Bitcoin Bet Pays Off—Tesla Reports $600 Million Gain In Late 2024

Tesla’s Bitcoin bet is paying off in a big way. The electric vehicle giant reported a $600 million unrealized gain on its Bitcoin holdings in Q4 2024, thanks to a new accounting rule update that allows companies to reflect fair market value for their crypto assets. This marks a significant shift in how corporate crypto holdings are reported, bringing greater transparency to balance sheets.

Accounting Rule Change Gives Tesla A Boost

For years, companies holding Bitcoin had to follow outdated accounting standards that only recognized impairment losses—meaning if BTC price dropped, companies had to report the loss. But if the price rebounded, those gains couldn’t be recorded until the asset was sold. This rule made corporate Bitcoin holdings appear riskier than they actually were.

That changed when the Financial Accounting Standards Board (FASB) updated its guidelines, allowing companies to report unrealized gains and losses at fair market value.

Tesla’s $600 million increase in Q4 is a direct result of this shift, aligning its crypto holdings with their actual market value. This gain raised the company’s digital asset value from the $184 million recorded under previous accounting procedures to $1.076 billion.

Tesla Holds Steady On Its Bitcoin Investment

Tesla didn’t purchase or sell any Bitcoin throughout the quarter, despite the price spike. In order to increase liquidity, the company sold down almost 75% of its initial holdings in mid-2022, but it has kept its cryptocurrency stake since then.

This choice demonstrates Tesla’s and Elon Musk’s continued commitment to Bitcoin as a business asset. Despite not actively trading BTC, Tesla’s choice to hold onto its shares is consistent with Musk’s long-standing endorsement of digital assets.

Based on data from Arkham Intelligence, Tesla possesses 11,509 BTC, which is worth $1.19 billion at the current market value.

In the last three months of 2024, Tesla earned $2.3 billion. In 2023, the profit was less than the $7.9 billion earned the previous year, but it included a special tax benefit of $5.9 billion.

In the last three months of the year, Tesla’s total profit fell by 23%, removing that big advantage. In the fourth quarter, sales went up by 2% to $25.7 billion, compared to $25.2 billion in 2023.

Bitcoin is growing more significant for the company’s finances, according to Tesla’s most recent earnings report. Given the new accounting regulations, more publicly traded companies may feel more at ease holding cryptocurrency as part of their holdings without fear of negative financial results.

The increase by Tesla also coincides with a period of increasing institutional confidence shown in the rise in Bitcoin. Once considered as a risky experiment, the company’s digital currency holdings are now proving to be a great advantage.

As Bitcoin becomes more popular, Tesla’s approach may provide a good example for other companies looking to use cryptocurrency. It’s unclear if more companies will follow Tesla’s example, but it’s clear that Tesla’s investment in Bitcoin has become much more appealing.

Featured image from Getty Images, chart from TradingView