Gamestop Raises $1.3 Billion to Advance Bitcoin Strategy: A Magical Journey from 'Game Retail Legacy' to 'New Aristocrat of the Encryption Revolution'

Written by: Alvis

On March 26, 2025, a notice from GameStop reignited Wall Street, which had been quiet for four years — this entity retail merchant, once regarded as the "totem of the retail investor uprising," actually staked its $4.8 billion cash reserve and $1.3 billion in convertible bonds entirely on Bitcoin.

The 12% surge in GME's stock price is both a market vote for its "digital asset balance sheet revolution" and another direct confrontation between crypto capital and traditional finance. From the "bloodbath of hedge funds" in 2021 to today’s "whales swallowing Bitcoin," every turn of GameStop tears apart traditional valuation logic: When meme culture is wrapped in decentralized faith, and when the cash flow of physical stores turns into on-chain UTXO, this gamble, described by Cai Chongxin as the "craziest experiment outside the AI bubble," is ultimately either a desperate counterattack of the old empire or a certificate of the new world.

The Rise and Fall of the Gaming Empire: From a Small Store in Dallas to a Global Giant

In the cold winter of 1983, a software retail store named "Babbage's" on the streets of Dallas, Texas, began the legendary chapter of GameStop. This small shop, founded by James McCauley, initially made a living by selling computer software and game cartridges. In 1994, it merged with Software Etc. to form NeoStar Retail, but fell into bankruptcy crisis due to chaotic management. The turning point in its fate came in 2000, when the chain bookstore giant Barnes & Noble acquired its parent company Funco, officially renamed it GameStop, and initiated a crazy expansion.

During the "Golden Age of Physical Gaming" (2005-2015), GameStop established its dominant position through four key acquisitions:

In 2005, merged with EB Games, expanding the store network to 21 countries worldwide.

Acquired Rhino Video Games in 2007, integrating the second-hand game trading ecosystem.

In 2008, it acquired France's Micromania for 700 million USD, with European stores surpassing a thousand.

Acquired Spring Mobile in 2013 to布局移动设备零售市场

At its peak, GameStop operated 5,889 stores worldwide, with its used game business contributing over 40% to its gross margin, and its revenue reached $9.36 billion in the fiscal year 2015. However, the digital game revolution quietly changed the rules of the game—by the third quarter of 2018, its core profit source, used game sales, plummeted by 13.4%, revealing a transformation crisis for the first time.

This empire, which once built a "media-retail" closed loop with the magazine "Game Informer," was ultimately buried by the players it cultivated — as Generation Z became more accustomed to watching game live streams on Twitch rather than walking into physical stores, the twilight of GameStop has already arrived.

Meme Frenzy: Retail Uprising Reshapes Capital Narrative

In August 2020, two seemingly unrelated events laid the groundwork for history: Chewy founder Ryan Cohen invested $76 million to acquire 9% of GameStop's shares; Massachusetts insurance professional Keith Gill, under the name "DeepF**kingValue", showcased a $53,000 long position in GameStop on the Reddit forum. At that time, the short-selling rate of the stock was as high as 140%, with short positions valued at over $5 billion.

The three stages of this epic short squeeze:

Cognitive Awakening Period (2020.8-2020.12)

Gill released an in-depth analysis through the YouTube channel "Roaring Kitty," pointing out that GameStop's cash flow is sufficient to support its transformation, and the unusually high short-selling ratio is brewing a short squeeze risk. His position value grew to $7 million within four months, attracting the first batch of "believers."

Institutional Challenge Period (2021.1-2021.1.28)​

On January 19, the short-selling firm Citron released a bearish report, stating that "GameStop is only worth $20." Reddit retail investors launched a "digital blitz:"

WSB forum gains one million new users in a single day

The options market has seen the emergence of over 500,000 bullish contracts.

The stock price soared from $18 to $483 in just 10 trading days.

Melvin Capital and other short sellers suffered a loss of $19 billion, known as the "Wall Street Massacre."

