Tesla’s Q4 Earnings Boosted by Bitcoin

Tesla’s net income for the fourth quarter experienced a significant increase, boosted by a $600 million mark-to-market benefit from its bitcoin holdings due to a recent accounting change mandated by the Financial Accounting Standards Board (FASB). This new rule requires companies to mark their digital asset holdings to market each quarter, starting in 2025, replacing the prior requirement to report holdings at the lowest recorded value. As a result, Tesla’s carrying value of digital assets surged from $184 million over the prior four quarters to $1.08 billion in Q4, reflecting a fair market value of approximately $729 million at the end of Q3. The adjustment contributed to a 68-cent increase in earnings per share, with an actual value increase of about $347 million from its bitcoin in the fourth quarter, aligning with a rally in bitcoin prices. However, despite these gains from bitcoin, Tesla reported disappointing earnings and sales overall, with auto revenue declining by 8% year-over-year, falling short of analysts’ expectations. Additionally, Tesla ranks as the sixth-biggest holder of bitcoin among public companies according to Bitcoin Treasuries.

Source: CNBC