GameStop’s Shift Toward Bitcoin

GameStop announced on Wednesday that it would sell convertible debt to buy Bitcoin and strengthen its balance sheet, marking a significant change in its approach to digital assets.

Historically, the video game retailer launched an unsuccessful NFT platform and sold a significant amount of IMX, the native token of Ethereum layer-2 network Immutable X. Currently, GameStop is adopting a Bitcoin hodler strategy, planning to offer $1.3 billion worth of convertible senior notes to potentially accumulate the largest cryptocurrency by market value.

Strategy, which began acquiring Bitcoin in 2020, currently holds over 500,000 Bitcoin valued at approximately $44 billion. By focusing on becoming a Bitcoin treasury, Strategy has issued billions through convertible senior notes, enabling it to raise capital for Bitcoin purchases.

However, it’s important to note that GameStop has yet to acquire any Bitcoin. Its prior engagement with crypto has been mainly transactional. Initially, holding Ethereum, GameStop opened an NFT marketplace in July 2022 on the Loopring network, aiming to dominate the NFT sector in gaming. Unfortunately, the company closed the platform less than two years later due to ongoing regulatory uncertainty regarding digital assets.

In 2022 and 2023, while distancing itself from crypto, GameStop generated $85 million from selling digital assets, revealing that revenues from its NFT marketplace were “not material.”

The price of IMX plunged 23% when GameStop sold $47 million worth in February 2022, following a contractual agreement with Immutable. Before its crypto product launch, GameStop had divested from its IMX holdings and even expanded its NFT marketplace to facilitate digital collectibles on Immutable X.

IMX’s price peaked around $9.50 three years ago but recently traded around $0.64.

The company’s NFT initiatives were overseen by former CEO Matt Furlong, who was dismissed in July 2023. Ryan Cohen, the current chair, has hinted at GameStop’s shift toward Bitcoin, recently sharing a photo with Strategy co-founder and Bitcoin advocate Michael Saylor. Despite this pivot, GameStop has acknowledged it “may sell any Bitcoin we may acquire.”

Edited by James Rubin