In this article, Tesla’s bitcoin holdings resulted in a significant increase in reported net income for the fourth quarter due to a new accounting rule change regarding digital assets. Tesla disclosed in its earnings release on Wednesday that after reporting a carrying value of $184 million in digital assets for the previous four quarters, the figure surged to $1.08 billion in the December period.
The surge was a consequence of a recent policy modification by the Financial Accounting Standards Board, which requires companies to mark their corporate digital asset holdings to market value each quarter starting in 2025. Prior to this FASB rule change, companies holding bitcoin were obligated to report their holdings at the lowest recorded value during their ownership, irrespective of any subsequent price appreciation.
Tesla mentioned in its earnings presentation that this alteration led to an increase in earnings per share by 68 cents in the quarter. CFO Vaibhav Taneja highlighted during the earnings call that the net income rise amounted to $600 million. Taneja emphasized, “It’s important to point out that the net income in Q4 was impacted by a $600 million mark-to-market benefit from bitcoin due to the adoption of a new accounting standard for digital assets.”
By the end of the third quarter, Tesla’s bitcoin holdings were valued at $184 million, although their fair market value was notably higher at $729 million. This indicates that the actual increase in the value of its holdings during the period was approximately $347 million, reflecting bitcoin’s rally in the fourth quarter.
The recent surge in bitcoin value is largely attributed to optimism surrounding the potential second Trump administration, which received substantial support from the crypto industry. Tesla CEO Elon Musk was a major financial supporter of Trump and currently serves as a key advisor in the White House. David Sacks, a longtime ally of Musk, was appointed by Trump to be the White House AI and crypto czar.
According to Bitcoin Treasuries, a bitcoin tracking website, Tesla is ranked as the sixth-largest holder of bitcoin among public companies. Despite Tesla’s fourth-quarter earnings and revenue falling below analysts’ expectations on Wednesday with an 8% decline in auto revenue from the previous year, the stock saw an increase in after-hours trading.
— CNBC’S Lora Kolodny contributed to this report.
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