Tesla's Bitcoin Surge: Early Adoption Boosts Earnings; Texas Eyes State Bitcoin Reserve

Tesla, the electric vehicle manufacturer, has reported a significant boost to its earnings in the fourth quarter, largely driven by a change in accounting standards for digital assets. The company has marked up the valuation of its Bitcoin holdings to $1.076 billion, a $600 million increase from its previously reported value. This surge in valuation is due to the implementation of a new accounting rule that allows companies to mark-to-market their digital assets quarterly, rather than reporting them at the lowest valuation recorded during ownership.

The Financial Accounting Standards Board (FASB) introduced this new rule in late 2024, with full implementation required by the first quarter of 2025. However, Tesla appears to have adopted the standard early, leading to a substantial increase in its GAAP income for the quarter. The company reported an overall GAAP income of $2.3 billion for the quarter, meaning Bitcoin holdings accounted for over a quarter of its reported profits. Despite an earnings miss, Tesla's stock rose 3.5% in after-hours trading as investors responded positively to the updated Bitcoin valuation.

Meanwhile, Texas Lieutenant Governor Dan Patrick has officially included a Texas Bitcoin Reserve in the state's 2025 legislative priorities. This move sets the stage for Texas to adopt Bitcoin as a strategic asset. The push for a state-backed Bitcoin reserve has gained traction, with state Senator Charles Schwertner and Representative Giovanni Capriglione both introducing legislation to allow fees, taxes, and contributions to be paid in Bitcoin, which could then be used to build the reserve. Schwertner argued that the initiative would position Texas at the forefront of the digital economy and further strengthen its status as a crypto-friendly state.

Texas joins several other U.S. states working on similar legislative efforts to integrate Bitcoin into state finances. The move comes as Wyoming Senator Cynthia Lummis pushes the BITCOIN Act, a federal initiative aimed at establishing a national strategic Bitcoin reserve. As the eighth-largest economy in the world, Texas' potential Bitcoin adoption could set a precedent for other states and institutions.

In other news, Bitcoin surged over 4.5% to $105,000, extending its biggest jump in over a week after Federal Reserve Chair Jerome Powell made neutral-to-positive remarks about crypto regulation during the Fed’s latest policy meeting. Powell reaffirmed that banks are "perfectly able to serve crypto customers" provided they manage