Tesla Got a $600 Million Boost to Its Net Earnings Because of Bitcoin and a New Accounting Rule

Tesla reported $1.08 billion in digital assets on Wednesday during its Earnings, up from the $184 million it reported for the previous four quarters.

Tesla's net earnings received a hefty boost in the last quarter of 2022, thanks to a new accounting rule for how companies can account for cryptocurrency. The rule change, adopted by the Financial Accounting Standards Board (FASB), now mandates that digital asset holdings be marked to market each quarter, starting at the beginning of 2023.

This change in accounting standards had a significant impact on Tesla, as the company reported a massive $1.08 billion in digital assets on Wednesday during its earnings call, up from the $184 million it reported for the previous four quarters.

According to CNBC, the previous FASB rule allowed companies to report their Bitcoin holdings at the lowest value recorded during their ownership. They were not required to report any subsequent price gains.

However, the new rule requires companies to mark their crypto holdings to the market price at the end of each reporting period. This change resulted in a $600 million net income boost for Tesla in Q4.

CFO Vaibhav Tenja highlighted the impact of the FASB rule on Tesla's net income during the earnings call.

“It is important to point out that the 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, whereby we will change — we will take mark-to-market adjustments through other income every reporting period going forward.”

Tesla's digital asset holdings were last reported at $184 million for Q3, but this was before the new FASB rule. At the time, the real value of Tesla's Bitcoin holdings was around $730 million.

Bitcoin has seen an impressive surge of 51 percent in value since President Trump's successful election campaign in November. On Election Night, Bitcoin was priced at $68,000. Currently, it trades at $105,023 per BTC.