WEBVTT - What the Future Holds for Bitcoin ATMs

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<v Speaker 1>This is Bloomberg Crypto, a daily Bloomberg I Heard podcast,

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<v Speaker 1>and I'm Stacy Marie Ishmael, Managing editor of Crypto for

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

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<v Speaker 1>Marie Ishmael. Quick news about this episode. We recorded it

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<v Speaker 1>before the arrest of Sam Bankman freed and all of

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<v Speaker 1>the various criminal and civil allegations against him. We'll have

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<v Speaker 1>much more on what happened there in the episodes later

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<v Speaker 1>this week. Thanks for tuning in. I'm a senior crypto

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<v Speaker 1>editor for Bloomberg News in today for Stacy Mary Ishmael.

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<v Speaker 1>Bitcoin a t m s have often been a symbol

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<v Speaker 1>of crypto popularity during the digital asset boom. They kept

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<v Speaker 1>on appearing in places where you would think, why would

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<v Speaker 1>there be a bitcoin a t M here, Somewhere like

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<v Speaker 1>in Amherst County, Virginia, a place that has no hospital

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<v Speaker 1>but sure does have a bitcoin a t M. The

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<v Speaker 1>number of crypto a t ms in the US peaked

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<v Speaker 1>at over just thirty four thousand in August and has

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<v Speaker 1>since dipped slightly. According to coin a t M Radar,

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<v Speaker 1>these a t m s were like the shrines of

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<v Speaker 1>the then growing faith in crypto. But this faith isn't

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<v Speaker 1>spreading nowadays, so could these monuments withstand the downturns of

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<v Speaker 1>the current market after the f t X implosion. Here

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<v Speaker 1>to join me to look at the current state of

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<v Speaker 1>bitcoin a t m s is Bloomberg reporter Carle Wanna.

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<v Speaker 1>Store owners said, maybe back in the day, a year ago,

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<v Speaker 1>they might get one guy told, maybe be four or

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<v Speaker 1>five people who had come to the machine, and now

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<v Speaker 1>it's maybe one, maybe two, but maybe nobody. So before

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<v Speaker 1>we get into what going on with bitcoiny tams, now,

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<v Speaker 1>let's have a chat about what actually bitcoin a tams are.

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<v Speaker 1>I have seen the bitcoin like the by bitcoin signs

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<v Speaker 1>that are on bodegas and gas stations and stuff like that,

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<v Speaker 1>and just always thought how odd. But I never never engage,

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<v Speaker 1>never even noticed the physical machines before, because it seemed

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<v Speaker 1>during the previous cycle they sort of exploded, especially in

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<v Speaker 1>the US. They were everywhere. You know, you mentioned bodegas,

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<v Speaker 1>they were in rural locations and you know, in the

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<v Speaker 1>middle of nowhere. So so there are many, but it

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<v Speaker 1>is quite telling that you say you have you haven't unnoticed.

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<v Speaker 1>Maybe you were in the target audience. Maybe maybe I

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<v Speaker 1>just wasn't paying close enough attention. So why would someone

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

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<v Speaker 1>You know, the machine is is in your face, right,

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<v Speaker 1>They are there like they're in gas stations, next to

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<v Speaker 1>the soda or the candy. It's it's a sign. A

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<v Speaker 1>lot of them flash the price of bitcoin for the

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<v Speaker 1>day at you, so you see it, you think about it.

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<v Speaker 1>And it also means that you can buy bitcoin with cash.

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<v Speaker 1>So for some people who if they don't have a

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

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<v Speaker 1>you know, there is that benefit, and there's also a

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<v Speaker 1>certain degree of anonymity, at least for smaller transactions. You know,

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<v Speaker 1>different providers have different rules about how much information you

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<v Speaker 1>need for how much money that you're transacting with, but

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<v Speaker 1>in a lot of cases, you know, it can be

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<v Speaker 1>less information than if you needed to go to an

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<v Speaker 1>actual bank and deal with an account that way. Let's

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<v Speaker 1>talk a bit about the metrics and dynamics of how

