Tesla's $600M Bitcoin gain highlights collateral use

Tesla reported a $600 million gain in the fourth quarter of 2024 from its Bitcoin (CRYPTO:BTC) holdings, due in part to new accounting rules that allow companies to record the market value of their digital assets.

Crypto executives say these new accounting rules unlock opportunities for companies to access working capital using their digital assets as collateral.

Tesla's initial investment in Bitcoin occurred in January 2021, when the company acquired $1.5 billion worth of the cryptocurrency.

While Tesla has since sold off more than 70% of its Bitcoin, it still holds 11,509 BTC, currently valued at $1.1 billion.

New accounting rules from the Financial Accounting Standards Board (FASB) went into effect in December 2024, allowing corporations to reflect the fair value of crypto assets on their books.

Previously, companies had to carry Bitcoin at its lowest historical price, obscuring unrealised gains.

Gadi Chait, investment manager at Xapo Bank, told that digital assets can now be marked to market, accurately reflecting fair value.

John Glover, chief investment officer of Ledn, said that the new FASB rules make it easier for companies to hold and report Bitcoin, improving access to working capital backed by their digital asset collateral.

Rather than selling Bitcoin and triggering taxable events, companies can borrow against their holdings to access working capital while maintaining their Bitcoin position.

Glover added that approval of spot Bitcoin ETFs has "legitimised Bitcoin as a treasury asset."

Glover noted that BTC holdings typically generate yields in the 3%–4% range, with some corporate treasuries actively lending to crypto firms to meet rising borrowing demand.

Tesla is among the few large public companies that invested some of their cash into cryptocurrency.

Roughly 26% of Tesla's net income for the fourth quarter of 2024 came from its Bitcoin holdings.

 At the time of reporting, the Bitcoin (BTC) price was $97,543.29.