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Speaker 1: This is Bloomberg Crypto, a daily Bloomberg I Heard podcast,

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Speaker 1: and I'm Stacy Marie Ishmael, Managing editor of Crypto for

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Speaker 1: Bloomberg News. It's Thursday, December. Hi everyone, this is Stacy

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Speaker 1: Marie Ishmael. Quick news about this episode. We recorded it

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Speaker 1: before the arrest of Sam Bankman freed and all of

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Speaker 1: the various criminal and civil allegations against him. We'll have

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Speaker 1: much more on what happened there in the episodes later

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Speaker 1: this week. Thanks for tuning in. I'm a senior crypto

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Speaker 1: editor for Bloomberg News in today for Stacy Mary Ishmael.

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Speaker 1: Bitcoin a t m s have often been a symbol

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Speaker 1: of crypto popularity during the digital asset boom. They kept

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Speaker 1: on appearing in places where you would think, why would

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Speaker 1: there be a bitcoin a t M here, Somewhere like

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Speaker 1: in Amherst County, Virginia, a place that has no hospital

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Speaker 1: but sure does have a bitcoin a t M. The

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Speaker 1: number of crypto a t ms in the US peaked

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Speaker 1: at over just thirty four thousand in August and has

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Speaker 1: since dipped slightly. According to coin a t M Radar,

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Speaker 1: these a t m s were like the shrines of

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Speaker 1: the then growing faith in crypto. But this faith isn't

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Speaker 1: spreading nowadays, so could these monuments withstand the downturns of

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Speaker 1: the current market after the f t X implosion. Here

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Speaker 1: to join me to look at the current state of

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Speaker 1: bitcoin a t m s is Bloomberg reporter Carle Wanna.

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Speaker 1: Store owners said, maybe back in the day, a year ago,

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Speaker 1: they might get one guy told, maybe be four or

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Speaker 1: five people who had come to the machine, and now

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Speaker 1: it's maybe one, maybe two, but maybe nobody. So before

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Speaker 1: we get into what going on with bitcoiny tams, now,

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Speaker 1: let's have a chat about what actually bitcoin a tams are.

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Speaker 1: I have seen the bitcoin like the by bitcoin signs

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Speaker 1: that are on bodegas and gas stations and stuff like that,

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Speaker 1: and just always thought how odd. But I never never engage,

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Speaker 1: never even noticed the physical machines before, because it seemed

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Speaker 1: during the previous cycle they sort of exploded, especially in

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Speaker 1: the US. They were everywhere. You know, you mentioned bodegas,

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Speaker 1: they were in rural locations and you know, in the

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Speaker 1: middle of nowhere. So so there are many, but it

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Speaker 1: is quite telling that you say you have you haven't unnoticed.

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Speaker 1: Maybe you were in the target audience. Maybe maybe I

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Speaker 1: just wasn't paying close enough attention. So why would someone

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Speaker 1: use one? Like what we're companies saying, it seems pretty easy.

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Speaker 1: You know, the machine is is in your face, right,

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Speaker 1: They are there like they're in gas stations, next to

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Speaker 1: the soda or the candy. It's it's a sign. A

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Speaker 1: lot of them flash the price of bitcoin for the

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Speaker 1: day at you, so you see it, you think about it.

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Speaker 1: And it also means that you can buy bitcoin with cash.

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Speaker 1: So for some people who if they don't have a

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Speaker 1: big account or they don't feel like going to a bank,

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Speaker 1: you know, there is that benefit, and there's also a

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Speaker 1: certain degree of anonymity, at least for smaller transactions. You know,

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Speaker 1: different providers have different rules about how much information you

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Speaker 1: need for how much money that you're transacting with, but

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Speaker 1: in a lot of cases, you know, it can be

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Speaker 1: less information than if you needed to go to an

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Speaker 1: actual bank and deal with an account that way. Let's

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Speaker 1: talk a bit about the metrics and dynamics of how

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Speaker 1: they work, the economics. Let's say, who pays whom? Why

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Speaker 1: would you want one in your store? And you know,

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Speaker 1: how do they make money? So as far as the

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Speaker 1: store owner's perspective, that one does make some sense as

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Speaker 1: to why you would want one in your store. You know,

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Speaker 1: if you own a bodega, the machine is another source

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Speaker 1: of income and it's not highly obtrusive. It can sit someplace.

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Speaker 1: It is like a physical machine. But at the same

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Speaker 1: time you don't have to do that much. Oftentimes. The

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Speaker 1: way that it works is, you know, you get some

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Speaker 1: sort of rent that's paid to you if you're the

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Speaker 1: store owner, so that's a benefit, and you don't have

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Speaker 1: to handle it. There's somebody else who comes and they

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Speaker 1: pick up the cash and then they leave. And I

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Speaker 1: went to a few boudeguaz I talked to store owners

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Speaker 1: and they just said that, you know, some man would

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Speaker 1: come like every week, every few weeks, something along those lines,

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Speaker 1: take out the cash. But the work at deal with

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Speaker 1: whatever needed to be dealt with. Their pretty hands off.

