GameStop CEO Confirms Letter Recommending $4.6 Billion Bitcoin Purchase

TLDR

• GameStop CEO Ryan Cohen has acknowledged receiving Strive Asset Management’s recommendation to invest in Bitcoin
• Strive CEO Matt Cole advised GameStop to convert its $4.6 billion cash reserves into Bitcoin
• The plan includes raising additional funds through equity offerings to purchase more Bitcoin
• Swan Bitcoin’s John Haar suggested this move would surprise traditional finance critics of both GameStop and Bitcoin
• This follows GameStop’s history as a meme stock that rose nearly 11,500% between April 2020 and January 2021

Video game retailer GameStop is weighing a bold financial move that could reshape its future. The company’s CEO Ryan Cohen confirmed on February 26 through social media platform X that he received a letter from Strive Asset Management suggesting the company invest in Bitcoin. This confirmation comes just two days after Strive CEO Matt Cole sent the letter dated February 24.

The letter outlines a strategy for GameStop to convert its substantial cash holdings of $4.6 billion into Bitcoin. This recommendation marks a potential new chapter for the retailer, which gained worldwide attention during the meme stock phenomenon of 2020-2021.

GameStop became a household name when its stock price skyrocketed from just $0.70 in April 2020 to $81.25 by January 2021. This remarkable 11,500% increase was fueled by retail investors organizing through Reddit forums, resulting in a short squeeze that cost Wall Street short sellers billions in losses.

Cole’s proposal goes beyond a simple one-time purchase of Bitcoin. He outlined what he calls a “Leveraged Bitcoin Equity” (LBE) strategy where GameStop would not only use existing cash but also raise additional funds specifically for Bitcoin purchases. These funds would come through at-the-market offerings and convertible debt securities.

The news has caught the attention of cryptocurrency industry figures. John Haar, managing director at Bitcoin-only exchange Swan Bitcoin, commented on February 25 that such a move “will bake the noodles of so many TradFi investors and commentators who think both GME and Bitcoin are a joke.”

The Bitcoin Strategy Takes Shape

This potential pivot to Bitcoin isn’t entirely unexpected. Reports from February 13 indicated that GameStop had already been considering investments in Bitcoin and other alternative assets. Strive’s letter appears to have formalized this direction with specific recommendations.

Beyond Bitcoin purchases, Cole advised GameStop to improve its operational efficiency by closing unprofitable stores and expanding its online presence. According to the letter, these changes would free up even more capital that could be directed toward Bitcoin accumulation.

Cole framed the Bitcoin investment as a strategic transformation that would take GameStop “from meme stock to market leader.” He emphasized Bitcoin’s role as a “true savings asset” that could help protect the company from the effects of inflation on traditional currencies.

Strive’s recommendation specifically warns against investing in cryptocurrencies other than Bitcoin. Cole argued that a Bitcoin-only approach would position GameStop as a “disciplined, forward-looking organization” and better protect shareholder value over the long term.

There are signs that GameStop’s leadership is already exploring the Bitcoin space. Cohen recently shared an image of himself with Michael Saylor, chairman of Strategy (formerly MicroStrategy). Strategy has become famous for its aggressive Bitcoin acquisition strategy and now holds approximately $44.2 billion worth of Bitcoin.

Strategy’s Bitcoin treasury approach has already inspired other public companies to follow suit. Firms like Metaplanet and Semler Scientific have implemented similar strategies, using company funds to build Bitcoin reserves as an alternative to holding cash.

For GameStop, adopting this strategy would represent a dramatic shift from its traditional focus on physical retail. The company has been working to adapt to the digital era as more gamers purchase games online rather than in stores, and a Bitcoin strategy would add another dimension to this transformation.

If GameStop follows through with Strive’s recommendation, it would join a small but growing group of public companies with large Bitcoin holdings. Such a move would place a substantial portion of the company’s value in an asset that, while increasingly mainstream, still experiences significant price volatility.

The response from GameStop’s investor community to this potential Bitcoin strategy remains uncertain. While some shareholders may support the move as forward-thinking, others might question the wisdom of allocating such a large portion of the company’s resources to a single, volatile asset class.

GameStop has not yet made any official announcement about whether it will adopt Strive’s Bitcoin investment recommendations. Cohen’s acknowledgment of the letter indicates the company is at least considering the proposal, though no timeline for a decision has been shared publicly.

This potential Bitcoin investment comes during a period when more traditional companies are beginning to explore cryptocurrency as part of their treasury strategies. This trend has accelerated as Bitcoin has gained greater institutional acceptance and as companies look for ways to protect against possible inflation.

The final decision on whether to pursue this Bitcoin strategy will likely have major implications for GameStop’s financial future. Whether viewed as a visionary move or a risky gamble, it represents a potential turning point for a company that has already defied traditional business expectations.