GME stock price surged over 200 times

Rule Reconstruction Period (2021.1.28-2021.3)

Brokerage Robinhood's trading restrictions trigger regulatory earthquake, Congress holds emergency hearing. GameStop seizes the opportunity to issue $3.5 billion in new shares, completing a "counter-kill harvest."

The essence of this uprising is the struggle for narrative power. When Reddit retail investors deconstruct traditional valuation models with memes and jokes, and when "decentralized organizations" confront Wall Street algorithms, GameStop stock no longer serves as a vehicle for value, but becomes a symbolic weapon in the class struggle.

Its far-reaching impact lies in proving that in the era of information equality, a collective narrative consensus is sufficient to temporarily distort capital pricing logic.

Bitcoin Gamble: A Balance Sheet Reconstruction Experiment

On March 26, 2025, GameStop announced plans to purchase Bitcoin (BTC), causing its stock price to rise nearly 12%.

The company plans to raise funds for the acquisition through debt financing. After the market close on March 26, GameStop announced the issuance of $1.3 billion in convertible bonds.

According to the company's statement, convertible preferred notes (debt that can later be converted into equity) will be used for general corporate purposes, including the acquisition of Bitcoin.

The company stated: "GameStop expects to use the net proceeds from this issuance for general corporate purposes, including acquiring Bitcoin in a manner consistent with GameStop's investment policy."

The company revealed on March 25 that it plans to use part of its cash or future debt to purchase digital assets, including Bitcoin and stablecoins pegged to the US dollar. GameStop's cash reserves were $4.77 billion on February 1, compared to $921.7 million a year ago.

This move implies a threefold calculation:

Financial Hedging: Following MicroStrategy to use Bitcoin as "digital gold reserves." The latter has cumulatively purchased 506,137 BTC since August 2020 (accounting for 2.4% of the circulating supply), with its stock price soaring 2600% during the same period. If GameStop replicates this strategy, it may trigger a short-term market liquidity siphoning effect.

Narrative Reconstruction: In the context of the continuous shrinkage of physical retail businesses (hardware sales down 28% in 2024), the crypto narrative can attract a new generation of investors. The combination of meme stocks and Bitcoin may create a new type of liquidity premium.

Regulatory Game: As the SEC tightens its requirements for listed companies to disclose cryptocurrency assets, GameStop chooses to finance through convertible bonds rather than directly purchasing cryptocurrencies, thus avoiding regulatory scrutiny while enjoying tax benefits (interest expenses are tax-deductible). However, controversy follows. Traditionalists like Peter Schiff criticize this as a "desperate business strategy," using high-volatility assets to mask the decline of core business.

The deeper risk lies in the fact that when a company's balance sheet is deeply tied to cryptocurrencies, macro policy adjustments or regulatory black swans could trigger a chain reaction. MicroStrategy faced a Margin Call crisis in 2022 due to the plummet of Bitcoin, and whether GameStop can avoid repeating this fate remains unknown.

The commercial embodiment of the spirit of crypto natives

GameStop's Bitcoin gamble is essentially a reverse penetration of the Web3 spirit into traditional business logic. Its strategy contains three revolutionary characteristics:

Community capitalization: The collective belief of 1.2 million WallStreetBets users is being realized through the encapsulation of value in crypto assets. This attempt to convert social capital into financial capital may give rise to new types of DAO governance models.

Anti-fragile architecture: a radical choice of converting 74% of cash reserves into Bitcoin actually builds a parallel value system outside traditional business. Even if all physical stores close, on-chain assets still possess independent liquidity.

Arbitrage in spacetime: bridging the gap between traditional PE valuation (191 times) and the multiplier of the crypto network effect, its stock price may serve as a benchmark for measuring the efficiency of value transmission between the "physical-digital" worlds.

The success or failure of this experiment may define the asset allocation paradigm for the next generation of enterprises. When GameStop rewrites its balance sheet with Bitcoin, and retail investors reconstruct pricing power with meme narratives, we witness not only corporate transformation but also a paradigm shift in the underlying logic of commercial civilization. As Roaring Kitty stated in a recent tweet on platform X: "This is not the end, but the beginning of a new narrative." In this new era of capital where the virtual and real intertwine, everyone is a co-author of the historical script.