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

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<v Speaker 1>would you want one in your store? And you know,

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<v Speaker 1>how do they make money? So as far as the

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<v Speaker 1>store owner's perspective, that one does make some sense as

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<v Speaker 1>to why you would want one in your store. You know,

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<v Speaker 1>if you own a bodega, the machine is another source

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

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<v Speaker 1>It is like a physical machine. But at the same

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<v Speaker 1>time you don't have to do that much. Oftentimes. The

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<v Speaker 1>way that it works is, you know, you get some

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<v Speaker 1>sort of rent that's paid to you if you're the

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

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<v Speaker 1>to handle it. There's somebody else who comes and they

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<v Speaker 1>pick up the cash and then they leave. And I

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<v Speaker 1>went to a few boudeguaz I talked to store owners

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<v Speaker 1>and they just said that, you know, some man would

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<v Speaker 1>come like every week, every few weeks, something along those lines,

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<v Speaker 1>take out the cash. But the work at deal with

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<v Speaker 1>whatever needed to be dealt with. Their pretty hands off.

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<v Speaker 1>And you know, one guy even told me, yeah, I

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<v Speaker 1>don't really pay any attention to it. Maybe it gets

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<v Speaker 1>me a customer every now and then. A customer is

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<v Speaker 1>a customer, So what do I really care? Um? And

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<v Speaker 1>so for the store owners it it really does. It's

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<v Speaker 1>not a big commitment and they do get paid to

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<v Speaker 1>have them in their store there is often a rent

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<v Speaker 1>type of EVA. So I guess we talked about the

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<v Speaker 1>rally um that was. Then we've been in a crypto

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<v Speaker 1>winter now for several months where volumes on exchanges have dropped.

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<v Speaker 1>Prices have fallen significantly since a year ago, which leads

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<v Speaker 1>me to why I guess we started looking at bitcoiny

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<v Speaker 1>tms again. Can you sort of walk our listeners through

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<v Speaker 1>why we thought it was a good moment to check

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<v Speaker 1>in again. Right, So, if you look at data online,

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<v Speaker 1>we mainly use coin a t M radar, and I mean,

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<v Speaker 1>you gotta look it up. It's it's like a mountain,

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<v Speaker 1>you know, it just increases and increases. For the amount

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<v Speaker 1>of Bitcoin A t m s that were installed in

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<v Speaker 1>especially in it does kind of look like it went

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<v Speaker 1>up with the price of bitcoin as it was shooting up,

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

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<v Speaker 1>there was a peak in August of two for the

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<v Speaker 1>amount of Bitcoin A t m s that were in

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<v Speaker 1>the United States eights and actually in September more Bitcoin

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<v Speaker 1>A t m s were taken down than they were installed,

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<v Speaker 1>which is like first for the industry. So the number

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<v Speaker 1>of crypto A t m s peaked around thirty four

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<v Speaker 1>thousand in August, and since then they've kind of come

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<v Speaker 1>down a little bit fluctuated more. And so our question was,

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<v Speaker 1>you know in this machine that it's physical, it's it's

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<v Speaker 1>in the story flashes the price of bitcoin at you

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<v Speaker 1>when you walk in, if you're somebody who is passing by,

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<v Speaker 1>if the prices you know, nineteen thousand as it was

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<v Speaker 1>when I was going around to these, or now you

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<v Speaker 1>know more around sixteen seventeen thousand, even that's a lot

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

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<v Speaker 1>all right, these machines are still there, the data is

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<v Speaker 1>showing that there are a few of them getting installed,

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<v Speaker 1>is anyone even really using them? Are companies feeling okay

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<v Speaker 1>about it? So we had a lot of questions and

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<v Speaker 1>and we asked a lot of people a lot of

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<v Speaker 1>the same question as to how the industry is doing

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<v Speaker 1>after this massive boom. Yeah, and they they many of

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<v Speaker 1>them seem quite sort of bullish still that they're saying,

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<v Speaker 1>you know, they have to kind of be a bit

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<v Speaker 1>more more deliberate and maybe focus on airs that had

