Months Ended March 31, 2024 (Unaudited)

 

 

Net increase in net assets from operations    
Net investment loss  $(63,571)
Net realized gain from investment in bitcoin   5,958,447 
Change in net unrealized appreciation (depreciation) from investments in bitcoin   103,409,916 
Net increase in net assets resulting from operations   109,304,792 
      
Capital share transactions     
Contributions for shares issued   530,072,065 
Withdrawals for shares redeemed   (20,426,829)
Total capital share transactions   509,645,236 
Net increase in net assets   618,950,028 
      
Net assets     
Beginning of period   100,000 
End of period  $619,050,028 
      
(a)No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2023.

 

The accompanying notes are an integral part of these financial statements.

3

VANECK BITCOIN TRUST

Schedule of Investment as
of March 31, 2024(a)
(Unaudited)

 

 

   Quantity of Bitcoin     Cost   Fair Value  % of Net Assets
Investment in Bitcoin   8,711.14    $515,657,187    $619,067,103    100.00%
Liabilities in excess of assets             (17,075)   0.00(b) 
Net Assets             $619,050,028    100.00%
                     
(a)No comparative financial statements have been provided as the Trust did not hold any bitcoin as of December 31, 2023.
(b)Rounds to less than 0.01%.

 

The accompanying notes are an integral part of these financial statements.

4

VANECK BITCOIN TRUST

Notes to Unaudited Financial Statements

March 31, 2024

 

 

 

Note 1. Organization:

 

The VanEck Bitcoin Trust (the “Trust”), a Delaware statutory trust, is an exchange-traded fund that issues common shares of beneficial interest in an ownership of the Trust (“Shares”). The Shares are traded on the Cboe BZX Exchange, Inc. (the “Exchange”). The Trust’s investment objective is to reflect the performance of bitcoin less the operating expenses of the Trust. The Trust is managed and controlled by VanEck Digital Assets, LLC (the “Sponsor”), a wholly-owned subsidiary of Van Eck Associates Corporation (“VanEck”). The Delaware Trust Company, is the “Trustee” of the Trust.

 

Note 2. Significant Accounting Policies:

 

A. Basis of Preparation and Use Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

The Trust qualifies as an investment company solely for accounting purposes and not for any other purpose and follows accounting and reporting requirements of Accounting Standards Codification (“ASC”) 946 Financial Services—Investment Companies, but is not registered, and is not required to be registered, as an investment company under the Investment Company Act of 1940, as amended.

 

B. Cash

 

Cash represents cash deposits held at a major financial institution and is subject to credit risk to the extent its balance exceeds the federally insured limits. As of March 31, 2024, the Trust’s cash balance did not exceed the federal insured limits.

 

C. Investment Valuation

 

The Trust values its investments in bitcoin and other assets and liabilities at fair value, daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.

 

The Trust identifies and determines the bitcoin principal market (or in the absence of a principal market, the most advantageous market) for GAAP financial statement purposes consistent with the application of fair value measurement framework in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 as of 4:00 p.m. EST. Under ASC 820, a principal market is the market with the greatest volume and activity level for the asset or liability. The determination of the principal market will be based on the market with the greatest volume and level of activity that can be accessed. The Sponsor on behalf of the Trust will determine in its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP.

 

Various inputs are used in determining the fair value of assets and liabilities. Inputs may be based on independent market data (observable inputs) or they may be internally developed (unobservable inputs). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The three levels of the fair value hierarchy are as follows:

 

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

 

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be

5

VANECK BITCOIN TRUST

Notes to Unaudited Financial Statements (Continued)

March 31, 2024

 

 

 

active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and

 

Level 3 – Unobservable inputs where there are little or no market activity for the asset or liability, including the Trust’s assumptions used in determining the fair value of investments.

 

The following is a summary of the fair value hierarchy as of March 31, 2024:

 

        Level 1   Level 2   Level 3   Total
  Assets                      
  Investment in Bitcoin   $   619,067,103   —   —   $   619,067,103  

 

The following represents the changes in quantity of Bitcoin and the respective fair value:

 

      Bitcoin   Fair Value
  Beginning balance as of January 1, 2024     —     $ —  
  Bitcoin contributed     9,023.10       530,070,682  
  Bitcoin withdrawn     (311.96 )     (20,371,942 )
  Net change in unrealized appreciation on investment in Bitcoin     —       103,409,916  
  Net realized gain on investment in Bitcoin     —       5,958,447  
  Ending balance as of March 31, 2024     8,711.14     $ 619,067,103  

 

The Trust did not hold any bitcoin as of December 31, 2023.

 

D. Bitcoin

 

Bitcoin transactions are accounted for on trade date. Realized gains and losses on sale of bitcoin are determined based on the average cost method. Proceeds received by the Trust from the issuance of creation baskets consist of bitcoin. Such deposits are held by the custodian on behalf of the Trust until (i) delivered out in connection with redemptions of creation baskets or (ii) sold by the Sponsor, which may be facilitated by the custodian, to pay fees due to the Sponsor and Trust expenses and liabilities not assumed by the Sponsor.

 

E. Calculation of Net Asset Value

 

The Trust’s net asset value (“NAV”) is calculated based on the Trust’s net asset holdings as reconciled to the Bitcoin Custodian’s accounts on a market approach, determined on a daily basis in accordance with the MarketVectorTM Bitcoin Benchmark Rate price at 4:00 pm EST. The Trust’s NAV per Share is calculated by taking the current market value of its total assets, subtracting any liabilities, and then dividing that total by the total number of outstanding Shares. The Trust Agreement gives the Sponsor the exclusive authority to determine the Trust’s NAV and the Trust’s NAV per Share, which it has delegated to the Administrator.

 

F. Federal Income Taxes

 

The Trust is treated as a grantor trust for federal income tax purposes and, therefore, no provision for federal income taxes is required. Any interest, expenses, gains and losses are passed through to the holders of Shares of the Trust. The Sponsor has reviewed the tax positions and has determined that no provision for income tax is required in the Trust’s financial statements.

6

VANECK BITCOIN TRUST

Notes to Unaudited Financial Statements (Continued)

March 31, 2024

 

 

 

Note 3. Trust Expenses and Other Agreements

 

The Trust pays the Sponsor a unified fee (the “Sponsor Fee”) of 0.20% of net assets that accrues daily and pays monthly. Prior to February 21, 2024, the Sponsor fee was 0.25%. Effective for the period from March 12, 2024, through March 31, 2025, the Sponsor agreed to waive the entire Sponsor Fee for the first $1.5 billion of the Trust’s net assets. If the Trust’s net assets exceed $1.5 billion prior to March 31, 2025, the Sponsor Fee charged on net assets over $1.5 billion will be 0.20%. All investors will incur the same Sponsor Fee which is the weighted average of those fee rates. After March 31, 2025, the Sponsor Fee will be 0.20%. The Sponsor has agreed to pay all operating expenses (except for litigation expenses and other extraordinary expenses) out of the Sponsor Fee. The Sponsor from time to time will sell bitcoin, which may be facilitated by the custodian, in such quantity as is necessary to permit payment of the Sponsor Fee and Trust expenses and liabilities not assumed by the Sponsor.

