While Tesla’s core automotive business hit the skids in 2024, the company’s savvy Bitcoin bet delivered a much-needed lifeline. The electric vehicle giant managed to cushion its financial blow with approximately $1.19 billion worth of Bitcoin holdings – 11,509 BTC to be exact. Talk about a lucky break.
The timing couldn’t have been better. Tesla’s automotive sales took a brutal 20% nosedive, but thanks to a $600 million mark-to-market gain on Bitcoin in Q4 2024, the company’s financial statements didn’t look quite as dire. Without those crypto gains, Tesla’s quarterly net income would have plummeted by a staggering 78% year-over-year. Ouch. The network effect value of Bitcoin has helped drive its price higher as more businesses adopt the cryptocurrency.
Tesla’s lucky Bitcoin boost came just in time to soften the blow of plunging car sales and rescue their bottom line.
It’s worth noting that Tesla’s current Bitcoin stash is actually what remains after a massive sell-off. The company initially bought 43,200 BTC for $1.5 billion in February 2021, then dumped about 75% of it by July 2022. Still holding 11,509 BTC proved to be a smart move – especially given Bitcoin’s bull run in 2024. The company had briefly accepted Bitcoin as payment for vehicles before suspending it due to environmental concerns. Tesla has indicated they might resume Bitcoin payments in the future.
New accounting rules (ASU 2023-08) came to Tesla’s rescue too. The company shuffled its Bitcoin to new wallets to comply with regulations, allowing it to record that sweet $600 million gain. Without Bitcoin and regulatory credits, Tesla’s P/E ratio would be through the roof – we’re talking over 1000.
Elon Musk’s cryptocurrency strategy has paid off, even if his car business is struggling. Between Tesla and SpaceX, Musk’s ventures held $1.73 billion in Bitcoin by late 2024. Not too shabby for a backup plan.
The stark reality? Tesla’s total 2024 profit took a nosedive compared to the previous year’s $7.9 billion. Without Bitcoin and regulatory credits propping up the books, a mere 0.5% dividend would push Tesla into negative earnings territory.
Sometimes it’s better to be lucky than good – and having a billion-dollar Bitcoin cushion certainly qualifies as lucky.
