One potential investment that can deliver good returns are Bitcoin ATMs (BTMs). This comes at a time when interest in cryptocurrency has been increasing. Analysts expect this to continue, as more capital is flowing into Bitcoin (BTC) and other cryptocurrency. The opportunity here is the growth in the number of users will create demand for services.
While there is no exact figure as to how many people own Bitcoin, analytical data from the blockchain (Bitcoin’s decentralized database network) indicate growing activity. Research and analytics firm Chainalysis has reported 460 million BItcoin addresses (as of December 2018). Each address is not mapped to a unique person, since a person can have multiple addresses. The important thing to look at is the activity, and as more users or institutions own Bitcoin there will be more addresses generated.
The growth of the number of BTMs worldwide has also skyrocketed in 2021 alone. From a total of 9,119 in August 2020 to 24,572 in August 2021. As of July 2023, there are 36,000+ BTMs worldwide (data from Coin ATM Radar). This is an indication that as Bitcoin becomes more valuable, the market demand increases. BTMs are providing a way for users to have access to Bitcoin whenever it is needed.
BTMs provide a service to meet the growing demand for Bitcoin transactions. Operators can either host a BTM or become a partner to earn a percentage of transactions from the BTM. It is just a matter of finding the right machine from a BTM provider.
The ROI for a BTM will depend upon several factors, like the following:
- Location of the business (e.g. commercial district)
- Number of target daily transactions
- Average transaction size (amount users transact)
- Total expected revenue from transaction fees
- Marketing strategy to promote BTM
There is an initial cost to cover the BTM and regulatory compliance. You then need to factor in the fixed costs like electricity, monthly rent (for those who don’t own the property), supplies for the machines, insurance and other costs (depending on the business).
Why would anyone want to use a Bitcoin ATM? Users can always use their digital exchange app if they want to buy Bitcoin. However, consider these reasons on why BTMs are useful:
- A BTM is a way to access your Bitcoin wallet, when you are not in front of a computer. It also provides more privacy or pseudonymity than having to use a digital exchange app (which tracks your transactions to your true identity) and only requires cash to buy Bitcoin or other cryptocurrency. There are even apps that help you find a BTM near you.
- A seamless way to convert Crypto-to-Fiat for cash and vice-versa. No need to fill out documents or create a user account. All you need is cash on hand to buy, and you can also withdraw crypto for cash. You cannot really do this with exchanges, since they do not dispense cash or accept cash directly.
- BTMs provide a service for more financial inclusivity. You do not need to have a bank account to use a BTM. This helps people in countries where access to a bank account is difficult to obtain or full of obstacles.
- BTMs are one of the fastest way to buy Bitcoin at the moment (as of July 2023), without needing to onboard on an exchange or digital asset custodian. Exchanges have a process that can take time before approving a user, while BTMs do not need to do this. The Bitcoin purchased from a BTM is also under the full custody of the user, and not a third party (provided the user has the private key to their digital wallet).
According to estimates from Coin ATM Radar, one BTM machine has the potential to earn up to $3,000 a month ($36,000/year) with total monthly revenues of $30,000. This can go even higher with an increase in the volume of transactions.
For operators, the revenue can be split with the provider. For those who only want to host a BTM, the provider pays a fixed monthly fee. According to research reports (Allied Market Research), BTMs or cryptocurrency ATMs are expected to hit $3.5 Billion in revenues by 2030 with a CAGR (Compounded Annual Growth Rate) of 58.5% a year from 2021 to 2030.
BTMs can be a profitable business with proper care and management of operations. It also brings additional benefits to operators because it can generate more foot traffic to their establishment and further grow their business. The market for Bitcoin is no longer niche, it is becoming more mainstream. A BTM is also available to any user, so it is more inclusive when it comes to access.
(Photo Cover Credit: Elise)
Disclaimer: This is not financial advice. The opinion shared is for reference purposes only. Please DYOR always to verify information.