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<v Speaker 1>more foot traffic on the mainstream and less rural. And

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<v Speaker 1>I remember when we were reporting early days, we were

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<v Speaker 1>looking at the map because you can, you know, for listeners,

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<v Speaker 1>you can search online and find all the maps of

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<v Speaker 1>them in the U S. And you mentioned that there

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<v Speaker 1>was one in the town you come from. Oh yeah,

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<v Speaker 1>I mean I'm from Making, Georgia. I am really surprised,

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<v Speaker 1>but there were, I mean several around the area. And

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<v Speaker 1>I was just wondering who, who from my hometown would

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<v Speaker 1>keep possibly using this right now, I'm I'm in New

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<v Speaker 1>York City and in some ways, and maybe it's because

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

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<v Speaker 1>crypto a d M S in Making Georgia. Just the

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<v Speaker 1>thought of somebody using a crypto a t M is

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

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<v Speaker 1>would be. So, you know, we looked at usage, and

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<v Speaker 1>you know, based on data from analysis, we saw that

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<v Speaker 1>usage had had dropped significantly. But obviously, you know you

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<v Speaker 1>you went there too, And although this is anecdotal, can

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<v Speaker 1>you give us a sense of what it what it

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<v Speaker 1>was like. You were literally just waiting there to see

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<v Speaker 1>if someone showed up. Yeah, I just stood by the

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<v Speaker 1>bitcoin a t M S hung out with store owners

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<v Speaker 1>maybe chatted with a customer too. I never saw anybody

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<v Speaker 1>use them. I talked to a lot of store owners,

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<v Speaker 1>even some stores, you know, because you want to broader sample.

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<v Speaker 1>I called some random places, and the consensus was that

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

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<v Speaker 1>Maybe one guy would say, like one or two people

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<v Speaker 1>occasionally would come in. Another thing that did come up

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<v Speaker 1>with at least two of the store owners is that

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<v Speaker 1>they did say that they felt like there was a

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<v Speaker 1>drop in demand for usage given bitcoins decline in prices.

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

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<v Speaker 1>But it was also interesting to know that store owners

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<v Speaker 1>said maybe back in the day, a year ago, they

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<v Speaker 1>might get one guy told me maybe four or five

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<v Speaker 1>people who would come to the machine, and now it's

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<v Speaker 1>maybe one, maybe two, but maybe nobody, you know. So

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<v Speaker 1>it does kind of seem like these machines are are

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<v Speaker 1>are sitting a little bit more in waiting for customers

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<v Speaker 1>that they perhaps once had more of. Up next, more

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<v Speaker 1>with Bloomberg reporter Carl Wanna on the present and the

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<v Speaker 1>future of bitcoin e TMS. You know, we were expecting

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<v Speaker 1>a bitcoin um spack, right bitcoining camps back and then um,

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<v Speaker 1>also you know we all you know, that's still something

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<v Speaker 1>that might be in the cards, right or not? What

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<v Speaker 1>what what sort of is the outlook for for movement there? Right? Yeah,

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<v Speaker 1>so I actually did look this up. There was a

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<v Speaker 1>company that we were reporting on called bitcoin Depot. They

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<v Speaker 1>were still trying to go public when we were doing

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<v Speaker 1>our reporting. Bitcoin Depot is a fast growing cryptocurrency, a

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<v Speaker 1>t M network letting you buy and sell bitcoin and

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<v Speaker 1>multiple other cryptocurrencies instantly at thousands. They said it what happening?

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<v Speaker 1>Kee looked it up. They issued a statement earlier this

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<v Speaker 1>month saying that they still intended to do that. And

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<v Speaker 1>you know, one thing that has changed since we were

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<v Speaker 1>doing the book of our reporting is that, you know,

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<v Speaker 1>the FTX empire has collapsed. Crypto prices have you know,

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<v Speaker 1>plunged even more than they were already down. And so

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<v Speaker 1>the fact that earlier this month the company said that

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<v Speaker 1>they're still plowing ahead with this back deal is is interesting.

