Tesla (TSLA, Financial) experienced a significant rise in its fourth-quarter net profit, driven by changes in accounting rules for digital assets. The company reported that the book value of its digital assets soared to $1.08 billion in the fourth quarter, compared to $184 million in the previous four quarters.
This increase is attributed to the Financial Accounting Standards Board (FASB) updating its policies, which will require companies to value their digital asset holdings at market prices each quarter starting in 2025. Previously, companies holding Bitcoin had to report it at the lowest value recorded during the holding period, regardless of any subsequent price increases.
As a result of this change, Tesla's earnings per share rose by $0.68, with net profit increasing by $600 million. The company's CFO, Vaibhav Taneja, highlighted the impact of Bitcoin's value on the fourth-quarter net profit.
By the end of the third quarter, Tesla's Bitcoin holdings had a book value of $184 million, but their fair market value was significantly higher at $729 million. This indicates an approximate $347 million increase in Bitcoin value during the period, reflecting Bitcoin's rise in the fourth quarter.
Despite Tesla's fourth-quarter revenue and earnings per share falling short of market expectations, and an 8% year-over-year decline in automotive revenue, the company's stock rose in after-hours trading. Tesla remains optimistic about future growth, citing advancements in automotive self-driving technology and new model plans as key drivers for recovery by 2025.
