Company: TOXR
Filing Date: 2025-11-20
Form Type: S-1/A
Source: 0001213900-25-112826
Chunk: 84

Company: 21Shares XRP ETF
Filing Date: 2025-11-20
Form: S-1/A
Chunk 84
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 validator
on the XRP Ledger is generally considered a voluntary contribution to the health and decentralization of the network. Participants run
validators for reasons other than direct financial gain, such as supporting the network’s decentralization, ensuring its security,
or for reputational benefits within the XRP community. However, because there is no financial incentive for entities or individuals to
maintain validators, there is no guarantee that such entities or individuals will continue to do so. Additionally, entities or individuals
running validators in certain jurisdictions may be limited or prohibited from continuing these activities as a result of regulation or
governmental decree.

Validators ceasing operations
or participation in the consensus mechanism would make the XRP Ledger more vulnerable to malicious actors obtaining sufficient control
to alter the blockchain and hinder transactions. Any reduction in confidence in the confirmation process and security of the XRP Ledger
may adversely affect the Trust’s investments in XRP. To the extent that a significant number of entities or individuals stop
running validators, there would be serious negative consequences to the XRP Ledger’s functionality, security and overall existence.

Electricity usage.

Concerns have been raised
about the electricity required to secure and maintain digital asset networks. Although measuring the electricity consumed by the process
of securing and maintaining digital asset networks is difficult because these operations are performed by various machines with varying
levels of efficiency, the process consumes a significant amount of energy. Driven by concerns around energy consumption and the impact
on public utility companies, various states and cities have implemented, or are considering implementing, moratoriums on mining activity
in their jurisdictions.

Unlike proof-of-work and
proof-of-stake systems, the consensus protocol utilized by the XRP Ledger is extremely lightweight in terms of energy usage. Notwithstanding,
the operations of digital asset networks, including the XRP Ledger, can consume significant amounts of electricity, which may have a
negative environmental impact and give rise to public opinion against allowing, or government regulations restricting, the use of electricity
for the operations of digital asset networks.

The operations of the XRP
Ledger and other digital asset networks may also consume significant amounts of energy, even though the XRP Ledger is generally considered
to consume significantly less energy than other digital asset networks that utilize proof-of-stake or proof-of-work transaction validation
mechanisms. Further, in addition to the direct energy costs of performing calculations on any given digital asset network, there are
indirect costs that impact a network’s total energy consumption, including the costs of cooling the machines that perform