Tesla had a $600 million boost in its net earnings because of Bitcoin and a new accounting rule for how companies can account for crypto.
Tesla reported $1.08 billion in digital assets on Wednesday during its Earnings, up from the $184 million it reported for the previous four quarters.
The bump was due to a recent policy change from the FASB (Financial Accounting Standards Board) which mandates digital asset holdings be market to market each quarter starting at the beginning of this year, CNBC reported.
The previous FASB rule allowed companies to report their Bitcoin holdings at the lowest value recorded during their ownership. They were not required to report any subsequent price gains.
CFO Vaibhav Tenja said during the Earnings Call that the net income in Q4 was impacted by the FASB rule (via Motley Fool):
“It is 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, whereby we will change — we will take mark-to-market adjustments through other income every reporting period going forward.”
Tesla reported a Bitcoin holding of $184 million for Q3, but this was pre-new FASB rules. The real value was around $730 million.
Bitcoin has exploded 51 percent in value since President Trump’s successful election campaign in November. It was priced at $68,000 on Election Night. It now trades at $105,023 per BTC.
Tesla dipped its toe into crypto several years ago in 2021, as it revealed in a 10-K that year that it invested $1.5 billion in bitcoin and said it “may acquire and hold digital assets from time to time or long-term.”
It sold three-quarters of its BTC holdings in Q2 2022, stating that it converted “approximately 75% of our Bitcoin purchases into fiat currency.”
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