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Speaker 1: And you know, one guy even told me, yeah, I

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Speaker 1: don't really pay any attention to it. Maybe it gets

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Speaker 1: me a customer every now and then. A customer is

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Speaker 1: a customer, So what do I really care? Um? And

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Speaker 1: so for the store owners it it really does. It's

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Speaker 1: not a big commitment and they do get paid to

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Speaker 1: have them in their store there is often a rent

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Speaker 1: type of EVA. So I guess we talked about the

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Speaker 1: rally um that was. Then we've been in a crypto

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Speaker 1: winter now for several months where volumes on exchanges have dropped.

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Speaker 1: Prices have fallen significantly since a year ago, which leads

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Speaker 1: me to why I guess we started looking at bitcoiny

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Speaker 1: tms again. Can you sort of walk our listeners through

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Speaker 1: why we thought it was a good moment to check

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Speaker 1: in again. Right, So, if you look at data online,

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Speaker 1: we mainly use coin a t M radar, and I mean,

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Speaker 1: you gotta look it up. It's it's like a mountain,

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Speaker 1: you know, it just increases and increases. For the amount

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Speaker 1: of Bitcoin A t m s that were installed in

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Speaker 1: especially in it does kind of look like it went

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Speaker 1: up with the price of bitcoin as it was shooting up,

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Speaker 1: and it's not that necessarily there are fewer. You know,

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Speaker 1: there was a peak in August of two for the

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Speaker 1: amount of Bitcoin A t m s that were in

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Speaker 1: the United States eights and actually in September more Bitcoin

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Speaker 1: A t m s were taken down than they were installed,

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Speaker 1: which is like first for the industry. So the number

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Speaker 1: of crypto A t m s peaked around thirty four

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Speaker 1: thousand in August, and since then they've kind of come

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Speaker 1: down a little bit fluctuated more. And so our question was,

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Speaker 1: you know in this machine that it's physical, it's it's

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Speaker 1: in the story flashes the price of bitcoin at you

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Speaker 1: when you walk in, if you're somebody who is passing by,

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Speaker 1: if the prices you know, nineteen thousand as it was

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Speaker 1: when I was going around to these, or now you

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Speaker 1: know more around sixteen seventeen thousand, even that's a lot

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Speaker 1: less appealing than sixty thousand. So it's a question of,

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Speaker 1: all right, these machines are still there, the data is

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Speaker 1: showing that there are a few of them getting installed,

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Speaker 1: is anyone even really using them? Are companies feeling okay

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Speaker 1: about it? So we had a lot of questions and

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Speaker 1: and we asked a lot of people a lot of

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Speaker 1: the same question as to how the industry is doing

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Speaker 1: after this massive boom. Yeah, and they they many of

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Speaker 1: them seem quite sort of bullish still that they're saying,

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Speaker 1: you know, they have to kind of be a bit

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Speaker 1: more more deliberate and maybe focus on airs that had

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Speaker 1: more foot traffic on the mainstream and less rural. And

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Speaker 1: I remember when we were reporting early days, we were

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Speaker 1: looking at the map because you can, you know, for listeners,

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Speaker 1: you can search online and find all the maps of

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Speaker 1: them in the U S. And you mentioned that there

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Speaker 1: was one in the town you come from. Oh yeah,

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Speaker 1: I mean I'm from Making, Georgia. I am really surprised,

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Speaker 1: but there were, I mean several around the area. And

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Speaker 1: I was just wondering who, who from my hometown would

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Speaker 1: keep possibly using this right now, I'm I'm in New

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Speaker 1: York City and in some ways, and maybe it's because

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Speaker 1: I'm around people who deal more with crypto, but I'm like, yeah, sure,

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Speaker 1: crypto a d M S in Making Georgia. Just the

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Speaker 1: thought of somebody using a crypto a t M is

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Speaker 1: it's so funny to me. I can't imagine their client

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Speaker 1: would be. So, you know, we looked at usage, and

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Speaker 1: you know, based on data from analysis, we saw that

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Speaker 1: usage had had dropped significantly. But obviously, you know you

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Speaker 1: you went there too, And although this is anecdotal, can

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Speaker 1: you give us a sense of what it what it

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Speaker 1: was like. You were literally just waiting there to see

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Speaker 1: if someone showed up. Yeah, I just stood by the

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Speaker 1: bitcoin a t M S hung out with store owners

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Speaker 1: maybe chatted with a customer too. I never saw anybody

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Speaker 1: use them. I talked to a lot of store owners,

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Speaker 1: even some stores, you know, because you want to broader sample.

