Tesla’s reported net income for the fourth quarter increased significantly due to its Bitcoin holdings, which resulted from a recent rule change that affects how businesses account for digital assets.
In its earnings release on Wednesday, Tesla stated that its digital assets, which had a carrying value of $184 million for the previous four quarters, unexpectedly increased to $1.08 billion in December.
The rise came after the Financial Accounting Standards Board recently changed its policy to require that, beginning in early 2025, corporate digital asset holdings be marked to market quarterly.
Before the FASB regulation change, businesses that owned bitcoin were required to report their holdings at the lowest value at the time of possession, regardless of any future price increases.
CFO Vaibhav Taneja stated during the earnings call that the net income increase was $600 million, and Tesla stated in its earnings deck that the adjustment led to a 68-cent rise in earnings per share for the quarter.
Taneja stated, “It’s important to point out that the adoption of a new accounting standard for digital assets had an impact on the net income in Q4 due to a $600 million mark-to-market benefit from bitcoin.”
Tesla’s bitcoin assets were valued at $184 million at the end of the third quarter, but their fair market value was much higher at $729 million. This indicates that, in line with Bitcoin’s fourth-quarter growth, the actual increase in the value of its holdings during that time was roughly $347 million.
The excitement surrounding the second Trump administration, strongly supported by the cryptocurrency industry, is largely responsible for the current increase in bitcoin prices. Elon Musk, the CEO of Tesla and a prominent White House adviser, was Trump’s largest financial backer. Trump appointed David Sacks, a long-time Musk ally, as the White House AI and crypto czar.
According to Bitcoin Treasuries, the website for tracking Bitcoin, Tesla is the sixth-largest Bitcoin holding among publicly traded corporations.
Although auto sales declined 8% from a year ago, Tesla’s fourth-quarter earnings and revenue fell short of analysts’ estimates on Wednesday. Nevertheless, the stock rose during after-hours trading.
