GameStop pledges 4,709 bitcoin as collateral at Coinbase, dismissing sell-off speculation

U.S. video game retailer GameStop has pledged most of its bitcoin (BTC) holdings as collateral at Coinbase and moved to generate income through an options strategy.

According to the company’s annual report (Form 10-K) filed with the U.S. Securities and Exchange Commission (SEC) on the 26th (local time), GameStop signed an agreement in January to pledge about 4,709 bitcoin it held as collateral for Coinbase Credit. The amount effectively represents the bulk of its holdings.

GameStop is running a covered-call options strategy based on the asset. The approach secures premium income by selling to the market the right to sell the asset at a specified price.

The disclosure addressed earlier speculation that GameStop had sold its bitcoin. In January, on-chain analysts flagged that the entirety of GameStop’s bitcoin had been transferred to Coinbase Prime, fueling the possibility of a sale.

In fact, the filing shows GameStop sold short-dated call options with strike prices in the $105,000 to $110,000 range and collected premium income through the strategy. The options are set to expire on Friday.

However, mark-to-market losses also emerged due to the drop in bitcoin’s price. With bitcoin down about 45% from its prior peak, the financial burden has increased.

The report said the value of the bitcoin pledged as collateral totaled about $368.30 million as of Jan. 31. The price decline resulted in unrealized losses of about $59.70 million.

GameStop reclassified the asset from directly held assets to an accounts receivable item as a result of the collateral arrangement. It added, however, that “while the asset classification has changed, the economic exposure to bitcoin is the same as direct ownership.”