GameStop’s (GME) massive bitcoin, worth $420 million the transfer earlier this year wasn’t an out – but he doesn’t hold the pieces anymore either.
In its annual report filed Tuesday, the video game retailer revealed that 4,709 BTC – of its 4,710 coins – had been pledged to crypto exchange giant Coinbase (COIN) as part of an over-the-counter covered call strategy.
The disclosure offers a clearer explanation for a January portfolio that showed GameStop had moved almost its entire Bitcoin position to Coinbase Prime. The move sparked speculation that the company was preparing to sell its stakes. Especially as digital asset treasury companies faced increasing pressure from falling crypto prices, sparking questions about whether GameStop was reducing risks.
The BTC options strategy
Instead, the company sold short-term call options on its bitcoin, with strike prices between $105,000 and $110,000 and expiring until the end of March.
The operation aimed to generate income from options premiums, while limiting gains above these levels.
The filing shows a liability of $0.7 million related to the options and an unrealized gain of $2.3 million. It also said that after the fiscal year ending January 31, a portion of the covered call contracts expired without being exercised, while the corresponding collateral remained with Coinbase Credit.
No longer holds Bitcoin
The structure also changed the way GameStop accounts for its holdings.
Since Coinbase can remortgage or redeploy pledged bitcoin, the company no longer classifies the assets as directly held. It now registers a claim, the right to subsequently recover an equivalent BTC.
This is a notable change from its buy-and-hold strategy. Although GameStop said its economic exposure remains similar to that of owning Bitcoin outright, the position is no longer free. It is held by a counterparty and linked to derivatives.
The company said receivables related to pledged bitcoin totaled $368.3 million at the end of the financial year. It also recorded an unrealized loss of $59.7 million linked to the drop in the price of Bitcoin.
