GameStop and Bitcoin Proposal

GameStop has received a proposal from Strive Asset Management recommending that the video game retailer convert nearly $5 billion in cash reserves into Bitcoin. Strive asserts that this transformation would position GameStop as the “premier Bitcoin treasury company in the gaming sector.”

The proposal, dated February 24 and signed by Strive CEO Matt Cole, was acknowledged by GameStop Chairman and CEO Ryan Cohen, who noted on social media, “Letter received,” without providing further details.

As of now, GameStop has not publicly stated whether it will consider Strive’s proposal and did not respond to Decrypt’s request for comment.

Strive, co-founded by Vivek Ramaswamy, a former U.S. presidential candidate, advocates for corporate strategies that prioritize shareholder value over environmental, social, and governance (ESG) considerations.

In the letter, Strive argues that Bitcoin offers a better alternative to holding cash, which they describe as a “shrinking asset” because of inflation. They highlight recent changes in accounting rules that allow companies to recognize unrealized Bitcoin gains as profit, thus enhancing its appeal as a corporate treasury asset. Strive cautioned GameStop against investing in other cryptocurrencies, asserting that Bitcoin is the only “true store of value” within digital assets.

The firm also warned that speculative investments in alternative tokens could jeopardize financial stability, referencing GameStop’s unsuccessful NFT marketplace as a risk of diversifying into unproven digital assets.

Strive proposed reducing GameStop’s retail presence, praising its exit from Canada, France, and Germany, while encouraging additional store closures as the industry pivots towards digital game sales. They advised shifting focus to e-commerce and AI-driven services rather than maintaining loss-making physical outlets.

To facilitate Bitcoin purchases, Strive suggested that GameStop raises additional capital through at-the-market stock offerings and convertible debt securities, claiming that its high trading volume makes these options feasible. They believe Bitcoin’s scarcity and growing institutional adoption render it a long-term hedge against inflation and a strategic reserve asset.

This proposal arrives as Bitcoin trades below $89,000, having dropped from a peak of over $109,000 in January. The overall crypto market has experienced elevated volatility, exacerbated by a $1.5 billion hack on the Bybit exchange, contributing to uncertainty.

Cohen has largely remained quiet regarding GameStop’s long-term strategy but has hinted at a transition to a more streamlined model focused on “value-added” items. Earlier this month, the CEO shared an untitled photo alongside Strategy CEO Michael Saylor, igniting speculation that Cohen is contemplating Bitcoin as a viable investment.

Despite these discussions, GameStop’s stock, favored by retail traders, closed down 2.36% at $24.32 and has seen minimal changes in after-hours trading.