- Despite a 20% decline in Q1 auto revenue contributing to a 9% overall revenue decrease, Tesla’s earnings report reveals the company maintained its $951 million Bitcoin holding
- This strategic decision to retain their 11,509 Bitcoins comes amidst new accounting rules.
Tesla’s latest earnings report reveals that at the close of the first quarter, the company was still holding $951 million in Bitcoin. This move highlights Tesla’s firm belief in digital currencies despite a notable 20% drop in automotive revenue during the same period.
Decoding Tesla’s Q1 Performance and Bitcoin Strategy
Tesla’s first-quarter results present a blend of financial obstacles and strategic decisions. The company’s dedication to Bitcoin remains evident, even as overall revenues face downward pressure.
The $951 million in Bitcoin is a slight decrease from the $1.076 billion reported at the end of December, a change that mirrors Bitcoin’s price volatility during the quarter. Yet, Tesla has not sold any of its Bitcoin, continuing to hold 11,509 Bitcoins. This commitment dates back to early 2021 when Tesla became a pioneering automaker to integrate digital assets into its financial strategy.
These figures come at a time when new accounting rules for digital assets are taking effect. The Financial Accounting Standards Board (FASB) now mandates that companies mark their crypto holdings to “fair value” each quarter.
“CRYPTO TO BE MEASURED AT FAIR VALUE UNDER NEW FASB RULES,” as reported by Walter Bloomberg.
Previously, companies could only record gains upon selling the asset, but were required to record losses even without selling. Many believe these changes are in line with the crypto industry’s demands.
Despite the revenue dip and broader economic uncertainties, institutional confidence in Bitcoin appears to be growing. Tesla’s decision to hold its Bitcoin may indicate faith in the long-term potential of cryptocurrency.
The financial summary shows that total revenue declined by 9% year-over-year (YoY) to $19.3 billion, mainly due to a drop in vehicle deliveries, a reduced average selling price (ASP), and a $0.3 billion negative foreign exchange impact. However, there was some offset from growth in Energy Generation, Storage and Services, as well as increased regulatory credit revenue.
Operating income decreased significantly, by 66% YoY, to $0.4 billion, resulting in a 2.1% operating margin. This decline was largely driven by lower vehicle ASP, fewer deliveries, and higher operating expenses from AI and R&D efforts.
Despite the challenges, cost savings from the Cybertruck production ramp and reduced raw material costs helped offset some of the negative impacts. Additionally, gains in Energy Generation and Storage gross profit, along with higher regulatory credit revenue, provided further support. The company closed the quarter with $37.0 billion in cash, cash equivalents, and investments, reflecting a $0.4 billion increase primarily driven by positive free cash flow.
Furthermore, CEO Elon Musk’s involvement with the Trump administration, focusing on government efficiency, coincides with concerns over the White House’s tariff policies. These policies could adversely affect EV manufacturers like Tesla by increasing import costs for critical components. Today, Bitcoin is trading at $94,191, up 6.55% in the last 24 hours, with a trading volume of $ 58.75 B.