 

The Trustee fee is paid by the Sponsor and is not a separate expense of the Trust.

 

The Trust holds its bitcoin at Gemini Trust Company, LLC (the “Bitcoin Custodian”), a regulated third-party custodian that carries insurance and is chartered as a trust company under the New York Banking Law and serves as a fiduciary responsible for safekeeping of bitcoin owned by the Trust and holding the private keys that provide access to the bitcoin in the Trust’s bitcoin account.

 

State Street Bank and Trust Company serves as the Trust’s administrator, transfer agent and cash custodian.

 

Note 4. Related Parties

 

The Sponsor is considered to be a related party to the Trust.

 

MarketVector Indexes GmbH is the index sponsor and index administrator for the MarketVector Bitcoin Benchmark Rate, which is used by the Trust to determine its net asset value. MarketVector Indexes GmbH is an indirectly wholly-owned subsidiary of VanEck.

 

Van Eck Securities Corporation, a marketing agent to the Trust, is a wholly owned-subsidiary of VanEck.

 

VanEck is the initial seed investor (“Seed Capital Investor”) on December 21, 2023. On January 4, 2024, the Seed Capital Investor purchased additional shares (see Note 5).

 

VanEck is a minority interest holder in the parent company of the Bitcoin Custodian, representing less than 1% of its equity.

 

Note 5. Capital Share Transactions

 

Investors can buy and sell Shares of the Trust in secondary market transactions through brokers. Shares trade on the Exchange under the ticker symbol HODL. Shares are bought and sold throughout the trading day like other publicly traded securities.

 

The Trust continuously offers the Trust Shares in creation baskets consisting of 25,000 Shares to authorized participants. Prior to March 4, 2024, the Trust offered creation baskets consisting of 50,000 Shares to authorized participants. Authorized participants pay a transaction fee for each order they place to create or redeem one or more creation baskets. The Administrator calculates the cost to purchase (or sell in the case of a redemption order) the amount of bitcoin represented by the baskets being created (or redeemed); the amount of bitcoin represented is equal to the combined NAV of the number of Shares included in the baskets being created (or redeemed).

 

The Trust creates and redeems Shares, but only in one or more creation baskets. Creation baskets are only made in exchange for delivery to the Trust or the distribution by the Trust of the amount of bitcoin represented by the baskets being created or redeemed, the amount of which is equal to the combined NAV of the number of Shares included in the baskets being created or redeemed determined as of 4:00 p.m. EST on the day the order to create or redeem

7

VANECK BITCOIN TRUST

Notes to Unaudited Financial Statements (Continued)

March 31, 2024

 

 

 

baskets is properly received. Only authorized participants may place orders to create and redeem baskets through the transfer agent. The transfer agent will coordinate with the Trust’s custodian in order to facilitate settlement of the Shares and bitcoin.

 

Share and Capital activity is as follows:

 

    Shares     Amount
Beginning of period     2,000   (a)   $ 100,000  
Shares issued     7,975,000   (b)     530,072,065  
Shares redeemed     (277,000 ) (b)     (20,426,829 )
End of period     7,700,000       $ 509,745,236  

 

(a) Van Eck Associates Corporation was the sole shareholder as of December 31, 2023.
(b) On January 4, 2024, the 2,000 Shares held by the Seed Capital Investor were redeemed for cash and the Seed Capital Investor purchased the “Seed Creation Baskets,” comprising of 1,450,000 Shares at a per-Share price of $50.00. Total proceeds to the Trust from the sale of the Seed Creation Baskets were $72,500,000, which resulted in the Trust receiving 1,640.92 bitcoin.

 

Note 6. Commitments and Contingent Liabilities

 

In the normal course of business, the Trust enters into contracts that contain a variety of general indemnifications. The Trust’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. However, the Sponsor believes the risk of loss under these arrangements to be remote.

 

Note 7. Concentration Risk

 

Substantially all of the Trust’s assets are holdings of bitcoin, which creates a concentration risk associated with fluctuations in the value of bitcoin due to number of factors. Accordingly, a decline in the value of bitcoin will have an adverse effect on the value of the Shares of the Trust. Factors that may have the effect of causing a decline in the value of bitcoin include high volatility, which could have a negative impact on the performance of the Trust. Bitcoin exchanges are relatively new and, in some cases, unregulated, and, therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments, which could have a negative impact on the performance of the Trust. The value of the Shares depends on the development and acceptance of the Bitcoin network. The slowing or stopping of the development or acceptance of the Bitcoin network may adversely affect an investment in the Trust. The price of bitcoin on the bitcoin market has exhibited periods of extreme volatility. Digital assets such as bitcoin were only introduced within the past decade, and the medium-to-long term value of the Shares is subject to a number of factors relating to the capabilities and development of block-chain technologies and to the fundamental investment characteristics of digital assets that are uncertain and difficult to evaluate. The Trust is subject to risks due to its concentration of investments in a single asset class. Possible illiquid markets may exacerbate losses or increase the variability between the Trust’s NAV and its market price. The amount of bitcoin represented by the Shares may decline over time.

 

Future and current regulations by a United States or foreign government or quasi-governmental agency could have an adverse effect on an investment in the Trust. Shareholders do not have the protections associated with ownership of Shares in an investment company registered under the 1940 Act or the protections afforded by the Commodity Exchange Act. Future legal or regulatory developments may negatively affect the value of bitcoin or require the Trust or the Sponsor to become registered with the SEC or CFTC, which may cause the Trust to liquidate.

 

The Exchange on which the Shares are listed may halt trading in the Trust’s Shares, which would adversely impact a Shareholder’s ability to sell Shares. The market infrastructure of the bitcoin spot market could result in the absence of active authorized participants able to support the trading activity of the Trust.

 

Shareholders that are not authorized participants may only purchase or sell their Shares in secondary trading markets, and the conditions associated with trading in secondary markets may adversely affect Shareholders’ investment in the Shares.

8

VANECK BITCOIN TRUST

Notes to Unaudited Financial Statements (Continued)

March 31, 2024

 

 

 

Note 8. Financial Highlights

 

The financial highlights summarize certain per share operating information and financial ratios of net investment income and expenses, to daily average net assets for the three months ended March 31, 2024. An individual investor’s return and ratios may vary from these percentages based on the timing of capital transactions:

 

Net asset value per share, beginning of period(a)  $50.00 
      
From investment operations:     
Net investment loss(b)   (0.02)
Net realized gain and change in unrealized appreciation/depreciation on investments in bitcoin   30.42 
Total increase resulting from operations   30.40 
      
Net asset value per share, end of period  $80.40 
      
Total return (%)(c)   60.80 
      
Ratios to average net assets(d)     
Expenses before fee waiver (%)   0.21 
Expenses after fee waiver (%)   0.11 
Net investment loss (%)   (0.11)
Portfolio turnover rate(e)   6.06%

 

(a) No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2023.
(b) Net investment income per share has been calculated based upon an average of daily shares outstanding.
(c) Total return calculation is based on the value of a single share of participation outstanding throughout the period. It represents the percentage change in the net asset value per share between the beginning and end of the period and is not annualized.
(d) Annualized.
(e) Not Annualized.

