Speaker 1: This is Bloomberg Crypto, a daily Bloomberg I Heard podcast,
Speaker 1: and I'm Stacy Marie Ishmael, Managing editor of Crypto for
Speaker 1: Bloomberg News. It's Thursday, December. Hi everyone, this is Stacy
Speaker 1: Marie Ishmael. Quick news about this episode. We recorded it
Speaker 1: before the arrest of Sam Bankman freed and all of
Speaker 1: the various criminal and civil allegations against him. We'll have
Speaker 1: much more on what happened there in the episodes later
Speaker 1: this week. Thanks for tuning in. I'm a senior crypto
Speaker 1: editor for Bloomberg News in today for Stacy Mary Ishmael.
Speaker 1: Bitcoin a t m s have often been a symbol
Speaker 1: of crypto popularity during the digital asset boom. They kept
Speaker 1: on appearing in places where you would think, why would
Speaker 1: there be a bitcoin a t M here, Somewhere like
Speaker 1: in Amherst County, Virginia, a place that has no hospital
Speaker 1: but sure does have a bitcoin a t M. The
Speaker 1: number of crypto a t ms in the US peaked
Speaker 1: at over just thirty four thousand in August and has
Speaker 1: since dipped slightly. According to coin a t M Radar,
Speaker 1: these a t m s were like the shrines of
Speaker 1: the then growing faith in crypto. But this faith isn't
Speaker 1: spreading nowadays, so could these monuments withstand the downturns of
Speaker 1: the current market after the f t X implosion. Here
Speaker 1: to join me to look at the current state of
Speaker 1: bitcoin a t m s is Bloomberg reporter Carle Wanna.
Speaker 1: Store owners said, maybe back in the day, a year ago,
Speaker 1: they might get one guy told, maybe be four or
Speaker 1: five people who had come to the machine, and now
Speaker 1: it's maybe one, maybe two, but maybe nobody. So before
Speaker 1: we get into what going on with bitcoiny tams, now,
Speaker 1: let's have a chat about what actually bitcoin a tams are.
Speaker 1: I have seen the bitcoin like the by bitcoin signs
Speaker 1: that are on bodegas and gas stations and stuff like that,
Speaker 1: and just always thought how odd. But I never never engage,
Speaker 1: never even noticed the physical machines before, because it seemed
Speaker 1: during the previous cycle they sort of exploded, especially in
Speaker 1: the US. They were everywhere. You know, you mentioned bodegas,
Speaker 1: they were in rural locations and you know, in the
Speaker 1: middle of nowhere. So so there are many, but it
Speaker 1: is quite telling that you say you have you haven't unnoticed.
Speaker 1: Maybe you were in the target audience. Maybe maybe I
Speaker 1: just wasn't paying close enough attention. So why would someone
Speaker 1: use one? Like what we're companies saying, it seems pretty easy.
Speaker 1: You know, the machine is is in your face, right,
Speaker 1: They are there like they're in gas stations, next to
Speaker 1: the soda or the candy. It's it's a sign. A
Speaker 1: lot of them flash the price of bitcoin for the
Speaker 1: day at you, so you see it, you think about it.
Speaker 1: And it also means that you can buy bitcoin with cash.
Speaker 1: So for some people who if they don't have a
Speaker 1: big account or they don't feel like going to a bank,
Speaker 1: you know, there is that benefit, and there's also a
Speaker 1: certain degree of anonymity, at least for smaller transactions. You know,
Speaker 1: different providers have different rules about how much information you
Speaker 1: need for how much money that you're transacting with, but
Speaker 1: in a lot of cases, you know, it can be
Speaker 1: less information than if you needed to go to an
Speaker 1: actual bank and deal with an account that way. Let's
Speaker 1: talk a bit about the metrics and dynamics of how
Speaker 1: they work, the economics. Let's say, who pays whom? Why
Speaker 1: would you want one in your store? And you know,
Speaker 1: how do they make money? So as far as the
Speaker 1: store owner's perspective, that one does make some sense as
Speaker 1: to why you would want one in your store. You know,
Speaker 1: if you own a bodega, the machine is another source
Speaker 1: of income and it's not highly obtrusive. It can sit someplace.
Speaker 1: It is like a physical machine. But at the same
Speaker 1: time you don't have to do that much. Oftentimes. The
Speaker 1: way that it works is, you know, you get some
Speaker 1: sort of rent that's paid to you if you're the
Speaker 1: store owner, so that's a benefit, and you don't have
Speaker 1: to handle it. There's somebody else who comes and they
Speaker 1: pick up the cash and then they leave. And I
Speaker 1: went to a few boudeguaz I talked to store owners
Speaker 1: and they just said that, you know, some man would
Speaker 1: come like every week, every few weeks, something along those lines,
Speaker 1: take out the cash. But the work at deal with
Speaker 1: whatever needed to be dealt with. Their pretty hands off.
