The price of Bitcoin and Tesla shares have both soared since President Donald Trump’s election win in November. Meanwhile, thanks to an accounting rule change, the digital currency’s rise has provided a boost to the electric vehicle manufacturer’s bottom line.
Tesla’s digital assets have carried a value of $184 million on the company’s balance sheet since the end of 2022, but that number jumped to $1.08 billion when Elon Musk’s company reported earnings Wednesday. The sudden increase is due to the fact that, in December, new accounting rules called for crypto holdings to be measured at fair value on the balance sheet, with changes reflected in net income at the end of each period.
Previously, crypto could only be marked down, not up, meaning gains would only show up in financial statements after the digital assets were sold.
“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,” Tesla CFO Vaibhav Taneja told analysts on the company’s earnings call.
A look at the notes from Tesla’s financial statements provides further clarification. If assessed at fair market value, Tesla’s crypto holdings would have been recorded as worth $487 million at beginning of 2024, not the “cost-less-impairment” number of $184 million. Bitcoin’s massive surge provided unrealized gains of $589 million for the year, adding up to the $1.076 billion number for digital assets on the balance sheet.
That represented roughly 9% of Tesla’s $7.1 billion in profits for 2024 as determined by Generally Accepted Accounting Principles, or GAAP, the standard adopted by the Securities and Exchange Commission but not the numbers companies and Wall Street analysts typically use to interpret performance.
Bitcoin has jumped more than 50% since Trump’s win in November, with the digital currency currently trading near the $106,000 mark thanks to the new administration’s embrace of crypto. Tesla’s crypto holdings were worth $754 million at the end of September, according to blockchain analytics platform Arkham Intelligence, implying that the value of Tesla’s Bitcoin appreciated by $320 million thanks to the digital currency’s fourth-quarter rally.
Tesla’s curious crypto history
Tesla initially bought $1.5 billion of Bitcoin in 2021. Musk, a famous fan of the memecoin Dogecoin, predicted the investment would help the company maximize returns on cash and help it accept crypto payments for its vehicles.
The company shifted its strategy in 2022, however, as it off-loaded most of its Bitcoin for an average price of around $20,000, roughly $18,000 less than the price it originally paid. Tesla’s original investment of 43,200 BTC would be worth about $4.5 billion today.
Nonetheless, Tesla’s remaining holdings—less than 10,000 BTC—makes it the sixth-biggest owner of Bitcoin among U.S. public companies, per Bitcoin Treasuries. Those digital reserves, however, represent less than a tenth of a percent of the company’s roughly $1.2 trillion market cap.
The new guidelines from the Financial Accounting Standards Board, or FASB, represent the first update it has issued on crypto in nearly a decade. The rule change may encourage other corporations to include crypto as part of their corporate treasuries since the ability to record it at fair market value will eliminate a significant impediment to holding it.