 

Note 9. Subsequent Event Review

 

The Trust has evaluated subsequent events and transactions for potential recognition or disclosure through the date the financial statements were issued and has determined that there are no material events that would require disclosure in the financial statements.

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

This information should be read in conjunction with the financial statements and notes to financial statements included with this report. The discussion and analysis that follows may contain statements that relate to future events or future performance. In some cases, such forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or the negative of these terms or other comparable terminology. All statements (other than statements of historical fact) included in this report that address activities, events or developments that may occur in the future, including such matters as changes in commodity prices and market conditions (for bitcoin and the Shares), the operations of the Trust, the plans of the Sponsor 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 upon certain assumptions and analyses made by the Sponsor on the basis of its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor’s expectations and predictions is subject to a number of risks and uncertainties, including the special considerations discussed in this Report, general economic, market and business conditions, changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies, and other world economic and political developments. Consequently, all the forward-looking statements made in this 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, will result in the expected consequences to, or have the expected effects on, the Trust’s operations or the value of the Shares issued by the Trust. Moreover, neither the Sponsor nor any other person assumes responsibility for the accuracy or completeness of the forward-looking statements. Neither the Trust nor the Sponsor undertakes an obligation to publicly update or conform to actual results any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

 

Introduction

 

The Trust is a Delaware statutory trust. The Trust does not have directors, officers or employees. The creation and operation of the Trust has been arranged by the Sponsor. The Trust is administered by the Trust Agreement, among the Sponsor, the Trustee and the Delaware Trustee. The Trust is managed and controlled by the Sponsor, a wholly-owned subsidiary of VanEck. The Sponsor is not governed by a board of directors.

 

The Trust’s investment objective is to reflect the performance of bitcoin less the operating expenses of the Trust. The Trust is a passive investment vehicle that does not seek to pursue any investment strategy beyond tracking the price of bitcoin. The Trust does not engage in any activities designed to obtain a profit from, or ameliorate losses caused by, changes in the price of bitcoin.

 

The Trust issues and redeems Shares only in aggregations of 25,000 Shares, a Basket, or integral multiples thereof, and only in transactions with Authorized Participants.

 

Shares of the Trust trade on the Exchange under the ticker symbol “HODL.”

 

Computation of Net Asset Value

 

The Trust’s NAV is calculated based on the Trust’s net asset holdings as reconciled to the Bitcoin Custodian’s accounts on a market approach, determined on a daily basis in accordance with the MarketVectorTM Bitcoin Benchmark Rate price at 4:00 p.m. EST. The Trust’s NAV per Share is calculated by taking the current market value of its total assets, subtracting any liabilities, and then dividing that total by the total number of outstanding Shares. The Trust Agreement gives the Sponsor the exclusive authority to determine the Trust’s NAV and the Trust’s NAV per Share, which it has delegated to the Administrator.

 

Liquidity

 

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. In exchange for a fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust. As a result, the only ordinary expense of the Trust during the period covered by this report was the Sponsor’s Fee. The Trust’s only source of liquidity is its sales of bitcoin.

 

Significant Accounting Policies

 

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), management makes estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amount of revenue and expenses reported during the period. Actual results could differ from these estimates. A description of the valuation of bitcoin, a critical accounting policy that the Trust believes is important to understanding its results of operations and financial position, is provided in the section entitled “Computation of Net Asset Value” above. In addition, please refer to Note 2 to the Financial Statements included in this report for further discussion of the Trust’s accounting policies. 

10

Results of Operations

 

The Quarter Ended March 31, 2024

 

The Trust’s net asset value increased from $100,000 at December 31, 2023 to $619,050,028 at March 31, 2024, a 618,950% increase. The increase in the Trust’s net asset value resulted primarily from an increase in the number of outstanding shares, which increased from 2,000 Shares at December 31, 2023 to 7,700,000 Shares at March 31, 2024, a consequence of 7,975,000 Shares (241 Baskets) being created and 277,000 Shares (9 Baskets) being redeemed during the period and an increase in the price of bitcoin, which grew 60.17% from $44,182.40 at January 4, 2024 to $70,766.04 at March 31, 2024.

 

The 60.80% increase in the NAV from $50.00 at December 31, 2023 to $80.40 at March 31, 2024 is directly related to the 66.74% increase in the price of bitcoin and impact from seed capital during this period.

 

The NAV increased less than the price of bitcoin on a percentage basis due to the Sponsor Fee, which, net of Sponsor Fee waiver, was $63,571 for the quarter, or 0.11% of the Trust’s average weighted assets of $239,311,214 during the quarter, and the seed capital period. The NAV of $82.73 on March 13, 2024, was the highest during the quarter, compared with a low during the quarter of $44.40 on January 23, 2024.

 

Net increase in net assets resulting from operations for the quarter ended March 31, 2024, was $109,304,792 resulting from an unrealized gain on investment in bitcoin of $103,409,916, a net realized gain of $5,947,470 on bitcoin sold for the redemption of Shares, a net realized gain of $10,977 from bitcoin sold to pay expenses during the quarter, and a net investment loss of $63,571. Other than the Sponsor Fee of $63,571, the Trust had no other expenses during the quarter.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable.

 

Item 4. Controls and Procedures.

 

The duly authorized officers 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, with the participation of the Trustee, have evaluated the effectiveness of the Trust’s disclosure controls and procedures, and have concluded that the disclosure controls and procedures of the Trust were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed in the reports that the Trust files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to the duly authorized officers 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.

 

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.

11

Part II. OTHER INFORMATION.

 

Item 1. Legal Proceedings.

 

None.

 

Item 1A. Risk Factors.

 

There have been no material changes to the Risk Factors last reported under Part I, Item 1A of the registrant’s Annual Report on Form 10-K for the period ended December 31, 2023, filed with the Securities and Exchange Commission on March 28, 2024

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

a) None.

 

b) Not applicable.

 

c) 277,000 Shares (9 Baskets) were redeemed during the quarter ended March 31, 2024.

 

Period   Total Number of Shares
Redeemed		   Average Per Share  
             
01/01/24 to 01/31/24   2,000   $ 50.00  
02/01/24 to 02/29/24   50,000     68.30  
03/01/24 to 03/31/24   225,000     75.16  
Total   277,000   $ 73.74  

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

Not applicable.

 

Item 6. Exhibits.

 

See the Exhibit Index below, which is incorporated by reference herein.

12

EXHIBIT INDEX

 

Exhibit No. Exhibit Description
   
3.1 Certificate of Trust incorporated by reference to Exhibit 3.1 of the Registration Statement on Form S-1 filed by the Registrant on December 30, 2020
   
4.1 Third Amended and Restated Declaration of Trust and Trust Agreement incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed by the Registrant on March 1, 2024
   
31.1* Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
31.2* Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
32.1* Certification by Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
   
32.2* Certification by Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
   
101.INS* Inline XBRL Instance Document the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
   
101.SCH* Inline XBRL Taxonomy Extension Schema Document
   
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
   
104* Cover Page Interactive Data File included as Exhibit 101 (embedded within the Inline XBRL document)

 

 

* Filed herewith.

