Elon Musk's Tesla Records $600 Million In Paper Gains On Bitcoin In Q4 Thanks To New Accounting Rule

Electric vehicle behemoth Tesla Inc. TSLA reported an unrealized gain of $600 million on its cryptocurrency holdings in the fourth quarter.

What happened: Tesla’s balance sheet showed $1.07 billion in digital assets, up from $184 million from the last several quarters, according to the company’s earnings report released Wednesday after the market close.

The company also reported a mark-to-market gain of $600 million on digital assets in the fourth quarter. For context, this was 26% of the total income made by the Elon Musk-led firm in the quarter.

Note that Tesla doesn't provide a breakdown of its digital holdings. However, on-chain analytics firms have indicated that the entirety of their stockpile consists of Bitcoin BTC/USD.

At the time of writing, Tesla held 11,509 BTC on its books, according to Arkham Intelligence, unchanged from last quarter. Tesla is the fourth-largest public company with Bitcoin on its balance sheet behind MicroStrategy, Marathon Digital Holdings, and Galaxy Digital Holdings, according to Coingecko data.

Why It Matters: The inflated value follows the new accounting standard for cryptocurrencies, enabling firms to report their holdings at market value and include them in the company's net income.

Before the mark-to-market standards, companies had to account for impairment charges, accounting for only the unrealized losses but not the gains.

Tesla’s Bitcoin journey began in January 2021, when it first acquired $1.5 billion worth of the leading cryptocurrency.

Tesla reported lower-than-expected fourth-quarter revenue of $25.71 billion, up 2% year-over-year.

Price Action: At the time of writing, Bitcoin was exchanging hands at $103,969.15, up 2.13% in the last 24 hours, according to data from Benzinga Pro.

Shares of Tesla were up 4.15% in after-hours trading after closing down 2.26% at 389.10 during Wednesday's regular trading session.

Photo by Rcc_Btn on Shutterstock

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