Key Takeaways
- Tesla's Q4 net income rose by $600M due to a Bitcoin accounting rule change.
- New FASB rules allow companies to mark digital assets to market quarterly.
- Tesla's Bitcoin holdings surged in reported value from $184M to $1.08B.
Tesla’s Q4 earnings received a $600 million boost due to a Financial Accounting Standards Board (FASB) rule change, which now mandates that corporate digital asset holdings be marked to market each quarter.
Official statement
Tesla CFO Vaibhav Taneja stated during the earnings call:
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.
New accounting rules
Previously, companies had to report Bitcoin holdings at their lowest recorded value, regardless of subsequent price increases.
Under the new rule, Tesla’s digital asset valuation jumped from $184 million to $1.08 billion in its latest earnings report.
Bitcoin’s price rally
At the end of Q3, Tesla’s Bitcoin holdings were recorded at $184 million, while their fair market value was actually $729 million.
With Bitcoin rallying in Q4, the fair market value increase was estimated at $347 million, driving Tesla’s reported net income per share up by 68 cents.
Bitcoin holdings ranking
Tesla is currently ranked sixth among public companies in Bitcoin holdings, according to Bitcoin Treasuries.
Overall financial performance
Despite the Bitcoin-related boost, Tesla’s Q4 earnings and revenue fell short of expectations, with auto revenue dropping 8% year-over-year.
However, the stock climbed in after-hours trading, fueled by optimism around Bitcoin’s gains and Tesla’s large holdings.
