Despite its latest 14% slump in prices, the world's most popular digital currency is attracting lots of user interest. Experts now say that its prices will soar to $100,000 soon. It follows then that the number of bitcoin wallet users will rise from the current global estimates of 200 million as more investors hedge their savings against rising inflation. The Bitcoin ATM use case is rising.
Why invest in bitcoin ATMs?
There were over 68 million blockchain wallet addresses in February 2021. Data by buybitcoinworldwide shows there are 53 million bitcoin traders in the global crypto markets. On top of that, 460 million bitcoin addresses have at one time held a bitcoin balance. This data proves that bitcoin adoption is only in its early stages.
That said, investing in BTC is no longer the pastime of the innovators and early adopters. The early majority, who are a sizable segment of the population, are moving into the market. They have witnessed the first mover enjoy the digital currency's initial success and now want to grab their market share.
The thing is, as per the Diffusion of Innovations theory, the early majority is not as tech-savvy as the early adopters or the innovators. This segment has a longer adoption process. They may want to take a chance on BTC, but the complexity and risky nature of the online exchange purchase process may put them off.
All in all it’s quite simple to understand the pros of Bitcoin ATMs owning - just calculate your profit of operating a crypto ATM.
The benefits of bitcoin ATMs
The early majority may be a tad blasé about online crypto purchases, but the bitcoin teller machine speaks a language that they are familiar with. Bitcoin automatic teller machines are excellent entry points for the crypto beginner since they are a familiar space.
They quickly and effortlessly convert cash to BTC. Bitcoin ATM users do not require extensive experience to use them. All a novice needs to use a crypto ATM is a phone number, their name, and a wallet address.
Second, these machines provide more privacy than online purchases and are also more secure. The crypto ATM user will not leave their crypto purchases on an exchange's hot wallet for hackers to pilfer. The purchase process is non-custodial sending, the buyer's private address, to their wallet.
Cryptocurrency ATMs offer a fast crypto purchase process and will onboard the 6% of American adults, or 7.1 million US households, that are unbanked. This segment only needs to slot in cash into the machine to purchase BTC and enjoy financial security.
Are bitcoin ATMs a profitable business?
The recent surge in cryptocurrency ATM installations is proof that there is something good going on in this market. In 2020, the number of bitcoin ATMs in the US rose from 4,200 to 10,000 by the year's end. Today, that number has spiked to 27,784 machines according to coinatmradar.com data. That is a 177.84% increase in installations in ten months!
Retail giant Walmart has installed 200 Coinstar kiosks in its stores.
As per Coinflip data, ATMs charge an average of 10% to 15% on Bitcoin transactions. The crypto ATMs business owner will earn a portion of the crypto vending machine's charges that may range between 1% to 12% of the transaction charge. There are bitcoin teller machines providers that pay business owners a flat monthly fee per unit.
Besides transaction fees, the bitcoin kiosk owner could earn commission fees on the bulk of profits. Commission fees could bring in as much as 10% of your ATM's transaction costs after you have factored all other costs out of the bulk of your profits.
As per atmmachines.com data, high monthly transaction volumes that cross 30,000 could earn $3,000 in commission fees. It follows then that the crypto ATM revenue heavily depends on your kiosk's foot traffic.
What are the costs of operating a cryptocurrency ATM business?
Below are some costs that you should factor into your business plan if you are looking to start a BTC ATM business.
Costs of machine and installation
Bitcoin automatic teller machine costs will vary as per their model. Pre-owned machines are cheaper than new freestanding or built-in models. Built-in ATMs are cheaper on purchase but have higher installation costs. Installation costs will include shipping, import fees, and manufacture installation charges.
Bank charges
Bitcoin ATMs have vendor software that processes all their payments. You, however, will pay bank fee charges for fiat-to-crypto transactions. On top of that, you are expected to hold a percentage of your capital in cryptocurrency and fiat to provide your crypto kiosk with liquidity.
Operational costs
Machine maintenance costs and other operational costs such as supplies, payments, branding, and utility costs will also set you back a couple of a hundred dollars.
Where does the law stand on cryptocurrency ATMs?
Cryptocurrencies are decentralized and do not have central governing bodies, such as central banks, overseeing their processes. Nevertheless, when you operate a crypto business in the US, you need to ensure that you comply with the existing state-level laws on digital currency businesses.
First, you will need to seek federal business licenses from the Financial Crimes and Enforcement Network (FinCEN). FinCEN classifies bitcoin ATMs as Money Service Businesses (MSB). In short, your business operations have to comply with bank-level compliance controls in record keeping, risk-based AML programs, and payment transaction legitimacy. FinCEN also expects you to renew your license every two years for compliance.
On top of that, your business has to comply with the Money Transmitter License (MTL), Money Service Business (MSB) registration, and Anti-Money Laundering (AML) policies. So, kick off your compliance program with a FinCEN registration.
Apply for a Money Service Business license. Next, go for your state’s MTL and MSB licenses, and ensure that you are AML compliant. Afterward, choose a crypto-friendly bank to work with and partner with a reputable bitcoin teller machine company.
What are the risks of running a crypto kiosk?
While there is a growing demand for cryptocurrencies amongst the early majority, the crypto market has diverse risks for the crypto ATM business operator. They include:
- Crypto volatility and exchange risks could adversely affect operator returns.
- The operator is exposed to counterparty risk from the exchange that holds their bitcoin in its hot wallet.
- The operator could incur losses should thieves or accidents damage the ATM.
Where to buy a bitcoin ATM
BITCOVAULT cryptocurrency ATMs is a reliable Bitcoin Teller Machines (BTMs) provider. BITCOVAULT provides ready-made and easy-to-install bitcoin kiosk solutions. On top of that, it offers crypto teller machine owners BITCOVAULT software upgrade services at super-low charges of 1%.
BITCOVAULT has the Model S, E, Y, and X cryptocurrency ATMs on offer, with the top-of-the-line Model S retailing at $8599. The Model X, on the other hand, has a bargain price of $5699. The BITCOVAULT ATMs and software will facilitate seamless and secure crypto transactions and follow stringent AML/KYC regulations for compliance.
You can choose and buy a Bitcoin ATM machine online - just look through our catalog.
The best spots for a bitcoin ATM kiosk
Place your bitcoin ATMs in areas that have high foot traffic. This area should be easily accessible and have favorable hours of operation. Places such as pizza places, coffee shops, malls, restaurants, and entertainment spots are a good bet. List your ATM on Bitcoin ATM websites for free marketing.