The crypto ATM landscape has drastically evolved over the past years. Bitcoin Depot, recognized as the world’s largest bitcoin ATM operator, now faces a fiercely competitive market teeming with 40,000 machines worldwide, 6,400 of which belong to it. After its initial public offering through a merger with a special purpose acquisition company (SPAC) in July, this well-capitalized company is considering acquiring smaller operators struggling with operational challenges.
Arguably, the crypto ATM industry’s rapid evolution can be traced back to as recently as 2020, clearly indicating that it was once a fairly profitable industry for anyone willing to invest. Once operators had the necessary system to run a Bitcoin ATM, it almost guaranteed profitability. However, with the significant expansion from about 6,000 machines to nearly 40,000 by 2022, smaller players are witnessing slimmer profit margins due to intensified competition.
Crypto ATMs are typically directed towards the unbanked or underbanked populace. Lack of access to traditional banking services due to poverty, immigration status or general distrust of the mainstream financial system pushes them towards these ATMs to fill up their digital wallets, since they can’t purchase cryptocurrency from online exchanges like Coinbase or Binance.
Industry-wide projections suggest that the crypto ATM sector could potentially grow from $117 million to $5.5 billion by 2030, as per Global Information, a market research site. However, there has been speculation that smaller players will gradually get eliminated as the industry matures, verifying the old adage – survival of the fittest.
The sudden decrease in crypto ATM installations in March is an indicator of the increasing burdens on smaller operators. The main reason being their lack of adherence to regulatory measures. Instances like the U.K.’s Financial Conduct Authority (FCA) attempting to close all 27 crypto ATMs in the country due to none being registered with the regulator, are a testament to this scenario. Switzerland’s Bity, another small player, also faced regulatory troubles over identity establishment in transactions.
Bitcoin Depot’s CEO, Brandon Mintz believes that building a strong compliance infrastructure was pivotal to their success. Not only does it bring in a revenue of $700 million annually in such a dense and competitive market, but it also gives them the potential to consolidate the industry further in the future. However, while their success story seems promising, it does pose a question – does it mark the exit of smaller players out of the game soon?
Source: Coindesk