13

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned in the capacities* indicated thereunto duly authorized.

 

VANECK DIGITAL ASSETS, LLC
Sponsor of VanEck Bitcoin Trust

 

By: /s/ Jan F. van Eck*  
  Jan F. van Eck
President and Chief Executive Officer
(Principal Executive Officer)		  

 

By: /s/ John J. Crimmins*  
  John J. Crimmins
Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)		  

 

Date: May 13, 2024

 

* The Registrant is a trust and the persons are signing in their capacities as officers of VanEck Digital Assets, LLC., the Sponsor of the Registrant.

14
false --12-31 Q1 2024 0001838028 0001838028 2024-01-01 2024-03-31 0001838028 2024-04-30 0001838028 2024-03-31 0001838028 2023-12-31 0001838028 2023-01-01 2023-12-31 0001838028 us-gaap:FairValueInputsLevel1Member 2024-03-31 0001838028 2024-02-21 0001838028 us-gaap:FinancialSupportWaivedFeesMember 2024-01-01 2024-03-31 0001838028 hodl:BitcoinCustodianMember 2024-03-31 0001838028 2024-03-04 0001838028 hodl:SeedCapitalInvestorMember 2024-01-04 0001838028 hodl:SeedCapitalInvestorMember 2024-01-04 2024-01-04 0001838028 2024-09-30 0001838028 2024-10-01 2024-12-31 0001838028 2024-12-31 xbrli:shares iso4217:USD iso4217:USD xbrli:shares xbrli:pure

Exhibit 31.1

 

Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and 15d- 14(a) Under the Securities Exchange Act Of 1934, as Amended

 

I, Jan F. van Eck, certify that:

 

1.I have reviewed this report on Form 10-Q of VanEck Bitcoin Trust (the “Trust”);

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the board of directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 13, 2024

 

/s/ Jan F. van Eck          

Jan F. van Eck
President and Chief Executive Officer

(Principal Executive Officer)

 

 

Exhibit 31.2

 

Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and 15d- 14(a) Under the Securities Exchange Act Of 1934, as Amended

 

I, John J. Crimmins, certify that:

 

1.I have reviewed this report on Form 10-Q of VanEck Bitcoin Trust (the “Trust”);

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the board of directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 13, 2024

 

/s/ John J. Crimmins          

John J. Crimmins

Vice President, Chief Financial Officer and Treasurer

(Principal Financial Officer and Principal Accounting Officer)

 

 

Exhibit 32.1

 

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Annual Report of VanEck Bitcoin Trust (the “Trust”) on Form 10-Q for the quarter ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust.

 

Date: May 13, 2024

 

/s/ Jan F. van Eck          

Jan F. van Eck*
President and Chief Executive Officer

(Principal Executive Officer)

 

*    The registrant is a trust and the persons are signing in their capacities as officers of VanEck Digital Assets, LLC, the Sponsor of the registrant.

 

 

Exhibit 32.2

 

Certification Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Annual Report of VanEck Bitcoin Trust (the “Trust”) on Form 10-Q for the quarter ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust.

 

Date: May 13, 2024

 

/s/ John J. Crimmins          

John J. Crimmins*

Vice President, Chief Financial Officer and Treasurer

(Principal Financial Officer and Principal Accounting Officer)

 

*    The registrant is a trust and the persons are signing in their capacities as officers of VanEck Digital Assets, LLC, the Sponsor of the registrant. 

 

 
v3.24.1.1.u2
Document And Entity Information - shares
 3 Months Ended
Mar. 31, 2024
Apr. 30, 2024
Document Information Line Items    
Entity Registrant Name VanEck Bitcoin Trust  
Trading Symbol HODL  
Document Type 10-Q  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding   8,200,000
Amendment Flag false  
Entity Central Index Key 0001838028  
Entity Current Reporting Status Yes  
Entity Filer Category Non-accelerated Filer  
Document Period End Date Mar. 31, 2024  
Document Fiscal Year Focus 2024  
Document Fiscal Period Focus Q1  
Entity Small Business true  
Entity Emerging Growth Company true  
Entity Shell Company false  
Entity Ex Transition Period true  
Document Quarterly Report true  
Document Transition Report false  
Entity File Number 001-41908  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 85-6811021  
Entity Address, Address Line One 666 Third Avenue  
Entity Address, Address Line Two 9th Floor  
Entity Address, City or Town New York  
Entity Address, State or Province NY  
Entity Address, Postal Zip Code 10017  
City Area Code 212  
Local Phone Number 293-2000  
Title of 12(b) Security Shares  
Security Exchange Name CboeBZX  
Entity Interactive Data Current Yes  
v3.24.1.1.u2
Statements of Assets and Liabilities (Unaudited) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Assets    
Investment in Bitcoin, at fair value (cost $515,657,187 and $-, respectively) $ 619,067,103  
Cash   $ 100,000
Receivable for shares sold 20,018,933  
Total assets 639,086,036 100,000
Liabilities    
Payable for investments in Bitcoin purchased 4,002,826  
Contribution received in advance 16,016,107  
Accrued sponsor fees, related party 17,075  
Total liabilities 20,036,008  
Net Assets [1] $ 619,050,028 [2] $ 100,000
Shares issued and outstanding (no par value, unlimited amount authorized) (in Shares) 7,700,000 2,000
Net Asset Value per Share (Note 2) (in Dollars per share) $ 80.4 $ 50
[1] No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2023.
[2] No comparative financial statements have been provided as the Trust did not hold any bitcoin as of December 31, 2023.
v3.24.1.1.u2
Statements of Assets and Liabilities (Unaudited) (Parentheticals)
Mar. 31, 2024
USD ($)
Statement of Financial Position [Abstract]  
Investment in Bitcoin, cost $ 515,657,187 [1]
[1] No comparative financial statements have been provided as the Trust did not hold any bitcoin as of December 31, 2023.
v3.24.1.1.u2
Statement of Operations
 3 Months Ended
Mar. 31, 2024
USD ($)
 [1]
Expenses  
Sponsor fee, related party $ 122,669
Total expenses 122,669
Sponsor fee waiver, related party (59,098)
Net expenses 63,571
Net investment loss (63,571)
Net realized gain on:  
Bitcoin sold for redemption of shares 5,947,470
Bitcoin distributed for Sponsor fee, related party 10,977
Total realized gain 5,958,447
Net change in unrealized appreciation (depreciation) on:  
Investment in Bitcoin 103,409,916
Total net change in unrealized appreciation (depreciation) 103,409,916
Net realized gain and change in unrealized appreciation (depreciation) 109,368,363
Net increase in net assets resulting from operations $ 109,304,792
[1] No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2023.
v3.24.1.1.u2
Statement of Changes in Net Assets
 3 Months Ended
Mar. 31, 2024
USD ($)
Net increase in net assets from operations  
Net investment loss $ (63,571) [1]
Net realized gain from investment in bitcoin 5,958,447 [2]
Change in net unrealized appreciation (depreciation) from investments in bitcoin 103,409,916 [2]
Net increase in net assets resulting from operations 109,304,792 [2]
Capital share transactions  
Contributions for shares issued 530,072,065 [2]
Withdrawals for shares redeemed (20,426,829) [2]
Total capital share transactions 509,645,236 [2]
Net increase in net assets 618,950,028 [2]
Net assets  
Beginning of period 100,000 [2]
End of period $ 619,050,028 [2],[3]
[1] No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2023.
[2] No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2023.
[3] No comparative financial statements have been provided as the Trust did not hold any bitcoin as of December 31, 2023.
v3.24.1.1.u2
Schedule of Investment
 3 Months Ended
Mar. 31, 2024
USD ($)
 [1]
Schedule Of Investment Abstract  
Cost $ 515,657,187
Quantity of Bitcoin 8,711.14
% of Net Assets 100.00%
Fair Value $ 619,067,103
Liabilities in excess of assets, % of Net Assets 0.00% [2]
Liabilities in excess of assets, Fair Value $ (17,075)
Net Assets, % of Net Assets 100.00%
Net Assets, Fair Value $ 619,050,028 [3]
[1] No comparative financial statements have been provided as the Trust did not hold any bitcoin as of December 31, 2023.
[2] Rounds to less than 0.01%.
[3] No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2023.
v3.24.1.1.u2
Organization:
 3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1. Organization:

