How Did Tesla Just Realise $1 Billion on Their Bitcoin?

Profit was down year on year, deliveries of Teslas were down, all in all it was down, down, down. Except one thing was up, up, up. Its Bitcoin holdings.

Author

Adam Atlantic
January 30, 2025 • Estimated Reading Time: 5 minutes

Tesla just banked $1 billion in Bitcoin.

It released its quarterly earnings yesterday and frankly; the car business was a disappointment.

Expectations from Wall St were revenues of $27.22 billion. Tesla only reported $25.71 billion.

Profit was down year on year, deliveries of Teslas were down, all in all it was down, down, down.[1]

Except one thing was up, up, up.

Its Bitcoin holdings.

And that might be a significant contributing factor as to why the stock was pumping 4.4% higher in after-hours trading.

Why Have They Made so Much on Bitcoin?

In their filing, Tesla reported a substantial gain of $600 million on its Bitcoin holdings in the fourth quarter of 2024.

That means a markup to fair value from $184 million to $1.076 billion.

The thing is, this has only been possible since December last year. That’s because of a change to the Financial Accounting Standards Board (FASB) rules around Fair Value Accounting for Bitcoin.

This meant Tesla could reflect the current market price of Bitcoin rather than a historically low recorded price.

It would appear that while Tesla's earnings-per-share missed expectations by some way, it’s this revaluation of their Bitcoin pushing Tesla's stock up by 4.4% in after-hours trading.

What is the FASB and What is the Change?

The Financial Accounting Standards Board (FASB) has introduced a significant update to how companies report their cryptocurrency holdings, specifically Bitcoin.[2]

Effective for fiscal years starting after December 15, 2024, this change requires companies to measure their crypto assets at fair value each reporting period. This is a big change from the previous cost-less-impairment model. In effect, that meant for years companies had to record their Bitcoin value at cost base, less impairment.

This positive change means companies can now reflect both gains and losses based on market value of their Bitcoin (or crypto) in their financials.

This change is big for Tesla, considering how long they’ve held their Bitcoin.

And they’re one of the first hodlers of Bitcoin to report based on this new accounting standard.

But they’re not the only one.

Here’s a few more that could see significant increases in their earnings simply off the back of their new reporting standards for Bitcoin holdings.

MicroStrategy: Having one of the largest public holdings of Bitcoin of 471,107 at an average purchase price of $64,511, they could see their balance sheet reflect a much higher valuation of Bitcoin. Based on their cost base, and a current value of $104,000, MicroStrategy could be reporting an $18.6 billion gain in upcoming earnings.

Block (formerly Square): Another company with significant Bitcoin on its books, Block holds around 8,211 Bitcoin.[3] 4,709 of that came in 2020 at a price of $10,618 per Bitcoin. Another 3,318 came in 2021 at $51,236.[4] That means a gain of $439 million and $175 million, for a grand total of $614 million in gains they could be reporting.

Coinbase: As a crypto-native company, Coinbase could see its earnings go absolutely bonkers when they report next. They’ve been holding Bitcoin and other crypto on their balance sheet going back to 2012![5]

Exactly when and how much they bought we’ll find out soon enough. But it’s estimated they have around 9,000 Bitcoin, so fair value on all their holdings could be up around $1 billion, and from 2012, the reported gain could be up around $900 million (or more)

What Does This Mean?

Well, expect the earnings for companies holding Bitcoin to skyrocket in the coming earnings seasons. Being able to fairly report now will see a short burst higher in their numbers.

This does also mean if Bitcoin’s price heads lower, they will be reporting losses. But if it heads higher, as in heads to $1 million or more, then it’s companies like these, all with Bitcoin on the balance sheet that will see earnings balloon.

End result is there’s a good chance more companies will look to adopt Bitcoin into their corporate strategy and that idea of $1 million won’t seem so far away.

Trust in crypto,
Adam Atlantic