GameStop has renewed a strategic options deal that effectively ties up nearly all of its Bitcoin holdings with Coinbase. This recent move follows the expiration of a previous set of options contracts in late May. The company disclosed these details in a quarterly filing with the Securities and Exchange Commission, covering the three-month period ending May 2.
In this arrangement, GameStop’s Bitcoin no longer counts as a direct asset; instead, it is reflected as a $369.6 million claim for repayment, which is approximately $58 million less than the original cost of the coins. During the reporting period, the sale of these options generated approximately $5.8 million for the retailer. The strike price on the renewed contracts decreased to $80,000, down from the previous range of $105,000 to $110,000. This new pricing places the assets closer to the point at which Coinbase could claim them.
The strategy taken by GameStop involves a financial mechanism known as a covered call, wherein the company sells the right to buy its Bitcoin at a predetermined price while pocketing a fee. If the asset appreciates beyond this price, GameStop retains the premium from the contract but misses out on any further gains beyond that level.
GameStop initially entered the cryptocurrency space in March of the previous year by borrowing $1.5 billion to acquire Bitcoin. This decision transformed part of its cash reserves into a Bitcoin treasury, essentially betting on the cryptocurrency’s price appreciation. By early March, the company moved nearly all of its 4,710 BTC into this strategy, allowing Coinbase to have rights over the coins while requiring GameStop to remove them from its balance sheet.
Notably, despite GameStop’s Bitcoin involvement, it only contributed around $1 million to the company’s earnings during the quarter, categorized as a gain on digital assets. This is particularly striking given that GameStop reported a record net income of about $390 million during the same period. Much of this profit was driven by interest accrued on its cash reserves and a paper gain from its eBay options position rather than from its core retail business.
As of the end of the reporting period on May 2, Bitcoin was trading near the $80,000 strike price. However, it has remained below this threshold, and the option contracts expired unexercised on May 29, allowing GameStop to retain the premiums without transferring any Bitcoin. Current data shows that Bitcoin is trading at approximately $63,900, a substantial drop of around 34% from earlier highs this year and about $43,000 less than what GameStop initially paid for the digital currency.
In the wake of these developments, Decrypt has reached out to GameStop for comments and will provide updates should the company respond.
