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Sunday, April 18, 2021
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Bitcoin ATMs are coming to a gas station near you

A new feature has appeared at smoke shops in Montana, gas stations in the Carolinas and delis in far-flung corners of New York City: a brightly-lit bitcoin ATM, where customers can buy or sell digital currency, and sometimes extract hard cash.

The machines have multiplied quickly through the United States over the past year, fueled by a frenzy in crypto trading that sent bitcoin prices over $58,000.

Kiosk operators like Coinflip and Coin Cloud have installed thousands of ATMs, scouring areas competitors have not yet reached, executives told Reuters.

As of January, there were 28,185 bitcoin ATMs in the United States, according to howmanybitcoinatms.com, an independent research site. Roughly 10,000 came within the prior five months.

Bitcoin’s growing popularity has been the primary driver for new installations.

The reasons people use ATMs rather than transacting online vary. Some get paid in cash, some lack bank accounts, some want to send remittances abroad or want anonymity, while others feel more comfortable interacting with a physical machine.

Some machines only offer bitcoin, while others let customers invest in various digital currencies. Few bitcoin ATMs can actually spit out cash, and they cost more than regular ATMs or transacting online.

Fees range from 6% to 20% of a total transaction, said Pamela Clegg, director of financial investigations and education at cryptocurrency compliance firm CipherTrace. Fees vary depending on the location and Bitcoin ATM operator.

Government agencies have raised red flags about some machines because of their cost and the potential for illicit activity.

The New Jersey State Commission of Investigation detailed some of those concerns in a February report titled “Scams, Suspicious Transactions and Questionable Practices at Cryptocurrency Kiosks.”

None of those concerns have stopped the industry’s growth.

There are now bitcoin ATMs in every state except Alaska, as well as in Washington, D.C., according to an online map by Coin ATM Radar. Reuters journalists spotted recent additions at gas stations, stores and restaurants in North Carolina, South Carolina, rural Pennsylvania and the outskirts of New Jersey and New York City.

Las Vegas-based Coin Cloud has 1,470 machines around the United States and expects to have 10,000 by year-end, said CEO Chris McAlary.

Although there were concerns that the pandemic might hurt business, foot traffic actually rose during lockdowns.

Chicago-based competitor Coinflip grew its ATM footprint from around 420 last year to 1,800 now, said CEO Daniel Polotsky.

Transactions per ATM nearly tripled during that period.

Coinflip charges customers 6.99% to buy crypto and 4.99% to sell, he said.

Atlanta-based Bitcoin Depot similarly grew its number of ATMs from 500 to more than 1,800 machines over the past year, said CEO Brandon Mintz.

Most customers are 25-40 years old and find machines by searching online, he said.

General Bytes, which manufactures bitcoin ATMs, temporarily ran out of stock last summer as demand soared.

The company sold 3,000 machines last year, 90% of which went to North America, said founder Karel Kyovsky.

Not every ATM draws lines of customers.

Quad Coin’s Shoiket removed a handful of the 200 ATMs he installed last year because they had not turned a profit within six months.

At Grassy Point Bar & Grill in Broad Channel, New York, an employee had to plug in a bitcoin ATM for a Reuters journalist to see how it worked.

And only a handful of truck drivers have stopped by the Pioneer Auto Museum in Murdo, South Dakota, to use a Coin Cloud machine installed five months ago, said owner Vivian Sonder.

Coin Cloud offered her $200 a month to house the machine, and periodically sends maintenance people to check on it from Rapid City, 140 miles away.

(Production: Aleksandra Michalska)

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