Tesla Inc. (NASDAQ: TSLA) elected to retain its Bitcoin assets throughout the fourth quarter, yet its cryptocurrency holdings experienced a significant valuation decline, culminating in paper losses as detailed in the company’s recent earnings release.
On December 31, Tesla reported holding approximately $1.008 billion in digital assets, marking a 23% reduction compared to the previous quarter. This information emerged following the company's market-close earnings announcement on Wednesday. Contrasting with the preceding two quarters, during which Tesla recorded unrealized gains on its crypto portfolio, the fourth quarter reflected a reversal with paper losses totaling about $307 million.
Although Tesla does not publicly disclose the specific composition of its cryptocurrency portfolio, independent on-chain intelligence from Arkham Intelligence indicates that the entirety of Tesla’s digital assets comprises Bitcoin. The firm’s Bitcoin inventory remained constant at 11,509 BTC relative to the previous quarter.
The decrease in Tesla's digital asset value closely mirrors the broader cryptocurrency market conditions. Bitcoin itself faced a drop of 23.7% over the same quarter, corroborating the downward trend seen in Tesla’s crypto valuation.
Tesla’s engagement with Bitcoin commenced in January 2021 when the company initially invested $1.5 billion in the cryptocurrency. During this period, Tesla had extended its acceptance of Bitcoin as a payment mechanism for vehicle purchases. However, concerns regarding the environmental impact associated with Bitcoin mining led the company to discontinue this payment option.
On a broader financial front, Tesla's fourth-quarter results exceeded market expectations. The company posted earnings and revenues above consensus estimates, reflecting robust operational performance outside of its crypto holdings.
Additionally, Tesla announced its intention to invest $2 billion in purchasing shares of xAI, an artificial intelligence startup founded by Elon Musk, signaling a strategic interest in advanced AI ventures alongside its core automotive and energy businesses.
At the time of reporting, Bitcoin was trading at approximately $88,510.89, reflecting a 0.98% decrease within the prior 24-hour period, based on data provided by Benzinga Pro. Tesla’s shares responded positively during after-hours trading, advancing 1.92% following a marginal intraday increase of 0.13%, where the stock closed at $431.46 on Wednesday.
According to Benzinga's proprietary Edge Rankings, Tesla’s performance is highlighted by strong momentum, although it shows a weaker price trend across short- and medium-term timeframes. These metrics underscore market dynamics influencing Tesla's stock amid varying demand factors.