Bitcoin ATMs Stay Strong Despite FTX Collapse

Bitcoin and cryptocurrency have taken a big hit in the news lately, with the ongoing collapse of the FTX exchange and criminal case against the founder bringing a lot of negative attention to the industry. In addition, Metropolitan Bank, formerly a major provider of cryptocurrency services, has quietly ended its services due to “current circumstances.”

Given these events, it would be reasonable to believe that bitcoin ATMs will also be affected. While bitcoin ATM growth has slowed, units continue to expand in various countries, such as Australia. In addition, retailers continue 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, the deployment of bitcoin ATMs was about giving customers 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 who may not have otherwise visited our locations,” a spokesperson for Sampson-Bladen said in an email interview.

While there hasn’t been much feedback from customers, the spokesperson says that’s a good thing, as it “means that the machines are working properly and there are little or no problems with the transactions.”

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

So what is driving this growth in bitcoin ATMs overall?

Brandon Mitz, CEO and president of Bitcoin Depot, a bitcoin ATM provider, said it’s all about letting customers be in control of cryptocurrency.

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

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

“There is less and less confidence in using centralized exchanges that only give you access to your cryptocurrency and not ownership of it as time has gone on, and the FTX implosion has only exacerbated this,” Mitz said.

As a result, Mitz 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 ATM’s 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,” Mitz said.

That said, the bitcoin ATM market is in a state of flux as regulatory expectations shift due to increasing government oversight in light of events such as the collapse of FTX, which in turn will greatly impact smaller operators. In addition, the industry itself is highly 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.

Mitz believes the trend is just getting started.

“I see a very high probability that industry consolidation will start quite quickly in 2023. According to CoinATMRadar, the top 10 crypto-ATM operators operate 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 best 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,” Mitz said.