Crypto’s brutal slump has finally caught up with Bitcoin ATMs

Bitcoin ATM
A Bitcoin automated teller machine (ATM) at a gas station in Washington, D.C., U.S. Image Credit: Bloomberg

Ever since the first Bitcoin ATM was installed almost a decade ago, the number of machines proliferated, impervious to cryptocurrencies’ boom-and-bust cycles. From the bustling streets of New York City to rural communities like Amherst County, they popped up everywhere, physical symbols of crypto’s growing mainstream appeal.

Then came 2022, and a “crypto winter” that sent Bitcoin plunging 64 per cent and swept away companies from Celsius Network to Sam Bankman-Fried’s FTX. The number of crypto ATMs in the US peaked at just over 34,000 in August and has since dipped slightly, according to Coin ATM Radar, which tracks the machines. September marked the first month in the industry’s history that more ATMs were retired than installed, Coin ATM data show (October saw a small rebound).

The total amount of money funneled through crypto ATMs globally, expressed in dollars, fell to $230 million in October from $349 million in January 2021, according to data from researcher Chainalysis. The drop came even as the number of machines installed worldwide almost tripled in the period. That implies a roughly 75 per cent decrease in the value the average unit generates.

Many ATMs now get little, if any, use. At the Smoke Shop convenience store in midtown Manhattan, there’s one tucked away between shelves of soda and snacks. Syed Alam, who works at the store, said he doesn’t pay much attention to the machine. At noontime on a recent Friday, he reckoned at least one person had used it that day. Every two weeks or so, someone comes to collect cash from the unit. What’s clear, though, is that usage has dropped off in the past year. “Now, it’s slow,” said Alam, 49.

Weak foot traffic

With demand waning, executives who had been used to plugging in units as fast as they could negotiate new leases are facing tougher choices. Coin Cloud, which runs about 5,000 ATMs across the US and Brazil, has tapped advisers to help it rework about $125 million of debt accumulated to fund an aggressive expansion, Bloomberg News reported in November. The company has been seeking additional funding from troubled crypto brokerage Genesis, people familiar with the matter said.

Some of Coin Cloud’s kiosks are in rural areas with weak foot traffic, according to people with knowledge of its business. Coin Cloud declined to comment on its efforts to secure funding. Chief Executive officer Chris McAlary said in October that the firm hasn’t had to reduce its number of machines.

Negotiating Rents
Running lots of underutilized machines can be costly. Operators negotiate rent individually with outlets, although some pay store owners a percentage of the revenue a unit generates, according to Eric Grill, CEO of crypto ATM manufacturer ChainBytes.

Grill also owns four crypto ATM companies that between them operate “a couple hundred” machines globally. He said his businesses typically pay stores around $300 a month to host a machine, but depending on how much money a unit brings in, the fee can reach as high as $1,000.

Crypto ATMs in the US generate anywhere between $1,000 and $10,000 in revenue per month, Grill said in early November. He estimated that three per cent to six per cent of that goes to operating costs such as rent, marketing and paying compliance officers and the people who collect money from the machines.


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