Digital Banking

Bitcoin ATMs stay strong despite FTX collapse

Despite recent events, such as the collapse of the FTX exchange, bitcoin ATMs remain a strong investment.

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February 14, 2023 by Bradley Cooper — Editor, ATM Marketplace & Food Truck Operator

Bitcoin and cryptocurrency have taken a major hit in the news lately, with the ongoing collapse of the FTX exchange and criminal proceedings against its founder bringing a lot of negative attention to the industry. In addition, Metropolitan Bank, previously a major supplier of cryptocurrency services, has quietly ended its services due to "current conditions."

Given these events, it would be reasonable to think bitcoin ATMs would be impacted as well. Yet while bitcoin ATM growth has slowed, the devices are continuing to expand in different countries, such as Australia. In addition, retailers are continuing to see the benefits of bitcoin ATMs.

For Sampson-Bladen Oil Co. Inc., which operates 89 Han-Dee Hugo's convenience stores in North Carolina, deploying bitcoin ATMs was all about providing customers with more options.

"As a c-store operator, our goal is to provide our customers with a wide variety of convenient options. The Bitcoin ATM certainly fits that and has allowed us to attract new customers that otherwise may have not visited our locations," a spokesperson for Sampson-Bladen said in an email interview.

Although there hasn't been much customer feedback, the spokesperson says that is a good thing as it, "means the machines are operating properly and there are little to no problems with the transactions."

When asked why the company decided to deploy bitcoin ATMs, the spokesperson said it was, "to give our customers a unique option and to keep up with the trends in today's marketplace."

So, what is driving this growth in bitcoin ATMs overall?

Brandon Mintz, CEO and president of Bitcoin Depot, a bitcoin ATM provider, said it has everything to do with allowing customers to have control of cryptocurrency.

"Now more than ever, cryptocurrency owners realize the importance of maintaining your own custody of your cryptocurrency, and nearly all Bitcoin ATMs allow you to use a self-custodial wallet," Mintz said in an email interview.

He also emphasized that for exchanges, such as FTX, the ATMs allow access to cryptocurrency but not direct ownership, which puts customer's crypto assets at risk.

"There is less and less trust in using centralized exchanges that only allow you access to your cryptocurrency and not ownership of it as time has gone on, and the FTX implosion has only exacerbated this," Mintz said.

As a result, Mintz said, "We have not seen any direct correlation or noticeable impact from the FTX collapse, nor did Bitcoin Depot have any funds on the FTX platform."

Another growth driver is the ATMs ability to support more than one cryptocurrency, which can attract different customers.

"According to Coinatmradar.com, over half of the world`s Crypto ATMs already support multiple cryptocurrencies," Mintz said.

That being said, the bitcoin ATM market is in a state of major flux as regulatory expectations are changing due to increasing government oversight in light of events such as the collapse of FTX, which will in turn majorly impact smaller operators. In addition, the industry itself is heavily fragmented, which is a perfect storm for consolidation.

We are already seeing this take place as Bitstop made a major acquisition with Genesis Coin, the largest provider of bitcoin ATMs in the world, powering 31.9% of all machines.

Mintz believes the trend is just getting started.

"I see a very high likelihood that industry consolidation will start pretty rapidly in 2023. According to CoinATMRadar, the top 10 crypto ATM operators run about two-thirds of the world`s Crypto ATMs, and with close to 600 total operators in the world, the market is very fragmented. The top operators have better economies of scale and are more likely to have the AML compliance infrastructure to support continued success and growth, while small operators may struggle to maintain profitability and regulatory expectations," Mintz said.

About Bradley Cooper

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Bradley Cooper is the editor of ATM Marketplace and Food Truck Operator. He was previously the editor of Digital Signage Today. His background is in information technology, advertising, and writing.

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