Bitcoin Made Up a Big Chunk of Tesla's Profits Last Quarter

Elon Musk's electric vehicle company recorded $589 million in paper gains on the crypto as profit, boosting its net income by 34% to $2.3 billion.

Tesla booked a hefty chunk of its profit last quarter thanks to an accounting rule change that allowed the automaker to report its unrealized gains on bitcoin as income.

Elon Musk's electric vehicle company recorded $589 million in paper gains on the crypto as profit, boosting its net income by 34% to $2.3 billion.

Tesla's finance chief, Vaibhav Taneja, confirmed on the company's earnings call that there was a "$600 million mark-to-market benefit from bitcoin due to the adoption of a new accounting standard for digital assets."

The Financial Accounting Standards Board recently changed its policy to allow companies to mark their digital assets to market each quarter. Previously, they had to report their holdings at the lowest value those assets had ever reached under their ownership.

Tesla had been carrying its bitcoin hoard on its balance sheet at $184 million but marked it up to $1.076 billion last quarter. The fair market value of its digital assets was $729 million at the end of September, meaning they rose in value by nearly $350 million last quarter as bitcoin soared to record highs.

Tesla originally invested $1.5 billion in bitcoin in January 2021, when the token was trading in the $30,000 to $40,000 range, compared with about $105,000 now.

At the time, the company said it had updated its investment policy to give itself more flexibility to diversify and maximize returns on its spare cash. But the carmaker sold about 75% of its bitcoin stash by the end of June 2022.

Crypto has seen a resurgence as President Trump continues to embrace the nascent industry. He launched his own $Trump token shortly before his inauguration, and Trump Media & Technology Group announced this week that it would expand into financial technology and crypto.