Speaker 1: And you know, one guy even told me, yeah, I
Speaker 1: don't really pay any attention to it. Maybe it gets
Speaker 1: me a customer every now and then. A customer is
Speaker 1: a customer, So what do I really care? Um? And
Speaker 1: so for the store owners it it really does. It's
Speaker 1: not a big commitment and they do get paid to
Speaker 1: have them in their store there is often a rent
Speaker 1: type of EVA. So I guess we talked about the
Speaker 1: rally um that was. Then we've been in a crypto
Speaker 1: winter now for several months where volumes on exchanges have dropped.
Speaker 1: Prices have fallen significantly since a year ago, which leads
Speaker 1: me to why I guess we started looking at bitcoiny
Speaker 1: tms again. Can you sort of walk our listeners through
Speaker 1: why we thought it was a good moment to check
Speaker 1: in again. Right, So, if you look at data online,
Speaker 1: we mainly use coin a t M radar, and I mean,
Speaker 1: you gotta look it up. It's it's like a mountain,
Speaker 1: you know, it just increases and increases. For the amount
Speaker 1: of Bitcoin A t m s that were installed in
Speaker 1: especially in it does kind of look like it went
Speaker 1: up with the price of bitcoin as it was shooting up,
Speaker 1: and it's not that necessarily there are fewer. You know,
Speaker 1: there was a peak in August of two for the
Speaker 1: amount of Bitcoin A t m s that were in
Speaker 1: the United States eights and actually in September more Bitcoin
Speaker 1: A t m s were taken down than they were installed,
Speaker 1: which is like first for the industry. So the number
Speaker 1: of crypto A t m s peaked around thirty four
Speaker 1: thousand in August, and since then they've kind of come
Speaker 1: down a little bit fluctuated more. And so our question was,
Speaker 1: you know in this machine that it's physical, it's it's
Speaker 1: in the story flashes the price of bitcoin at you
Speaker 1: when you walk in, if you're somebody who is passing by,
Speaker 1: if the prices you know, nineteen thousand as it was
Speaker 1: when I was going around to these, or now you
Speaker 1: know more around sixteen seventeen thousand, even that's a lot
Speaker 1: less appealing than sixty thousand. So it's a question of,
Speaker 1: all right, these machines are still there, the data is
Speaker 1: showing that there are a few of them getting installed,
Speaker 1: is anyone even really using them? Are companies feeling okay
Speaker 1: about it? So we had a lot of questions and
Speaker 1: and we asked a lot of people a lot of
Speaker 1: the same question as to how the industry is doing
Speaker 1: after this massive boom. Yeah, and they they many of
Speaker 1: them seem quite sort of bullish still that they're saying,
Speaker 1: you know, they have to kind of be a bit
Speaker 1: more more deliberate and maybe focus on airs that had
Speaker 1: more foot traffic on the mainstream and less rural. And
Speaker 1: I remember when we were reporting early days, we were
Speaker 1: looking at the map because you can, you know, for listeners,
Speaker 1: you can search online and find all the maps of
Speaker 1: them in the U S. And you mentioned that there
Speaker 1: was one in the town you come from. Oh yeah,
Speaker 1: I mean I'm from Making, Georgia. I am really surprised,
Speaker 1: but there were, I mean several around the area. And
Speaker 1: I was just wondering who, who from my hometown would
Speaker 1: keep possibly using this right now, I'm I'm in New
Speaker 1: York City and in some ways, and maybe it's because
Speaker 1: I'm around people who deal more with crypto, but I'm like, yeah, sure,
Speaker 1: crypto a d M S in Making Georgia. Just the
Speaker 1: thought of somebody using a crypto a t M is
Speaker 1: it's so funny to me. I can't imagine their client
Speaker 1: would be. So, you know, we looked at usage, and
Speaker 1: you know, based on data from analysis, we saw that
Speaker 1: usage had had dropped significantly. But obviously, you know you
Speaker 1: you went there too, And although this is anecdotal, can
Speaker 1: you give us a sense of what it what it
Speaker 1: was like. You were literally just waiting there to see
Speaker 1: if someone showed up. Yeah, I just stood by the
Speaker 1: bitcoin a t M S hung out with store owners
Speaker 1: maybe chatted with a customer too. I never saw anybody
Speaker 1: use them. I talked to a lot of store owners,
Speaker 1: even some stores, you know, because you want to broader sample.
