Tesla reported a substantial $600 million increase in the value of its Bitcoin holdings during Q4 2024, thanks to new cryptocurrency accounting rules implemented in December 2023.
The electric vehicle manufacturer's digital assets jumped from $184 million at the end of 2022 to $1.08 billion in its latest earnings report. This dramatic rise stems from updated Financial Accounting Standards Board (FASB) guidelines that now require companies to measure crypto holdings at fair market value on their balance sheets.
"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 explained during the earnings call.
Previously, companies could only report losses when cryptocurrency prices fell but couldn't recognize gains unless they sold their holdings. The new FASB rules allow firms to reflect both gains and losses based on current market prices.
Tesla currently holds approximately 9,720 Bitcoin, making it the sixth-largest Bitcoin holder among U.S. public companies. The company first entered the cryptocurrency market in 2021 with a $1.5 billion Bitcoin purchase but sold most of its position in 2022 when prices dropped.
While the Bitcoin gains provided a welcome boost to Tesla's bottom line, representing about 9% of its $7.1 billion GAAP profits for 2024, the company still faced challenges. Tesla missed earnings estimates, posting $0.73 per share versus expected $0.76, while revenue grew only 2% year-over-year to $25.71 billion.
The FASB rule change may encourage other corporations to add cryptocurrency to their treasuries since they can now more accurately reflect the value of these digital assets in their financial statements.