Elon Musk's Tesla quietly left off US$97m Bitcoin loss in earnings report
The electric vehicle maker reported adjusted earnings of about US$900 million — more than twice its official net income of US$400 million — after excluding the crypto-related loss and a much larger expense tied to stock compensation.
According to a Bloomberg report, this approach helped offset what was otherwise Tesla's weakest quarterly performance in years.
Such practices fall under the watch of the US Securities and Exchange Commission (SEC), which reviews unofficial earnings figures to ensure companies are not presenting an overly optimistic picture to investors.
In April 2024, the SEC reprimanded Bitcoin miner Marathon Digital Holdings Inc. for omitting the value increase of its crypto assets from adjusted earnings. Marathon later agreed to comply with the regulator's expectations.
Though digital assets are no longer central to Tesla's business, the company still adjusts for gains and losses in crypto valuations. In late 2024, when Bitcoin prices surged, Tesla reported a US$600 million benefit and included it in its non-GAAP earnings.
The inconsistency in treatment could invite scrutiny from regulators if market trends reverse, said Olga Usvyatsky, an accounting analyst.
'If they suddenly eliminate the adjustment during a quarter when Bitcoin shows gains, that would be a red flag,' she said.
Companies are permitted to use non-GAAP metrics to clarify underlying business performance, excluding irregular or non-operating costs. However, the SEC warns firms against presenting figures some critics label 'earnings before bad stuff.'
A new rule issued by the Financial Accounting Standards Board in December 2023 requires companies to report crypto assets at fair value, reflecting their market volatility.
Tesla's chief financial officer, Vaibhav Taneja, acknowledged the impact of the accounting change during an analyst call on Tuesday.
'With the adoption of the new mark-to-market standard for Bitcoin, we expect increased volatility in our other income in addition to the FX equivalent,' Taneja said.
Tesla declined to comment on the specific treatment of the crypto loss in its latest earnings report.
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