Speaker 1: I called some random places, and the consensus was that
Speaker 1: really hardly anybody was using these. You know. Again, it's anecdotal.
Speaker 1: Maybe one guy would say, like one or two people
Speaker 1: occasionally would come in. Another thing that did come up
Speaker 1: with at least two of the store owners is that
Speaker 1: they did say that they felt like there was a
Speaker 1: drop in demand for usage given bitcoins decline in prices.
Speaker 1: I mean, that makes sense, that's what the data has seen.
Speaker 1: But it was also interesting to know that store owners
Speaker 1: said maybe back in the day, a year ago, they
Speaker 1: might get one guy told me maybe four or five
Speaker 1: people who would come to the machine, and now it's
Speaker 1: maybe one, maybe two, but maybe nobody, you know. So
Speaker 1: it does kind of seem like these machines are are
Speaker 1: are sitting a little bit more in waiting for customers
Speaker 1: that they perhaps once had more of. Up next, more
Speaker 1: with Bloomberg reporter Carl Wanna on the present and the
Speaker 1: future of bitcoin e TMS. You know, we were expecting
Speaker 1: a bitcoin um spack, right bitcoining camps back and then um,
Speaker 1: also you know we all you know, that's still something
Speaker 1: that might be in the cards, right or not? What
Speaker 1: what what sort of is the outlook for for movement there? Right? Yeah,
Speaker 1: so I actually did look this up. There was a
Speaker 1: company that we were reporting on called bitcoin Depot. They
Speaker 1: were still trying to go public when we were doing
Speaker 1: our reporting. Bitcoin Depot is a fast growing cryptocurrency, a
Speaker 1: t M network letting you buy and sell bitcoin and
Speaker 1: multiple other cryptocurrencies instantly at thousands. They said it what happening?
Speaker 1: Kee looked it up. They issued a statement earlier this
Speaker 1: month saying that they still intended to do that. And
Speaker 1: you know, one thing that has changed since we were
Speaker 1: doing the book of our reporting is that, you know,
Speaker 1: the FTX empire has collapsed. Crypto prices have you know,
Speaker 1: plunged even more than they were already down. And so
Speaker 1: the fact that earlier this month the company said that
Speaker 1: they're still plowing ahead with this back deal is is interesting.
Speaker 1: And of note, another bitcoin, a t M provider, who
Speaker 1: was also tied to sort of the contagion now in
Speaker 1: crypto in a way, Um, one of the companies everybody's
Speaker 1: been following is Genesis the Lender, and we've been reporting
Speaker 1: how they have been trying to raise money from investors
Speaker 1: and warning that if they don't manage to raise they
Speaker 1: might have to file for bankruptcy. So can you maybe
Speaker 1: talk a bit about that about sort of how one
Speaker 1: of the bitcoin at M companies was sort of connected
Speaker 1: to Genesis the Lender. Right, Yeah, so our colleague Rachel
Speaker 1: but she found some really interesting stuff about the debt
Speaker 1: of coin Cloud. It range about five thou a t
Speaker 1: M s across the US and Brazil, and she found
Speaker 1: that they had tapped advisers to help them rework about
Speaker 1: a d million dollars of debt that they had accumulated
Speaker 1: to fund and aggressive expansion. She reported that back in November.
Speaker 1: So again things have changed quite a bit, very rapidly
Speaker 1: in the crypto space. But it does raise some questions
Speaker 1: about these companies that may have incurred quite a large
Speaker 1: bit of debt and what they're going to do with them.
Speaker 1: You know that company we were talking about earlier, Bitcoin
Speaker 1: Depot that does still intend ongoing public via back. They
Speaker 1: owe forty two point four million dollars under a term
Speaker 1: loan bearing a fifteent interest rate. As of June thirtieth,
Speaker 1: according to a proxy statement. Um, So it's a question of,
Speaker 1: you know, how how sustainable all these businesses. It does
Speaker 1: seem that some of them, oh a fair bit of money.
Speaker 1: Bitcoin Depot again they said that they're still going to
Speaker 1: go forward. The SPAC deal could end up injecting some
Speaker 1: very much needed cash and do that business. So. Um.
Speaker 1: You know. One of the pressures that the industry is
Speaker 1: facing in general now, not just becoining TMS, is regulatory pressure. Right,
Speaker 1: we've seen, especially after the collapse of FDx, regulators looking
Speaker 1: to crackdown policymakers as well. What's the current environment like
Speaker 1: for bitcoin E TMS and could that be seen as
Speaker 1: another sort of threat for growth in in the space? Right?