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Speaker 1: I called some random places, and the consensus was that

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Speaker 1: really hardly anybody was using these. You know. Again, it's anecdotal.

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Speaker 1: Maybe one guy would say, like one or two people

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Speaker 1: occasionally would come in. Another thing that did come up

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Speaker 1: with at least two of the store owners is that

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Speaker 1: they did say that they felt like there was a

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Speaker 1: drop in demand for usage given bitcoins decline in prices.

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Speaker 1: I mean, that makes sense, that's what the data has seen.

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Speaker 1: But it was also interesting to know that store owners

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Speaker 1: said maybe back in the day, a year ago, they

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Speaker 1: might get one guy told me maybe four or five

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Speaker 1: people who would come to the machine, and now it's

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Speaker 1: maybe one, maybe two, but maybe nobody, you know. So

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Speaker 1: it does kind of seem like these machines are are

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Speaker 1: are sitting a little bit more in waiting for customers

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Speaker 1: that they perhaps once had more of. Up next, more

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Speaker 1: with Bloomberg reporter Carl Wanna on the present and the

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Speaker 1: future of bitcoin e TMS. You know, we were expecting

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Speaker 1: a bitcoin um spack, right bitcoining camps back and then um,

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Speaker 1: also you know we all you know, that's still something

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Speaker 1: that might be in the cards, right or not? What

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Speaker 1: what what sort of is the outlook for for movement there? Right? Yeah,

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Speaker 1: so I actually did look this up. There was a

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Speaker 1: company that we were reporting on called bitcoin Depot. They

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Speaker 1: were still trying to go public when we were doing

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Speaker 1: our reporting. Bitcoin Depot is a fast growing cryptocurrency, a

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Speaker 1: t M network letting you buy and sell bitcoin and

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Speaker 1: multiple other cryptocurrencies instantly at thousands. They said it what happening?

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Speaker 1: Kee looked it up. They issued a statement earlier this

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Speaker 1: month saying that they still intended to do that. And

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Speaker 1: you know, one thing that has changed since we were

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Speaker 1: doing the book of our reporting is that, you know,

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Speaker 1: the FTX empire has collapsed. Crypto prices have you know,

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Speaker 1: plunged even more than they were already down. And so

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Speaker 1: the fact that earlier this month the company said that

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Speaker 1: they're still plowing ahead with this back deal is is interesting.

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Speaker 1: And of note, another bitcoin, a t M provider, who

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Speaker 1: was also tied to sort of the contagion now in

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Speaker 1: crypto in a way, Um, one of the companies everybody's

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Speaker 1: been following is Genesis the Lender, and we've been reporting

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Speaker 1: how they have been trying to raise money from investors

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Speaker 1: and warning that if they don't manage to raise they

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Speaker 1: might have to file for bankruptcy. So can you maybe

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Speaker 1: talk a bit about that about sort of how one

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Speaker 1: of the bitcoin at M companies was sort of connected

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Speaker 1: to Genesis the Lender. Right, Yeah, so our colleague Rachel

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Speaker 1: but she found some really interesting stuff about the debt

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Speaker 1: of coin Cloud. It range about five thou a t

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Speaker 1: M s across the US and Brazil, and she found

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Speaker 1: that they had tapped advisers to help them rework about

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Speaker 1: a d million dollars of debt that they had accumulated

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Speaker 1: to fund and aggressive expansion. She reported that back in November.

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Speaker 1: So again things have changed quite a bit, very rapidly

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Speaker 1: in the crypto space. But it does raise some questions

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Speaker 1: about these companies that may have incurred quite a large

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Speaker 1: bit of debt and what they're going to do with them.

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Speaker 1: You know that company we were talking about earlier, Bitcoin

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Speaker 1: Depot that does still intend ongoing public via back. They

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Speaker 1: owe forty two point four million dollars under a term

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Speaker 1: loan bearing a fifteent interest rate. As of June thirtieth,

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Speaker 1: according to a proxy statement. Um, So it's a question of,

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Speaker 1: you know, how how sustainable all these businesses. It does

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Speaker 1: seem that some of them, oh a fair bit of money.

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Speaker 1: Bitcoin Depot again they said that they're still going to

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Speaker 1: go forward. The SPAC deal could end up injecting some

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Speaker 1: very much needed cash and do that business. So. Um.

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Speaker 1: You know. One of the pressures that the industry is

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Speaker 1: facing in general now, not just becoining TMS, is regulatory pressure. Right,

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Speaker 1: we've seen, especially after the collapse of FDx, regulators looking

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Speaker 1: to crackdown policymakers as well. What's the current environment like

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Speaker 1: for bitcoin E TMS and could that be seen as

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Speaker 1: another sort of threat for growth in in the space? Right?