 

The VanEck Bitcoin Trust (the “Trust”), a Delaware statutory trust, is an exchange-traded fund that issues common shares of beneficial interest in an ownership of the Trust (“Shares”). The Shares are traded on the Cboe BZX Exchange, Inc. (the “Exchange”). The Trust’s investment objective is to reflect the performance of bitcoin less the operating expenses of the Trust. The Trust is managed and controlled by VanEck Digital Assets, LLC (the “Sponsor”), a wholly-owned subsidiary of Van Eck Associates Corporation (“VanEck”). The Delaware Trust Company, is the “Trustee” of the Trust.
v3.24.1.1.u2
Significant Accounting Policies:
 12 Months Ended
Dec. 31, 2023
Accounting Policies [Abstract]  
Significant Accounting Policies [Text Block]

Note 2. Significant Accounting Policies:

 

A. Basis of Preparation and Use Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

The Trust qualifies as an investment company solely for accounting purposes and not for any other purpose and follows accounting and reporting requirements of Accounting Standards Codification (“ASC”) 946 Financial Services—Investment Companies, but is not registered, and is not required to be registered, as an investment company under the Investment Company Act of 1940, as amended.

 

B. Cash

 

Cash represents cash deposits held at a major financial institution and is subject to credit risk to the extent its balance exceeds the federally insured limits. As of March 31, 2024, the Trust’s cash balance did not exceed the federal insured limits.

 

C. Investment Valuation

 

The Trust values its investments in bitcoin and other assets and liabilities at fair value, daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.

 

The Trust identifies and determines the bitcoin principal market (or in the absence of a principal market, the most advantageous market) for GAAP financial statement purposes consistent with the application of fair value measurement framework in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 as of 4:00 p.m. EST. Under ASC 820, a principal market is the market with the greatest volume and activity level for the asset or liability. The determination of the principal market will be based on the market with the greatest volume and level of activity that can be accessed. The Sponsor on behalf of the Trust will determine in its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP.

 

Various inputs are used in determining the fair value of assets and liabilities. Inputs may be based on independent market data (observable inputs) or they may be internally developed (unobservable inputs). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The three levels of the fair value hierarchy are as follows:

 

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

 

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be

active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and

 

Level 3 – Unobservable inputs where there are little or no market activity for the asset or liability, including the Trust’s assumptions used in determining the fair value of investments.

 

The following is a summary of the fair value hierarchy as of March 31, 2024:

 

        Level 1   Level 2   Level 3   Total
  Assets                      
  Investment in Bitcoin   $   619,067,103   —   —   $   619,067,103  

 

The following represents the changes in quantity of Bitcoin and the respective fair value:

 

      Bitcoin   Fair Value
  Beginning balance as of January 1, 2024     —     $ —  
  Bitcoin contributed     9,023.10       530,070,682  
  Bitcoin withdrawn     (311.96 )     (20,371,942 )
  Net change in unrealized appreciation on investment in Bitcoin     —       103,409,916  
  Net realized gain on investment in Bitcoin     —       5,958,447  
  Ending balance as of March 31, 2024     8,711.14     $ 619,067,103  

 

The Trust did not hold any bitcoin as of December 31, 2023.

 

D. Bitcoin

 

Bitcoin transactions are accounted for on trade date. Realized gains and losses on sale of bitcoin are determined based on the average cost method. Proceeds received by the Trust from the issuance of creation baskets consist of bitcoin. Such deposits are held by the custodian on behalf of the Trust until (i) delivered out in connection with redemptions of creation baskets or (ii) sold by the Sponsor, which may be facilitated by the custodian, to pay fees due to the Sponsor and Trust expenses and liabilities not assumed by the Sponsor.

 

E. Calculation of Net Asset Value

 

The Trust’s net asset value (“NAV”) is calculated based on the Trust’s net asset holdings as reconciled to the Bitcoin Custodian’s accounts on a market approach, determined on a daily basis in accordance with the MarketVectorTM Bitcoin Benchmark Rate price at 4:00 pm EST. The Trust’s NAV per Share is calculated by taking the current market value of its total assets, subtracting any liabilities, and then dividing that total by the total number of outstanding Shares. The Trust Agreement gives the Sponsor the exclusive authority to determine the Trust’s NAV and the Trust’s NAV per Share, which it has delegated to the Administrator.

 

F. Federal Income Taxes

 

The Trust is treated as a grantor trust for federal income tax purposes and, therefore, no provision for federal income taxes is required. Any interest, expenses, gains and losses are passed through to the holders of Shares of the Trust. The Sponsor has reviewed the tax positions and has determined that no provision for income tax is required in the Trust’s financial statements.
v3.24.1.1.u2
Trust Expenses and Other Agreements
 3 Months Ended
Mar. 31, 2024
Trust Expenses And Other Agreements Abstract  
Trust Expenses and Other Agreements [Text Block]

Note 3. Trust Expenses and Other Agreements

 

The Trust pays the Sponsor a unified fee (the “Sponsor Fee”) of 0.20% of net assets that accrues daily and pays monthly. Prior to February 21, 2024, the Sponsor fee was 0.25%. Effective for the period from March 12, 2024, through March 31, 2025, the Sponsor agreed to waive the entire Sponsor Fee for the first $1.5 billion of the Trust’s net assets. If the Trust’s net assets exceed $1.5 billion prior to March 31, 2025, the Sponsor Fee charged on net assets over $1.5 billion will be 0.20%. All investors will incur the same Sponsor Fee which is the weighted average of those fee rates. After March 31, 2025, the Sponsor Fee will be 0.20%. The Sponsor has agreed to pay all operating expenses (except for litigation expenses and other extraordinary expenses) out of the Sponsor Fee. The Sponsor from time to time will sell bitcoin, which may be facilitated by the custodian, in such quantity as is necessary to permit payment of the Sponsor Fee and Trust expenses and liabilities not assumed by the Sponsor.

