Tesla's (TSLA.US) Bitcoin profit skyrocketed by $600M following the change in digital asset regulations.

Changes in accounting rules for digital assets led to a massive surge in Tesla's (TSLA.US) net profit in the fourth quarter, driven by the company's bitcoin holdings. The electric vehicle maker reported that the value of its digital assets jumped to $1.08 billion in the fourth quarter from $184 million in the previous four quarters in its earnings report on Wednesday.

Earlier, the Financial Accounting Standards Board changed its policy to require companies to value their digital asset holdings on a quarterly basis at market value starting in early 2025. Before the FASB rule change, companies holding bitcoin had to report the value of their holdings at the lowest value recorded during the holding period, regardless of whether the price subsequently rose.

Tesla said in its earnings report that the change led to a 68 cent increase in fourth-quarter earnings per share, with CFO Vaibhav Taneja noting that the net profit increased by $600 million.

"It is important to note that the fourth-quarter net profit was affected by a $600 million increase in the value of bitcoin due to the adoption of new accounting standards for digital assets," Taneja said.

Tesla's balance sheet showed the value of its bitcoin holdings at $184 million at the end of the third quarter, but its fair market value was much higher at $729 million. This means the company's bitcoin holdings actually increased by about $347 million during the period, reflecting the rise in bitcoin in the fourth quarter.

The recent rise in bitcoin has been largely driven by optimism about a second Trump administration, with Tesla CEO Elon Musk a Trump supporter and now a senior White House adviser. Trump appointed Musk's longtime ally David Sacks as the White House's crypto czar.

Tesla is listed as the sixth-largest holder of bitcoin by the Bitcoin Treasuries website.

Tesla's fourth-quarter revenue and earnings per share missed market expectations, with auto revenue down 8% year-on-year, but the company's stock rose in after-hours trading. The electric vehicle maker said that advances in its self-driving technology and new vehicle plans would drive the company to "return to growth" in 2025.