Tesla's Bitcoin Bet: New Accounting Rules Reveal $600M Gain in Fourth Quarter
New accounting rules are giving a clearer picture of the financial impact of Tesla's Bitcoin holdings. The electric vehicle maker, led by Elon Musk, reported a $600 million paper gain on its Bitcoin investment in the fourth quarter of 2024, thanks to a recent update that allows companies to reflect the current market value of their digital assets on their balance sheets.
A Fairer Reflection: How New Rules Changed the Game
Previously, companies were required to write down the value of their crypto holdings if prices fell, but they couldn't recognize any gains until the assets were sold. This often resulted in a distorted view of a company's financial position, particularly for those with significant crypto investments. The new rule, introduced by the Financial Accounting Standards Board (FASB), allows companies to mark their digital asset holdings to market, providing a more accurate reflection of their value.
Tesla's Bitcoin Holdings: A $1 Billion+ Asset
Under these new rules, Tesla's digital asset holdings grew to $1.076 billion by the end of 2024, up from $184 million the previous quarter. Bitcoin's impressive performance in the last three months of 2024, fueled by strong inflows into spot Bitcoin ETFs and renewed optimism around the regulatory landscape, significantly contributed to this increase.
While Tesla did not disclose the exact number of Bitcoins it holds in its Q4 report, data from Arkham Intelligence suggests the company holds around 11,509 BTC, currently valued at approximately $1.21 billion. This makes Tesla the fourth largest publicly traded holder of Bitcoin, trailing behind MicroStrategy, Marathon Digital, and Galaxy Digital.
Profits and Performance: Bitcoin's Impact on Tesla's Bottom Line
The $600 million paper gain contributed to Tesla's overall financial performance, with the company reporting a GAAP net income of $2.3 billion for Q4 and $7.1 billion for the entire year. However, its adjusted earnings per share of $0.73 fell slightly short of analyst expectations of $0.76.