Bitwise Bitcoin ETF (NYSE: BITB)

Bitwise Bitcoin ETF (the “Trust”) is a Delaware statutory trust designed to provide investors with exposure to bitcoin through a regulated, exchange-traded product. The Trust holds bitcoin as its sole asset, tracking its value using the CME CF Bitcoin Reference Rate - New York Variant (BRRNY), a benchmark calculated daily based on aggregated trade data from major bitcoin trading platforms. Listed on NYSE Arca under the ticker symbol “BITB,” the Trust commenced operations in January 2024, offering a cost-effective and secure alternative to direct bitcoin ownership by eliminating the complexities of custody, storage, and transaction execution. The Trust operates within the digital asset investment industry, specifically targeting investors seeking bitcoin exposure without the operational burdens of self-custody or the risks associated with unregulated platforms.

The Trust generates revenue primarily through a management fee charged to shareholders. This fee is set at an annualized rate of 0.20% of the Trust’s bitcoin holdings, accrued daily and payable monthly in bitcoin. The Sponsor, Bitwise Investment Advisers, LLC, temporarily waived the entire fee on the first $1 billion of Trust assets for the initial six months following the Trust’s listing. The Trust does not engage in active trading, lending, or leveraging of its bitcoin holdings, ensuring a passive investment strategy that directly mirrors bitcoin’s market performance, net of expenses. Revenue is derived solely from this fee structure, with no additional income streams such as transaction fees or performance-based incentives.

Bitwise Bitcoin ETF occupies a competitive position within the rapidly evolving digital asset investment landscape, particularly among bitcoin exchange-traded products (ETPs). The Trust competes with other spot bitcoin ETFs, including those offered by industry incumbents such as Grayscale, BlackRock, and Fidelity, as well as futures-based bitcoin ETFs and traditional investment vehicles like closed-end funds and trusts. Its competitive advantages lie in its passive management approach, which minimizes tracking error and operational risks, and its reliance on a transparent, regulated benchmark (BRRNY) for daily net asset value (NAV) calculations. The Trust also benefits from institutional-grade custody solutions, with Coinbase Custody Trust Company serving as the bitcoin custodian, ensuring high-security offline storage and multi-layered encryption protocols. Additionally, the Trust’s structure avoids the use of derivatives or leverage, reducing counterparty and credit risks that may affect other bitcoin investment products.

The Trust’s customer base consists primarily of institutional and retail investors seeking regulated exposure to bitcoin. Authorized Participants, who are registered broker-dealers or financial institutions, facilitate the creation and redemption of Shares in large blocks known as Baskets. These entities include firms such as Jane Street Capital, LLC, and other market participants approved by the Sponsor. Retail investors access the Trust’s Shares through secondary market transactions on NYSE Arca, where Shares trade like traditional securities. The Trust does not engage directly with end investors but relies on Authorized Participants and brokerage platforms to distribute Shares. This structure ensures liquidity and accessibility while maintaining compliance with regulatory requirements.