Tucked into corners of grocery stores, gas stations and transit hubs, crypto ATMs are part of the âcritical infrastructure industryâ still allowed to operate amid the coronavirus contagion event. And some are thriving.
With blockchain-based payments apps and entertainment platforms seeing a boost in users with people spending more time online, crypto and bitcoin ATMs, the physical manifestation of this network, seem an unlikely adjunct to this market growth.
Despite wide-reaching shelter-in-place rulings meant to keep people indoors, some bitcoin ATM operators are reporting an increase in transactions, while others are taking advantage of this intermission to expand their networks.Â
Perhaps people are scared and are prepping in the most immediate way: the nearest ATM. Bitcoin-related Google searches are skyrocketing, but for the many intimidated by the world of wallets, private keys and QR codes, bitcoin ATMs (sometimes called BTMs) provide a convenient onramp to these âsafe havenâ assets.Â
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âEven during a global pandemic, and perhaps more so, bitcoin and bitcoin point-of-sale services meet our customersâ essential needs in participating in this next-generation of banking, remittance, and e-commerce,â Marc Grens, co-founder of DigitalMint, a Bitcoin ATM operator, said over email.Â
Approximately 95 percent of DigitalMint machines are located in or outside of essential businesses and still accessible to the public. While the firm has seen a âslight declineâ in overall volumes, Grens said, âweâre still driving a consistent amount of new and existing customer traffic, even during the lockdown.âÂ
Since March, DigitalMint has expanded its kiosk and teller services to a few dozen new locations in Boston, Los Angeles and Philadelphia. According to Coin ATM Radar, the total number of ATMs has increased 5.6 percent to 7,417 machines on April 1, up from 7,023 on March 1.
Similarly, LibertyX, which was granted a âBitLicenseâ to operate in New York last year, has finally begun to expand to locations in the state. âWeâve gone from zero to several hundred ATMs in a little over a month,â CEO and co-founder Chris Yim said. Including expansions across the country, LibertyX has added approximately 1,000 machines in the last two months.
LibertyX doesnât own the actual physical machines but licenses software to non-bank ATMs manufactured by Genmega and Hyosung or operated by Payment Alliance International, which in turn are maintained by private owners across the country. At some point LibertyXâs software will be installed by default in new machines, but for now ATM operators have to manually update their software to support crypto transactions.Â
âTiming-wise, itâs a little unfortunate,â Yim said. But, under quarantine âI donât think these operators have much else to do.âÂ
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Transaction volume across LibertyXâs 3,000 ATM network dropped approximately 20 percent in March. âWeâre almost back to where we were pre-[COVID-19].â Yim added: âApril 15 was one of our highest volume ATM days, the day many taxpayers received their stimulus check.â
The company has also seen an increase in customer support tickets asking how the product works, suggesting an uptick in interest among new users.Â
Unlike LibertyX and DigitalMint, a recent market entrant is reporting a surge in transaction volume, despite the shrinking footprint of its ATM network. Coinsquare, which bought a controlling stake in crypto ATM startup Just Cash last summer, said about 350 of its 800 total ATMs are currently inaccessible.Â
These numbers are staggering. Fewer machines, more overall transactions, and far more value per transaction.
According to CEO Cole Diamond, the average transaction size in the past seven days is up 167 percent compared to the average transaction in 2019. While the average transaction size for the entire month is up 158 percent on last yearâs average.Â
âThese numbers are staggering. Fewer machines, more overall transactions and far more value per transaction,â Diamond said. âThe average number, and average volume of transactions, is the highest itâs ever been.â
Coinsquare operates a similar business model to LibertyX, providing software to non-bank ATMs to enable crypto transactions. He expects to roll out to several thousand new operators in the coming months.Â
Bricks-and-mortar banks are modifying or curtailing in-person services, like all businesses trying to adhere to social distancing mandates. Some retail branches have cordoned off access to ATMs, while others are converting to âdrive-through only.âÂ
This is a level of control many Bitcoin ATM manufacturers are unable to exert. As providers of software, or companies that franchise machines to private owners, itâs up to operators to determine how, if they choose to, sanitize these screens.Â
Grens, Yim and Diamond have reached out to machine operators to recommend best practices in disinfection. But there really isnât much they can do.
âItâs not responsible for us to push people to go out and touch screens,â Yim said. His firm, like the others, has low variable costs, little overhead and nearly pure profits when times are fat so, he said, thereâs runway for the company to wait out the COVID-19 crisis.Â
âAlthough the country may be shut down, our lives and financial responsibilities cannot be put on hold,â Grens said. âFortunately for our customers, bitcoin never goes on hold, either.â Â