SpaceX and xAI Merger Creates $1.25 Trillion Company With Bitcoin Holdings

TLDR

• Elon Musk’s SpaceX has merged with his AI startup xAI in a deal valued at $1.25 trillion
• The combined company plans to go public and holds 8,300 bitcoin worth approximately $650 million
• Musk cited space-based AI as necessary due to power limitations of terrestrial data centers
• SpaceX bought its bitcoin in 2021 and has never sold any holdings unlike Tesla
• The merger consolidates cryptocurrency holdings across Musk’s various business ventures

Elon Musk announced the merger of his aerospace company SpaceX with artificial intelligence startup xAI. Bloomberg reports the combined entity will pursue an initial public offering at a $1.25 trillion valuation.

The merger unites two of Musk’s privately held ventures into what could become one of the world’s most valuable public companies. xAI recently raised funding at a $230 billion valuation while SpaceX was valued at roughly $800 billion.

Musk explained the strategic reasoning behind combining rocket technology with AI development. He wrote that current AI systems rely on large terrestrial data centers requiring enormous power and cooling resources. Global electricity demand for AI cannot be satisfied with ground-based infrastructure without negatively impacting communities and the environment, according to Musk.

SpaceX Bitcoin Position Returns to Spotlight

The merger brings renewed attention to SpaceX’s cryptocurrency holdings as the company moves toward a public listing. SpaceX owns roughly 8,300 bitcoin acquired in 2021, currently valued at about $650 million.

While this represents a small fraction of the merged company’s total worth, the bitcoin position will require careful handling under public company rules. SpaceX has remained private since purchasing its cryptocurrency, avoiding the quarterly earnings swings that affect public firms under fair-value accounting standards.

Once the IPO process begins, these protections disappear. The company will need to report bitcoin holdings and any value changes to shareholders regularly.

Contrast With Tesla’s Bitcoin Strategy

Tesla’s bitcoin experience offers insight into potential challenges ahead. Musk’s electric vehicle company has recorded hundreds of millions in paper losses during cryptocurrency market downturns, even without selling holdings.

SpaceX has maintained a buy-and-hold approach since 2021. Unlike Tesla, which has both sold and repurchased bitcoin, SpaceX has not traded its position. This long-term strategy may appeal to investors seeking stability but reduces options if cryptocurrency markets decline during the IPO window.

The merger consolidates digital asset exposure across Musk’s business portfolio. Tesla ranks among the largest public companies holding bitcoin, and now the SpaceX-xAI combination adds another major corporate position.

Each company has operated under separate disclosure requirements and accounting methods due to their different public and private statuses. The merged entity will need unified policies for managing cryptocurrency assets going forward.

Bitcoin has experienced high volatility recently following liquidation-driven market selloffs. The timing of the IPO will determine how cryptocurrency market conditions affect investor reception and company valuation.

The combined SpaceX-xAI company will face new requirements for bitcoin disclosure and accounting once it goes public. The $650 million cryptocurrency position will appear in financial statements and be subject to mark-to-market accounting rules that can create earnings volatility unrelated to core business performance.

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