Speaker 1: It does depend on where you are. So for example,
Speaker 1: Singapore January they banned crypto a t M s. They
Speaker 1: said you have to shut down your operations. You know.
Speaker 1: In the UK they've also taken some more aggressive measures.
Speaker 1: It was in March that they that they hadn't approved
Speaker 1: any machines and they told operators you have to remove
Speaker 1: any of your units that are still in use. Um
Speaker 1: From where I am. In the United States, regulators have
Speaker 1: been a little bit more hands off. I guess you
Speaker 1: could say there's not a ton of laws in place
Speaker 1: kind of monitoring these machines. However, there are warnings. There
Speaker 1: are concerns, the FBI warning about fraudulent schemes targeting cryptocurrency
Speaker 1: a t ms, with criminals directing victims to use the
Speaker 1: A t m s and send funds that are then
Speaker 1: used for illegal activity. The A t m s are foundering.
Speaker 1: There was a report issued in September from the Government
Speaker 1: Accountability Office and they said that they said that crypto
Speaker 1: machines could be used to facilitate drug trafficking. It's also
Speaker 1: recommended that they should be reviewed for the registration requirements,
Speaker 1: and federal agencies agreed, but there hasn't necessarily been a
Speaker 1: lot of movement on that regulation space. So it's kind
Speaker 1: of another issue of everybody agrees, yes, there should be
Speaker 1: regulation for this crypto thing, but there are questions about who, how,
Speaker 1: and what exactly that means. So I know you don't
Speaker 1: have a crystal ball, but going forward, what you expect,
Speaker 1: or at least, what are what are you looking at?
Speaker 1: What are we looking at in terms of bitcoin A
Speaker 1: t m s, What would be interesting for you to see. Um,
Speaker 1: I would say, dicey, I guess you know all of
Speaker 1: crypto could go for more regulation. UM I could see
Speaker 1: this being something that could get a little bit more
Speaker 1: or maker interest intrigue. Especially you know in the US
Speaker 1: there hasn't been much, but there have been warnings and
Speaker 1: other countries and places have taken actions against them, so
Speaker 1: there is a question of what US regulators might do.
Speaker 1: There also might be fewer operators. This is something that even,
Speaker 1: like you said, Anna, the companies that we talked to,
Speaker 1: they were really bullish. They were super excited about crypto
Speaker 1: A t M s and the future, but a lot
Speaker 1: of them even said the they expect more consolidation in
Speaker 1: the space. Right, So there are some really big Bitcoin
Speaker 1: a t M operators, but there's a lot of smaller
Speaker 1: players too, and now that each machine isn't getting as
Speaker 1: much transactions, you know, there are questions of if it's
Speaker 1: a stainable business model to have a one off machine
Speaker 1: every now and again. So some of the larger players
Speaker 1: and of course this does play into their interests, but
Speaker 1: they kind of said there would be consolidation and there
Speaker 1: won't be as many operators and as many providers and
Speaker 1: people would start to seek out trusted platforms or kind
Speaker 1: of no names in the bitcoin a t M space.
Speaker 1: Whether they're right or not, who knows, but that was
Speaker 1: that was their guests, and I guess as far as utilization,
Speaker 1: you know, we have seen that the usage and the
Speaker 1: installation of these machines, they're not separate from bitcoin prices.
Speaker 1: So again we have no crystal ball. All that we
Speaker 1: know is that right now the price of bitcoin is
Speaker 1: significantly lower than it was a year ago. I don't
Speaker 1: know where will be a year from now, but I
Speaker 1: would have to assume that since the history of crypto
Speaker 1: a t m s has been somewhat tied to bitcoin prices,
Speaker 1: that the future of crypto a t m s will
Speaker 1: also be tied to those same prices. So I think
Speaker 1: you'll have to come and report back on whether your
Speaker 1: hometown still has a Bitcoin a t M as a judge,
Speaker 1: as a meter to whether whether the industry is still
Speaker 1: going strong. Yeah, I'll check in Christmas. I'll be going
Speaker 1: home so soon, so maybe i'll stop it. Great, all right,
Speaker 1: thank you, Carly, thank you. You can find more of
Speaker 1: Carl jana Is reporting on the Bloomberg terminal and on
Speaker 1: Bloomberg dot com. For more, be sure to check out
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Speaker 1: I'm Stacy Marie Schmal. We'll be back tomorrow