 

The Trustee fee is paid by the Sponsor and is not a separate expense of the Trust.

 

The Trust holds its bitcoin at Gemini Trust Company, LLC (the “Bitcoin Custodian”), a regulated third-party custodian that carries insurance and is chartered as a trust company under the New York Banking Law and serves as a fiduciary responsible for safekeeping of bitcoin owned by the Trust and holding the private keys that provide access to the bitcoin in the Trust’s bitcoin account.

 

State Street Bank and Trust Company serves as the Trust’s administrator, transfer agent and cash custodian.
v3.24.1.1.u2
Related Parties
 3 Months Ended
Mar. 31, 2024
Related Party Transactions [Abstract]  
Related Party Transactions Disclosure [Text Block]

Note 4. Related Parties

 

The Sponsor is considered to be a related party to the Trust.

 

MarketVector Indexes GmbH is the index sponsor and index administrator for the MarketVector Bitcoin Benchmark Rate, which is used by the Trust to determine its net asset value. MarketVector Indexes GmbH is an indirectly wholly-owned subsidiary of VanEck.

 

Van Eck Securities Corporation, a marketing agent to the Trust, is a wholly owned-subsidiary of VanEck.

 

VanEck is the initial seed investor (“Seed Capital Investor”) on December 21, 2023. On January 4, 2024, the Seed Capital Investor purchased additional shares (see Note 5).

 

VanEck is a minority interest holder in the parent company of the Bitcoin Custodian, representing less than 1% of its equity.
v3.24.1.1.u2
Capital Share Transactions
 3 Months Ended
Mar. 31, 2024
Stockholders' Equity Note [Abstract]  
Equity [Text Block]

Note 5. Capital Share Transactions

 

Investors can buy and sell Shares of the Trust in secondary market transactions through brokers. Shares trade on the Exchange under the ticker symbol HODL. Shares are bought and sold throughout the trading day like other publicly traded securities.

 

The Trust continuously offers the Trust Shares in creation baskets consisting of 25,000 Shares to authorized participants. Prior to March 4, 2024, the Trust offered creation baskets consisting of 50,000 Shares to authorized participants. Authorized participants pay a transaction fee for each order they place to create or redeem one or more creation baskets. The Administrator calculates the cost to purchase (or sell in the case of a redemption order) the amount of bitcoin represented by the baskets being created (or redeemed); the amount of bitcoin represented is equal to the combined NAV of the number of Shares included in the baskets being created (or redeemed).

 

The Trust creates and redeems Shares, but only in one or more creation baskets. Creation baskets are only made in exchange for delivery to the Trust or the distribution by the Trust of the amount of bitcoin represented by the baskets being created or redeemed, the amount of which is equal to the combined NAV of the number of Shares included in the baskets being created or redeemed determined as of 4:00 p.m. EST on the day the order to create or redeem

baskets is properly received. Only authorized participants may place orders to create and redeem baskets through the transfer agent. The transfer agent will coordinate with the Trust’s custodian in order to facilitate settlement of the Shares and bitcoin.

 

Share and Capital activity is as follows:

 

    Shares     Amount
Beginning of period     2,000   (a)   $ 100,000  
Shares issued     7,975,000   (b)     530,072,065  
Shares redeemed     (277,000 ) (b)     (20,426,829 )
End of period     7,700,000       $ 509,745,236  

 

(a) Van Eck Associates Corporation was the sole shareholder as of December 31, 2023.
(b) On January 4, 2024, the 2,000 Shares held by the Seed Capital Investor were redeemed for cash and the Seed Capital Investor purchased the “Seed Creation Baskets,” comprising of 1,450,000 Shares at a per-Share price of $50.00. Total proceeds to the Trust from the sale of the Seed Creation Baskets were $72,500,000, which resulted in the Trust receiving 1,640.92 bitcoin.
v3.24.1.1.u2
Commitments and Contingent Liabilities
 3 Months Ended
Mar. 31, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]

Note 6. Commitments and Contingent Liabilities

 

In the normal course of business, the Trust enters into contracts that contain a variety of general indemnifications. The Trust’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. However, the Sponsor believes the risk of loss under these arrangements to be remote.
v3.24.1.1.u2
Concentration Risk
 3 Months Ended
Mar. 31, 2024
Risks and Uncertainties [Abstract]  
Concentration Risk Disclosure [Text Block]

Note 7. Concentration Risk

 

Substantially all of the Trust’s assets are holdings of bitcoin, which creates a concentration risk associated with fluctuations in the value of bitcoin due to number of factors. Accordingly, a decline in the value of bitcoin will have an adverse effect on the value of the Shares of the Trust. Factors that may have the effect of causing a decline in the value of bitcoin include high volatility, which could have a negative impact on the performance of the Trust. Bitcoin exchanges are relatively new and, in some cases, unregulated, and, therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments, which could have a negative impact on the performance of the Trust. The value of the Shares depends on the development and acceptance of the Bitcoin network. The slowing or stopping of the development or acceptance of the Bitcoin network may adversely affect an investment in the Trust. The price of bitcoin on the bitcoin market has exhibited periods of extreme volatility. Digital assets such as bitcoin were only introduced within the past decade, and the medium-to-long term value of the Shares is subject to a number of factors relating to the capabilities and development of block-chain technologies and to the fundamental investment characteristics of digital assets that are uncertain and difficult to evaluate. The Trust is subject to risks due to its concentration of investments in a single asset class. Possible illiquid markets may exacerbate losses or increase the variability between the Trust’s NAV and its market price. The amount of bitcoin represented by the Shares may decline over time.

 

Future and current regulations by a United States or foreign government or quasi-governmental agency could have an adverse effect on an investment in the Trust. Shareholders do not have the protections associated with ownership of Shares in an investment company registered under the 1940 Act or the protections afforded by the Commodity Exchange Act. Future legal or regulatory developments may negatively affect the value of bitcoin or require the Trust or the Sponsor to become registered with the SEC or CFTC, which may cause the Trust to liquidate.

 

The Exchange on which the Shares are listed may halt trading in the Trust’s Shares, which would adversely impact a Shareholder’s ability to sell Shares. The market infrastructure of the bitcoin spot market could result in the absence of active authorized participants able to support the trading activity of the Trust.

