SpaceX and xAI Merge Into $1.25 Trillion Company With $650 Million Bitcoin Holdings

TLDR

• SpaceX and xAI have merged to form a combined company expected to IPO at a $1.25 trillion valuation
• The merged entity inherits SpaceX’s bitcoin holdings of approximately 8,300 BTC, worth around $650 million
• Elon Musk stated “space-based AI is obviously the only way to scale” as the reason for the merger
• The deal concentrates crypto exposure across Musk’s business empire, alongside Tesla’s bitcoin position
• SpaceX has held bitcoin since 2021 and unlike Tesla has not traded its position

Elon Musk has merged his rocket company SpaceX with his artificial intelligence firm xAI. The combined entity is expected to go public at a valuation of $1.25 trillion, according to Bloomberg.

Musk announced the merger by explaining the rationale behind combining space technology with AI development. He stated that current AI advances depend on large data centers that need massive amounts of power and cooling. According to Musk, global electricity demand for AI cannot be met with ground-based solutions without causing hardship to communities and the environment.

The merger brings SpaceX’s bitcoin holdings into focus as the company prepares for its public listing. SpaceX owns approximately 8,300 BTC, which it first purchased in 2021. At current prices, this stake is worth roughly $650 million.

Bitcoin Accounting Challenges Ahead of IPO

The bitcoin holdings represent a small portion of the company’s overall valuation. However, they will matter for accounting purposes, disclosure requirements, and investor perception once the IPO process begins.

SpaceX has remained private since acquiring its bitcoin position. This has protected the company from the quarter-to-quarter earnings volatility that public companies face under fair-value accounting rules. That protection will end once IPO preparation starts.

Tesla’s experience with bitcoin serves as a reference point for what SpaceX might face. The automaker has recorded hundreds of millions of dollars in paper losses during market downturns, even without selling its holdings.

The merger concentrates crypto exposure within a single corporate structure. This happens at a time when bitcoin has experienced extreme volatility following recent liquidation-driven selloffs.

Different Approach Than Tesla

SpaceX has taken a different approach to its bitcoin position compared to Tesla. While Tesla has previously sold and repurchased bitcoin, SpaceX has shown little interest in trading its holdings. This stability could attract long-term investors, but it also reduces flexibility if market conditions worsen during the IPO window.

The deal raises questions about crypto asset management across Musk’s business empire. Tesla, SpaceX, and xAI have operated under different disclosure regimes, accounting treatments, and capital structures. Tesla is a public company, while SpaceX and xAI have been private.

The combined company will need to establish clear policies for handling its bitcoin position. This includes decisions about holding, selling, or adding to the position.

Bloomberg reported that xAI recently raised money at a $230 billion valuation. SpaceX was valued at approximately $800 billion in its most recent funding round.

The merger creates one of the world’s most valuable private companies before its planned IPO. The $650 million bitcoin position will now be subject to public company disclosure and accounting requirements.

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