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Speaker 1: It does depend on where you are. So for example,

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Speaker 1: Singapore January they banned crypto a t M s. They

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Speaker 1: said you have to shut down your operations. You know.

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Speaker 1: In the UK they've also taken some more aggressive measures.

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Speaker 1: It was in March that they that they hadn't approved

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Speaker 1: any machines and they told operators you have to remove

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Speaker 1: any of your units that are still in use. Um

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Speaker 1: From where I am. In the United States, regulators have

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Speaker 1: been a little bit more hands off. I guess you

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Speaker 1: could say there's not a ton of laws in place

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Speaker 1: kind of monitoring these machines. However, there are warnings. There

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Speaker 1: are concerns, the FBI warning about fraudulent schemes targeting cryptocurrency

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Speaker 1: a t ms, with criminals directing victims to use the

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Speaker 1: A t m s and send funds that are then

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Speaker 1: used for illegal activity. The A t m s are foundering.

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Speaker 1: There was a report issued in September from the Government

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Speaker 1: Accountability Office and they said that they said that crypto

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Speaker 1: machines could be used to facilitate drug trafficking. It's also

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Speaker 1: recommended that they should be reviewed for the registration requirements,

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Speaker 1: and federal agencies agreed, but there hasn't necessarily been a

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Speaker 1: lot of movement on that regulation space. So it's kind

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Speaker 1: of another issue of everybody agrees, yes, there should be

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Speaker 1: regulation for this crypto thing, but there are questions about who, how,

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Speaker 1: and what exactly that means. So I know you don't

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Speaker 1: have a crystal ball, but going forward, what you expect,

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Speaker 1: or at least, what are what are you looking at?

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Speaker 1: What are we looking at in terms of bitcoin A

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Speaker 1: t m s, What would be interesting for you to see. Um,

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Speaker 1: I would say, dicey, I guess you know all of

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Speaker 1: crypto could go for more regulation. UM I could see

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Speaker 1: this being something that could get a little bit more

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Speaker 1: or maker interest intrigue. Especially you know in the US

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Speaker 1: there hasn't been much, but there have been warnings and

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Speaker 1: other countries and places have taken actions against them, so

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Speaker 1: there is a question of what US regulators might do.

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Speaker 1: There also might be fewer operators. This is something that even,

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Speaker 1: like you said, Anna, the companies that we talked to,

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Speaker 1: they were really bullish. They were super excited about crypto

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Speaker 1: A t M s and the future, but a lot

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Speaker 1: of them even said the they expect more consolidation in

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Speaker 1: the space. Right, So there are some really big Bitcoin

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Speaker 1: a t M operators, but there's a lot of smaller

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Speaker 1: players too, and now that each machine isn't getting as

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Speaker 1: much transactions, you know, there are questions of if it's

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Speaker 1: a stainable business model to have a one off machine

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Speaker 1: every now and again. So some of the larger players

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Speaker 1: and of course this does play into their interests, but

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Speaker 1: they kind of said there would be consolidation and there

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Speaker 1: won't be as many operators and as many providers and

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Speaker 1: people would start to seek out trusted platforms or kind

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Speaker 1: of no names in the bitcoin a t M space.

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Speaker 1: Whether they're right or not, who knows, but that was

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Speaker 1: that was their guests, and I guess as far as utilization,

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Speaker 1: you know, we have seen that the usage and the

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Speaker 1: installation of these machines, they're not separate from bitcoin prices.

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Speaker 1: So again we have no crystal ball. All that we

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Speaker 1: know is that right now the price of bitcoin is

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Speaker 1: significantly lower than it was a year ago. I don't

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Speaker 1: know where will be a year from now, but I

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Speaker 1: would have to assume that since the history of crypto

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Speaker 1: a t m s has been somewhat tied to bitcoin prices,

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Speaker 1: that the future of crypto a t m s will

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Speaker 1: also be tied to those same prices. So I think

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Speaker 1: you'll have to come and report back on whether your

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Speaker 1: hometown still has a Bitcoin a t M as a judge,

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Speaker 1: as a meter to whether whether the industry is still

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Speaker 1: going strong. Yeah, I'll check in Christmas. I'll be going

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Speaker 1: home so soon, so maybe i'll stop it. Great, all right,

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Speaker 1: thank you, Carly, thank you. You can find more of

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Speaker 1: Carl jana Is reporting on the Bloomberg terminal and on

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Speaker 1: Bloomberg dot com. For more, be sure to check out

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Speaker 1: to Crypto at Bloomberg dot net. Yeah. The supervising producer

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Speaker 1: of Bloomberg Crypto is Vicky Verglina. Our senior producer is

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Speaker 1: I'm Stacy Marie Schmal. We'll be back tomorrow