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<v Speaker 1>And of note, another bitcoin, a t M provider, who

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<v Speaker 1>was also tied to sort of the contagion now in

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<v Speaker 1>crypto in a way, Um, one of the companies everybody's

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<v Speaker 1>been following is Genesis the Lender, and we've been reporting

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<v Speaker 1>how they have been trying to raise money from investors

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<v Speaker 1>and warning that if they don't manage to raise they

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<v Speaker 1>might have to file for bankruptcy. So can you maybe

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<v Speaker 1>talk a bit about that about sort of how one

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<v Speaker 1>of the bitcoin at M companies was sort of connected

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<v Speaker 1>to Genesis the Lender. Right, Yeah, so our colleague Rachel

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<v Speaker 1>but she found some really interesting stuff about the debt

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<v Speaker 1>of coin Cloud. It range about five thou a t

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<v Speaker 1>M s across the US and Brazil, and she found

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<v Speaker 1>that they had tapped advisers to help them rework about

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<v Speaker 1>a d million dollars of debt that they had accumulated

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<v Speaker 1>to fund and aggressive expansion. She reported that back in November.

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<v Speaker 1>So again things have changed quite a bit, very rapidly

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<v Speaker 1>in the crypto space. But it does raise some questions

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<v Speaker 1>about these companies that may have incurred quite a large

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

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<v Speaker 1>You know that company we were talking about earlier, Bitcoin

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<v Speaker 1>Depot that does still intend ongoing public via back. They

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<v Speaker 1>owe forty two point four million dollars under a term

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<v Speaker 1>loan bearing a fifteent interest rate. As of June thirtieth,

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

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<v Speaker 1>you know, how how sustainable all these businesses. It does

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<v Speaker 1>seem that some of them, oh a fair bit of money.

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<v Speaker 1>Bitcoin Depot again they said that they're still going to

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<v Speaker 1>go forward. The SPAC deal could end up injecting some

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<v Speaker 1>very much needed cash and do that business. So. Um.

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<v Speaker 1>You know. One of the pressures that the industry is

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

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<v Speaker 1>we've seen, especially after the collapse of FDx, regulators looking

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<v Speaker 1>to crackdown policymakers as well. What's the current environment like

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<v Speaker 1>for bitcoin E TMS and could that be seen as

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<v Speaker 1>another sort of threat for growth in in the space? Right?

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<v Speaker 1>It does depend on where you are. So for example,

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<v Speaker 1>Singapore January they banned crypto a t M s. They

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<v Speaker 1>said you have to shut down your operations. You know.

0:12:54.360 --> 0:12:58.040
<v Speaker 1>In the UK they've also taken some more aggressive measures.

0:12:58.080 --> 0:13:01.120
<v Speaker 1>It was in March that they that they hadn't approved

0:13:01.120 --> 0:13:04.680
<v Speaker 1>any machines and they told operators you have to remove

0:13:04.720 --> 0:13:07.640
<v Speaker 1>any of your units that are still in use. Um

0:13:07.679 --> 0:13:10.480
<v Speaker 1>From where I am. In the United States, regulators have

0:13:10.640 --> 0:13:13.760
<v Speaker 1>been a little bit more hands off. I guess you

0:13:13.800 --> 0:13:17.160
<v Speaker 1>could say there's not a ton of laws in place

0:13:17.360 --> 0:13:20.920
<v Speaker 1>kind of monitoring these machines. However, there are warnings. There

0:13:20.960 --> 0:13:26.600
<v Speaker 1>are concerns, the FBI warning about fraudulent schemes targeting cryptocurrency

0:13:26.720 --> 0:13:30.600
<v Speaker 1>a t ms, with criminals directing victims to use the

0:13:30.679 --> 0:13:33.559
<v Speaker 1>A t m s and send funds that are then

0:13:33.640 --> 0:13:36.199
<v Speaker 1>used for illegal activity. The A t m s are foundering.

