GameStop has entered into a new set of Bitcoin-linked contracts with Coinbase, following the expiration of previous agreements that yielded no exercise. The company collected $5.8 million in premiums from the initial options, which expired worthless as Bitcoin remained below the strike price. Under the renewed arrangement, the strike price has been lowered to $80,000, down from the earlier range of $105,000 to $110,000. Nearly all of GameStop’s 4,710 Bitcoin remain pledged under this strategy, which allows Coinbase to acquire the coins if the cryptocurrency rises above the new strike before expiration.
The pledged Bitcoin is no longer recorded as a direct asset on GameStop’s balance sheet. Instead, the company reports a $369.6 million claim for repayment from Coinbase, approximately $58 million below the original cost of the coins. This accounting treatment reflects the nature of covered calls, where the seller retains premium income but forfeits potential gains above the strike price if the option is exercised.
Bitcoin contributed only about $1 million in gains to GameStop’s quarterly earnings, which totaled roughly $390 million. The bulk of the profit stemmed from interest income on substantial cash reserves and an unrealized gain from an options position tied to eBay. Notably, GameStop recently submitted a non-binding proposal to acquire eBay for $125 per share, with a combined cash and stock funding plan.
As of the end of the reported quarter, Bitcoin traded near the new $80,000 strike level, increasing the likelihood that the options may become in the money. However, recent market data shows Bitcoin around $63,500, significantly below both the strike and GameStop’s average purchase price.