 

Shareholders that are not authorized participants may only purchase or sell their Shares in secondary trading markets, and the conditions associated with trading in secondary markets may adversely affect Shareholders’ investment in the Shares.
v3.24.1.1.u2
Financial Highlights
 3 Months Ended
Mar. 31, 2024
Quarterly Financial Information Disclosure [Abstract]  
Quarterly Financial Information [Text Block]

Note 8. Financial Highlights

 

The financial highlights summarize certain per share operating information and financial ratios of net investment income and expenses, to daily average net assets for the three months ended March 31, 2024. An individual investor’s return and ratios may vary from these percentages based on the timing of capital transactions:

 

Net asset value per share, beginning of period(a)  $50.00 
      
From investment operations:     
Net investment loss(b)   (0.02)
Net realized gain and change in unrealized appreciation/depreciation on investments in bitcoin   30.42 
Total increase resulting from operations   30.40 
      
Net asset value per share, end of period  $80.40 
      
Total return (%)(c)   60.80 
      
Ratios to average net assets(d)     
Expenses before fee waiver (%)   0.21 
Expenses after fee waiver (%)   0.11 
Net investment loss (%)   (0.11)
Portfolio turnover rate(e)   6.06%

 

(a) No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2023.
(b) Net investment income per share has been calculated based upon an average of daily shares outstanding.
(c) Total return calculation is based on the value of a single share of participation outstanding throughout the period. It represents the percentage change in the net asset value per share between the beginning and end of the period and is not annualized.
(d) Annualized.
(e) Not Annualized.
v3.24.1.1.u2
Subsequent Event Review
 3 Months Ended
Mar. 31, 2024
Subsequent Events [Abstract]  
Subsequent Events [Text Block]

Note 9. Subsequent Event Review

 

The Trust has evaluated subsequent events and transactions for potential recognition or disclosure through the date the financial statements were issued and has determined that there are no material events that would require disclosure in the financial statements.
v3.24.1.1.u2
Accounting Policies, by Policy (Policies)
 3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block] Basis of Preparation and Use Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

The Trust qualifies as an investment company solely for accounting purposes and not for any other purpose and follows accounting and reporting requirements of Accounting Standards Codification (“ASC”) 946 Financial Services—Investment Companies, but is not registered, and is not required to be registered, as an investment company under the Investment Company Act of 1940, as amended.
Cash and Cash Equivalents, Policy [Policy Text Block] Cash

Cash represents cash deposits held at a major financial institution and is subject to credit risk to the extent its balance exceeds the federally insured limits. As of March 31, 2024, the Trust’s cash balance did not exceed the federal insured limits.
Investment, Policy [Policy Text Block] Investment Valuation

The Trust values its investments in bitcoin and other assets and liabilities at fair value, daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.

The Trust identifies and determines the bitcoin principal market (or in the absence of a principal market, the most advantageous market) for GAAP financial statement purposes consistent with the application of fair value measurement framework in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 as of 4:00 p.m. EST. Under ASC 820, a principal market is the market with the greatest volume and activity level for the asset or liability. The determination of the principal market will be based on the market with the greatest volume and level of activity that can be accessed. The Sponsor on behalf of the Trust will determine in its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP.

Various inputs are used in determining the fair value of assets and liabilities. Inputs may be based on independent market data (observable inputs) or they may be internally developed (unobservable inputs). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The three levels of the fair value hierarchy are as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be

active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and

Level 3 – Unobservable inputs where there are little or no market activity for the asset or liability, including the Trust’s assumptions used in determining the fair value of investments.

The following is a summary of the fair value hierarchy as of March 31, 2024:

        Level 1   Level 2   Level 3   Total
  Assets                      
  Investment in Bitcoin   $   619,067,103   —   —   $   619,067,103  

The following represents the changes in quantity of Bitcoin and the respective fair value:

      Bitcoin   Fair Value
  Beginning balance as of January 1, 2024     —     $ —  
  Bitcoin contributed     9,023.10       530,070,682  
  Bitcoin withdrawn     (311.96 )     (20,371,942 )
  Net change in unrealized appreciation on investment in Bitcoin     —       103,409,916  
  Net realized gain on investment in Bitcoin     —       5,958,447  
  Ending balance as of March 31, 2024     8,711.14     $ 619,067,103  
The Trust did not hold any bitcoin as of December 31, 2023
Bitcoin, Policy [Policy Text Block] Bitcoin

Bitcoin transactions are accounted for on trade date. Realized gains and losses on sale of bitcoin are determined based on the average cost method. Proceeds received by the Trust from the issuance of creation baskets consist of bitcoin. Such deposits are held by the custodian on behalf of the Trust until (i) delivered out in connection with redemptions of creation baskets or (ii) sold by the Sponsor, which may be facilitated by the custodian, to pay fees due to the Sponsor and Trust expenses and liabilities not assumed by the Sponsor.
Calculation Of Net Asset Value, Policy [Policy Text Block] Calculation of Net Asset Value

The Trust’s net asset value (“NAV”) is calculated based on the Trust’s net asset holdings as reconciled to the Bitcoin Custodian’s accounts on a market approach, determined on a daily basis in accordance with the MarketVectorTM Bitcoin Benchmark Rate price at 4:00 pm EST. The Trust’s NAV per Share is calculated by taking the current market value of its total assets, subtracting any liabilities, and then dividing that total by the total number of outstanding Shares. The Trust Agreement gives the Sponsor the exclusive authority to determine the Trust’s NAV and the Trust’s NAV per Share, which it has delegated to the Administrator.
Income Tax, Policy [Policy Text Block] Federal Income Taxes

The Trust is treated as a grantor trust for federal income tax purposes and, therefore, no provision for federal income taxes is required. Any interest, expenses, gains and losses are passed through to the holders of Shares of the Trust. The Sponsor has reviewed the tax positions and has determined that no provision for income tax is required in the Trust’s financial statements.
v3.24.1.1.u2
Significant Accounting Policies: (Tables)
 12 Months Ended
Dec. 31, 2023
Accounting Policies [Abstract]  
Fair Value, Assets Measured on Recurring Basis [Table Text Block] The following is a summary of the fair value hierarchy as of March 31, 2024:
        Level 1   Level 2   Level 3   Total
  Assets                      
  Investment in Bitcoin   $   619,067,103   —   —   $   619,067,103  
Changes In Quantity Of Bitcoin And The Respective Fair Value [Table Text Block] The following represents the changes in quantity of Bitcoin and the respective fair value:
      Bitcoin   Fair Value
  Beginning balance as of January 1, 2024     —     $ —  
  Bitcoin contributed     9,023.10       530,070,682  
  Bitcoin withdrawn     (311.96 )     (20,371,942 )
  Net change in unrealized appreciation on investment in Bitcoin     —       103,409,916  
  Net realized gain on investment in Bitcoin     —       5,958,447  
  Ending balance as of March 31, 2024     8,711.14     $ 619,067,103  
v3.24.1.1.u2
Capital Share Transactions (Tables)
 12 Months Ended
Dec. 31, 2023
Stockholders' Equity Note [Abstract]  
Schedule of Stockholders Equity [Table Text Block] Share and Capital activity is as follows:
    Shares     Amount
Beginning of period     2,000   (a)   $ 100,000  
Shares issued     7,975,000   (b)     530,072,065  
Shares redeemed     (277,000 ) (b)     (20,426,829 )
End of period     7,700,000       $ 509,745,236  
(a) Van Eck Associates Corporation was the sole shareholder as of December 31, 2023.
(b) On January 4, 2024, the 2,000 Shares held by the Seed Capital Investor were redeemed for cash and the Seed Capital Investor purchased the “Seed Creation Baskets,” comprising of 1,450,000 Shares at a per-Share price of $50.00. Total proceeds to the Trust from the sale of the Seed Creation Baskets were $72,500,000, which resulted in the Trust receiving 1,640.92 bitcoin.
v3.24.1.1.u2
Financial Highlights (Tables)
 3 Months Ended
Mar. 31, 2024
Quarterly Financial Information Disclosure [Abstract]  
Investment Company, Financial Highlights [Table Text Block] The financial highlights summarize certain per share operating information and financial ratios of net investment income and expenses, to daily average net assets for the three months ended March 31, 2024. An individual investor’s return and ratios may vary from these percentages based on the timing of capital transactions:
Net asset value per share, beginning of period(a)  $50.00 
      
