The new FASB rule allowed Tesla to report the market value of digital assets like Bitcoin on their balance sheets.
Other firms in auto tech space like Worksport have also announced adding Bitcoin to their balance sheet.
Bitcoin’s price continues to show bullish momentum, with predictions suggesting a potential rally to $120K by February.
America’s automobile giant (NASDAQ: TSLA) reported its Q4 earnings on Wednesday noting that the value of its Bitcoin holdings surged past $1 billion amid a strong BTC price rally past $100K levels. During the last quarter, the firm recorded a $600 million gain on its 9,720 BTC holdings.
This marks a significant increase from the $184 million recorded in earlier quarters. It also reflects a net gain of $589 million in Bitcoin value over the quarter. Furthermore, the new accounting rules that came into effect will allow the firm to record the market value of the digital assets on its books.
As per the new rule of the Financial Accounting Standards Board (FASB), implemented in mid-December 2023, corporations holding digital assets can report the estimated market value of their digital assets on their balance sheets. As a result, the FASB establishes accounting and reporting standards under US Generally Accepted Accounting Principles (GAAP).
Previously, corporate crypto holdings were required to be recorded at their lower value during an accounting period if their market price dropped. However, it understated a company’s assets compared to its actual market value.
Will Tesla Buy More Bitcoin Moving Ahead?
Tesla was among the early corporate adopters of Bitcoin buying a stash of 42,902 BTC back in February 2021. However, later in July 2022, the company sold 75% of its holdings, more than 30,000 Bitcoin, for a total of $936 million. Since then the automaker has kept its BTC holdings unchanged.
However, the corporate demand for Bitcoin has been growing over the past few months, especially with the expectation of pro-crypto policies in the Donald Trump administration. Adopting MicroStrategy’s Bitcoin acquisition blueprint, several firms like Metaplanet, Semler Scientific, and others have added BTC to their balance sheets.
On Wednesday, another auto tech firm Worksport Ltd (NASDAQ: WKSP) acquired Bitcoin (BTC) and XRP as part of its Treasury reserves. The company announced a six-figure purchase for the two cryptocurrencies with a long-term horizon and stated that it would continue to add more as excess cash grows. Worksport Chief Executive Officer, Steven Rossi, :
“Our business has been growing rapidly, with revenues up and margins steadily improving. We believe our strategic treasury plan is a low-risk approach to hedge inflation and potentially benefit from increasing regulatory clarity around cryptocurrencies. We hold a long-term view on our current BTC and XRP holdings.”
“Our business has been growing rapidly, with revenues up and margins steadily improving. We believe our strategic treasury plan is a low-risk approach to hedge inflation and potentially benefit from increasing regulatory clarity around cryptocurrencies. We hold a long-term view on our current BTC and XRP holdings.”
Bitcoin Price Action Ahead
Bitcoin price is once again showing strength gaining 2.34% in the last hours and looking to retest the resistance of $106K. Breaking past this could trigger a BTC price rally to a fresh all-time high at $100K and beyond.
Source: Captain Faibik
Popular crypto analyst Captain Faibik noted that Bitcoin (BTC) appears to be preparing for another bullish rally, with analysts predicting the potential for significant price movement. He added that according to the Broadening Wedge pattern, Bitcoin could reach as high as $120K by February, signaling optimism for the cryptocurrency’s future performance.
