Bitcoin is the next big technological advancement after the Internet. It has the potential to become a global standard as a decentralized alternative to central banking. Estimations expect Bitcoin to be worth multiple millions of dollars. Are Bitcoin ATMs a good investment?
Disclaimer: This article is for information purposes and does not give any investment advise.
Smart investors and entrepreneurs can arrange their strategy to capitalize on anticipated disruption. Bitcoin ATMs are positioned in a special niche that undergoes rapid growth and becomes an essential part of the Bitcoin ecosystem.
But let’s talk about the facts and the status quo:
Bitcoin is taking over the world. And if you assume this process will follow a steady growth rate you’ll be dissappointed. It’s much more exciting:
The growth of Bitcoin is following a volatile pattern, which allows both for short-term speculation and long-term capital gain. The most experienced investors such as Erik Voorhees, say that this is a “one-in-a-lifetime opportunity”.
How do Bitcoin ATMs work?
Bitcoin ATMs have a massive advantage over other gateways as they are extremely simple to use for end-users. For operators there is a bit more technology and knowledge required to allow a safe and secure business. There are a few different manufacturers producing such machines. Due to the relatively young age of the industry, prices still are high and one has to pay between 3000 and 10000EUR for a new machine, depending on size, model and manufacturer.
A two-way ATM allows users to buy and sell Bitcoin with cash whereas buying goes instant and does take less than a minute for small amounts. Selling BTC requires 10 Minutes waiting time for the blockchain to confirm the transaction.
On top of the basic functionality, there are additional features such as printing of paperwallets, sending wallets via email, sms notification, printing of voucher codes, dispensing of nfc cards and different authentification functions.
Want to try a Bitcoin ATM near you? Find one in your neighborhood.
What is the ROI of an ATM?
Bitcoin ATMs are generating passive revenue through fees on transactions. Depending on the volume per month the return of investment is reached after 1-24 Months. Why such a large spread? If you buy a one way ATM, which costs only around €3500 and place it at the best location in the city and right after you place it, the bull market hits, you’ll be earning back the initial investment very quick. On the other side, if you a deploy a $9000 two-way machine just after the bull market turns into a bear market and your location is poor, it can take longer until you paid off your initial investment.
Either way investors should have the foresight, experience and patience to reap the long-term benefits because Bitcoin ATMs need a long-term approach to makes sense as an investment-case.
Earnings of a single ATM compared to an ATM network are less due to the scaling efficency that a fleet of ATMs brings. However a single ATM can generate significant revenue for you and if you partner up with an existing operator you can save time and money in regards to the setup and ease of your ATM operation.
How much money can be made?
The profitability of a Bitcoin ATM depends on it’s monthly transaction volume and commission fee. The website coinatmradar.com publishes regular industry reports and provides throughout information about the financial model and average volumes of different operators.
Operators reported on average a machine brings roughly $30K a month in transaction volume. Some operators reported it is lower in the $20-25K for machine, some operators reported higher values (some up to $100K per machine). We find volume of $30K quite a realistic to receive at a good location with enough visibility and promotion on the internet.
How does the Bitcoin ATM market develop?
The market of Bitcoin ATMs is still young and very small providing excellent ground for future growth. Around 5.000 machines have been deployed all around the world and reports estimate a market size of $145 Million by 2023.
Operators report that the business develops steady despite the volatile market. With two-way machines two different target audiences are catered for, on the one side people who want to acquire Bitcoin either for the first time or on a regular basis and secondly sellers who mostly are early investors or earn Bitcoin with their business. Being able so serve both sides makes the business antifragile and generates profit both during an upwards trend or downwards trend generating solid revenue with an automated vending machine.
Bitcoin ATM operators have to follow all required regulations set by regulatory bodies and financial supervisors and authorities. Many jurisdictions in the EU aimed to attract “crypto-companies” by designing new legislation, tailored to help these businesses to operate fully legal. In countries such as Switzerland, Liechtenstein and Austria thousands of ATMs are in operation. Estonian law firms even advertised a crypto license for €3000.
The regulatory perspective has a postive and a negative notion. On the one side, technology is always ahead and Bitcoin can’t be regulated as it is a global open-source protocol. On the other side, most regulators are over ambitious and don’t let new innovations come up. So far there has been enough regulatory freedom to start and grow Bitcoin ATM networks and while regulatory freedom will remain in some markets, other markets may fall under regulatory regimes that can reduce attractiveness and profitability of the operation.
One also has to recognize that regulation is arriving on a slow pace, leaving a highly profitable window of opportunity in many markets including European countries. However, many competitors do the mistake to over-comply because of risk aversion and wrong legal advise of lawyers.
In addition to the regulatory threat, the banking partnership is what sets the bar high to enter this business. Although most established banks are trying to block all on and off ramps, every week new Bitcoin ATMs are being installed growing the industry bigger and bigger and eventually it will be difficult to limit this growth.
Growth and adoption
Bitcoin is the largest cryptocurrency with the most secure protocol, highest global hashpower and biggest market capitalization. A look into the history of Bitcoin, failed prototypes prior to Bitcoin and it’s current development one can be very positive that Bitcoin will grow further and adoption will continue.
The keys to success are likely the powerful features of Bitcoin:
Bitcoin is strictly limited to 21 Million and the inflation rate halves every 200.000 blocks. Therefore it is a great store of value and safe from devaluation and debasement through monetary inflation and top-down money management.
Setting up a Bitcoin wallet takes less than 5 minutes and does not require any verification (similar to email). Anyone in the world can start using it in a matter of of minutes and join global commerce without relying on bank accounts.
A constant flow of improvements and innovations enhance Bitcoin technology, making it even more secure and user friendly. The world’s smartest programmers and top cryptographers contribute to Bitcoin.
Once a user controls the private keys to his Bitcoins it is almost impossible to confiscate it, given the acquistation and storage is done the right way. This feature make Bitcoin a very secure asset for people living under oppressive governments.
Payments are send peer to peer that means money can be transferred from one person to another directly without relying middlemen. The network is maintained not by a single organization but a global network of nodes. Nobody ever has control over the Bitcoin network.
Benefits of a Bitcoin ATM business
A bitcoin ATM business is positioned in a specialized niche, unlocking an audience that exchanges can’t serve. The Bitcoin industry is just 10 years old but one of the fastest growing industries. A bitcoin ATM network benefits from this general growth with a proven business model and constant revenue stream. Due to the vending machine nature it allows to operate with a high amount of automization.
—-> Restaurant owners are happy about the additional benefits of an ATM
Demand for Bitcoin
Considering the disadvantages for users of our current financial system, Bitcoin is the logical alternative. Banking defaults that are bailed out with tax payer money, debasement of savings through inflation, government debt and over-expenditure of public institutions, artificially enhanced uncertainty in all markets, extreme distortion of markets through misallocation of capital through manipulation of interest rates, the list goes on and on. Banks and governments undermine the civil achievement of financial privacy and banking secrecy on their mission to protect their oldfashioned banking-sheme.
The solution is simple. Long Bitcoin and short the banks. Millions of people worldwide are using Bitcoin as a secure asset and store of value. Smart investors choose financial privacy companies in the Bitcoin sector to benefit from this anti-trend.
If you are interested to learn more, buy your own Bitcoin ATM or take part in a growing venture as a shareholder use the contact form to get in touch with us.