From investment operations:     
Net investment loss(b)   (0.02)
Net realized gain and change in unrealized appreciation/depreciation on investments in bitcoin   30.42 
Total increase resulting from operations   30.40 
      
Net asset value per share, end of period  $80.40 
      
Total return (%)(c)   60.80 
      
Ratios to average net assets(d)     
Expenses before fee waiver (%)   0.21 
Expenses after fee waiver (%)   0.11 
Net investment loss (%)   (0.11)
Portfolio turnover rate(e)   6.06%
(a) No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2023.
(b) Net investment income per share has been calculated based upon an average of daily shares outstanding.
(c) Total return calculation is based on the value of a single share of participation outstanding throughout the period. It represents the percentage change in the net asset value per share between the beginning and end of the period and is not annualized.
(d) Annualized.
(e) Not Annualized.
v3.24.1.1.u2
Significant Accounting Policies: (Details) - Schedule of the Fair Value Hierarchy
Mar. 31, 2024
USD ($)
Assets  
Investment in Bitcoin $ 619,067,103
Fair Value, Inputs, Level 1 [Member]  
Assets  
Investment in Bitcoin $ 619,067,103
v3.24.1.1.u2
Significant Accounting Policies: (Details) - Schedule of Changes in Quantity of Bitcoin
 3 Months Ended
Mar. 31, 2024
USD ($)
Schedule Of Changes In Quantity Of Bitcoin Abstract  
Bitcoin contributed, Shares 9,023.1
Bitcoin contributed $ 530,070,682
Bitcoin withdrawn, Shares (311.96)
Bitcoin withdrawn $ (20,371,942)
Net change in unrealized appreciation on investment in Bitcoin 103,409,916 [1]
Net realized gain on investment in Bitcoin $ 5,958,447 [2]
Balance, Shares 8,711.14 [3]
Balance $ 619,067,103 [3]
[1] No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2023.
[2] No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2023.
[3] No comparative financial statements have been provided as the Trust did not hold any bitcoin as of December 31, 2023.
v3.24.1.1.u2
Trust Expenses and Other Agreements (Details) - USD ($)
 3 Months Ended
Mar. 31, 2024
Feb. 21, 2024
Trust Expenses and Other Agreements (Details) [Line Items]    
Sponsor Fee Percentage 0.20% 0.25%
Sponsor Fees (in Dollars) [1] $ 122,669  
Financial Support, Waived Fees [Member]    
Trust Expenses and Other Agreements (Details) [Line Items]    
Sponsor Fees (in Dollars) $ 1,500,000,000  
[1] No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2023.
v3.24.1.1.u2
Related Parties (Details)
Mar. 31, 2024
Bitcoin Custodian [Member]  
Related Parties (Details) [Line Items]  
Subsidiary, Ownership Percentage, Parent 1.00%
v3.24.1.1.u2
Capital Share Transactions (Details)
Jan. 04, 2024
USD ($)
$ / shares
shares
Mar. 31, 2024
shares
Mar. 04, 2024
shares
Dec. 31, 2023
shares
 [1]
Capital Share Transactions (Details) [Line Items]        
Temporary Equity, Shares Authorized   25,000 50,000  
Shares, Issued   7,700,000   2,000
Quantity of Bitcoin in Bitcoin [2]   8,711.14    
Seed Capital Investor [Member]        
Capital Share Transactions (Details) [Line Items]        
Payable, Common Stock Redeemed (in Dollars) | $ $ 2,000      
Shares, Issued 1,450,000      
Share Price (in Dollars per share) | $ / shares $ 50      
Proceeds from Issuance of Common Stock (in Dollars) | $ $ 72,500,000      
Quantity of Bitcoin in Bitcoin 1,640.92      
[1] Van Eck Associates Corporation was the sole shareholder as of December 31, 2023.
[2] No comparative financial statements have been provided as the Trust did not hold any bitcoin as of December 31, 2023.
v3.24.1.1.u2
Capital Share Transactions (Details) - Schedule of Share And Capital Activity
 3 Months Ended
Mar. 31, 2024
USD ($)
shares
Schedule Of Share And Capital Activity Abstract  
Beginning of period, Shares | shares 2,000 [1]
Beginning of period, Amount (in Dollars) | $ $ 100,000
Shares issued, Shares | shares 7,975,000 [2]
Shares issued, Amount (in Dollars) | $ $ 530,072,065
Shares redeemed, Shares | shares (277,000) [2]
Shares redeemed, Amount (in Dollars) | $ $ (20,426,829)
End of period, Shares | shares 7,700,000
End of period, Amount (in Dollars) | $ $ 509,745,236
[1] Van Eck Associates Corporation was the sole shareholder as of December 31, 2023.
[2] On January 4, 2024, the 2,000 Shares held by the Seed Capital Investor were redeemed for cash and the Seed Capital Investor purchased the “Seed Creation Baskets,” comprising of 1,450,000 Shares at a per-Share price of $50.00. Total proceeds to the Trust from the sale of the Seed Creation Baskets were $72,500,000, which resulted in the Trust receiving 1,640.92 bitcoin.
v3.24.1.1.u2
Financial Highlights (Details) - Schedule of Financial Highlights
 3 Months Ended
Dec. 31, 2024
$ / shares
Schedule Of Financial Highlights Abstract  
Net asset value per share, beginning of period $ 50 [1]
From investment operations:  
Net investment loss (0.02) [2]
Net realized gain and change in unrealized appreciation/depreciation on investments in bitcoin 30.42
Total increase resulting from operations 30.4
Net asset value per share, end of period $ 80.4
Total return (%) 60.80% [3]
Ratios to average net assets(d)  
Expenses before fee waiver (%) 0.21% [4]
Expenses after fee waiver (%) 0.11% [4]
Net investment loss (%) (0.11%) [4]
Portfolio turnover rate 6.06% [5]
[1] No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2023.
[2] Net investment income per share has been calculated based upon an average of daily shares outstanding.
[3] Total return calculation is based on the value of a single share of participation outstanding throughout the period. It represents the percentage change in the net asset value per share between the beginning and end of the period and is not annualized.
[4] Annualized.
[5] Not Annualized.
VanEck Bitcoin ETF (AMEX:HODL)
Historical Stock Chart
From Oct 2024 to Nov 2024 Click Here for more VanEck Bitcoin ETF Charts.
VanEck Bitcoin ETF (AMEX:HODL)
Historical Stock Chart
From Nov 2023 to Nov 2024 Click Here for more VanEck Bitcoin ETF Charts.