Tesla and SpaceX have formed a special committee to explore a merger that would create the largest equity in the world by market capitalization. In a video clip from Bitcoin Magazine, Sean Hagan breaks down why the deal is a “no brainer” on first principles: a combined company would earn a higher index weighting and capture more passive flows than either firm alone. As described, the committee represents an exploratory step rather than a definitive agreement — so the index implications discussed here would only become concrete if a deal advances.

Watch the full clip on YouTube.

The argument rests on index mechanics. Benchmarks such as the S&P 500 weight their constituents by market capitalization, meaning larger companies attract proportionally greater buying from the index funds and exchange-traded funds that track them — the so-called passive flows, which now account for a substantial share of U.S. equity assets. Hagan argues that a merged Tesla-SpaceX entity, by virtue of its combined size, would draw more of this index-driven demand than either company could generate on its own.

Hagan connects the discussion to the MSCI decision on Strategy, the software company and largest corporate holder of bitcoin — a decision that followed a public consultation over whether companies with concentrated bitcoin treasuries should remain index-eligible. That episode explains why passive flows matter for Bitcoin treasury companies more broadly: for firms that hold bitcoin on their balance sheets, index eligibility — and the passive capital that comes with it — has become a central consideration, and index providers' methodology decisions are what determine that access.

The hosts also raise a pointed question: is the merger a workaround for SpaceX's S&P 500 inclusion? The backdrop is straightforward — Tesla has been a member of the S&P 500 since December 2020, while SpaceX remains privately held and therefore outside major equity benchmarks. A combination would fold SpaceX's scale into a single publicly traded, index-eligible stock. In practice, that eligibility is not self-granting: additions to the S&P 500 are decided by the index committee at S&P Dow Jones Indices, typically ahead of scheduled quarterly rebalances, so any combined entity would still have to clear that institutional gate.

Bitcoin gives the index math a second layer. Tesla has held bitcoin on its balance sheet since first disclosing a $1.5 billion purchase in January 2021, meaning every S&P 500 tracker already carries a slice of bitcoin-linked exposure through its Tesla weighting That channel is the bitcoin-specific payoff behind Hagan's “passive flows hack” framing — the idea that scaled-up index buying could bring more BTC exposure into the S&P 500.

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This article, SpaceX-Tesla Merger: Passive Flows 'Hack', Could Bring More BTC Exposure to S&P 500, first appeared on Bitcoin Magazine and was written by Patrick Green.