Tesla leveraged a new accounting rule to mark its bitcoin holdings to market value in the fourth quarter, resulting in a significant boost to its reported earnings. The new Financial Accounting Standards Board (FASB) regulation allows corporate bitcoin owners to adjust their asset valuation each quarter instead of reporting at their lowest historical value. Tesla, one of the largest public holders of bitcoin, saw its BTC valuation rise to $1.076 billion by the end of 2024, up from $184 million in previous quarters.

This adjustment led to a $600 million increase in GAAP income for Tesla, contributing to its overall $2.3 billion GAAP income in Q4. However, the gain did not impact the company's adjusted earnings per share (EPS), which came in at $0.73, slightly missing analyst expectations of $0.76.

Despite the earnings miss, Tesla's stock climbed 3.5% in after-hours trading, suggesting investors responded positively to the bitcoin revaluation. The company holds 9,720 BTC, making it the sixth-largest public firm with bitcoin on its balance sheet.

Under the new FASB rule, companies must mark their digital assets to market no later than Q1 2025. Tesla's early adoption of the rule reflects its strategic approach to leveraging digital assets.