0:13:36.200 --> 0:13:40.320
<v Speaker 1>There was a report issued in September from the Government

0:13:40.320 --> 0:13:43.320
<v Speaker 1>Accountability Office and they said that they said that crypto

0:13:43.360 --> 0:13:46.199
<v Speaker 1>machines could be used to facilitate drug trafficking. It's also

0:13:46.240 --> 0:13:50.040
<v Speaker 1>recommended that they should be reviewed for the registration requirements,

0:13:50.080 --> 0:13:54.440
<v Speaker 1>and federal agencies agreed, but there hasn't necessarily been a

0:13:54.480 --> 0:13:57.079
<v Speaker 1>lot of movement on that regulation space. So it's kind

0:13:57.080 --> 0:14:00.880
<v Speaker 1>of another issue of everybody agrees, yes, there should be

0:14:00.920 --> 0:14:05.439
<v Speaker 1>regulation for this crypto thing, but there are questions about who, how,

0:14:05.760 --> 0:14:10.000
<v Speaker 1>and what exactly that means. So I know you don't

0:14:10.040 --> 0:14:12.840
<v Speaker 1>have a crystal ball, but going forward, what you expect,

0:14:12.960 --> 0:14:15.040
<v Speaker 1>or at least, what are what are you looking at?

0:14:15.080 --> 0:14:17.320
<v Speaker 1>What are we looking at in terms of bitcoin A

0:14:17.320 --> 0:14:21.400
<v Speaker 1>t m s, What would be interesting for you to see. Um,

0:14:21.440 --> 0:14:24.760
<v Speaker 1>I would say, dicey, I guess you know all of

0:14:24.800 --> 0:14:28.680
<v Speaker 1>crypto could go for more regulation. UM I could see

0:14:28.680 --> 0:14:32.200
<v Speaker 1>this being something that could get a little bit more

0:14:32.640 --> 0:14:36.360
<v Speaker 1>or maker interest intrigue. Especially you know in the US

0:14:36.480 --> 0:14:39.040
<v Speaker 1>there hasn't been much, but there have been warnings and

0:14:39.200 --> 0:14:43.000
<v Speaker 1>other countries and places have taken actions against them, so

0:14:43.360 --> 0:14:46.400
<v Speaker 1>there is a question of what US regulators might do.

0:14:47.200 --> 0:14:50.520
<v Speaker 1>There also might be fewer operators. This is something that even,

0:14:50.680 --> 0:14:52.840
<v Speaker 1>like you said, Anna, the companies that we talked to,

0:14:52.960 --> 0:14:56.880
<v Speaker 1>they were really bullish. They were super excited about crypto

0:14:56.960 --> 0:14:59.000
<v Speaker 1>A t M s and the future, but a lot

0:14:59.040 --> 0:15:01.840
<v Speaker 1>of them even said the they expect more consolidation in

0:15:01.840 --> 0:15:04.640
<v Speaker 1>the space. Right, So there are some really big Bitcoin

0:15:04.680 --> 0:15:07.160
<v Speaker 1>a t M operators, but there's a lot of smaller

0:15:07.200 --> 0:15:10.600
<v Speaker 1>players too, and now that each machine isn't getting as

0:15:10.680 --> 0:15:13.400
<v Speaker 1>much transactions, you know, there are questions of if it's

0:15:13.400 --> 0:15:15.720
<v Speaker 1>a stainable business model to have a one off machine

0:15:15.760 --> 0:15:18.440
<v Speaker 1>every now and again. So some of the larger players

0:15:18.440 --> 0:15:20.240
<v Speaker 1>and of course this does play into their interests, but

0:15:20.280 --> 0:15:22.120
<v Speaker 1>they kind of said there would be consolidation and there

0:15:22.120 --> 0:15:25.520
<v Speaker 1>won't be as many operators and as many providers and

0:15:25.560 --> 0:15:29.640
<v Speaker 1>people would start to seek out trusted platforms or kind

0:15:29.640 --> 0:15:32.200
<v Speaker 1>of no names in the bitcoin a t M space.

0:15:32.240 --> 0:15:34.640
<v Speaker 1>Whether they're right or not, who knows, but that was

0:15:34.800 --> 0:15:37.840
<v Speaker 1>that was their guests, and I guess as far as utilization,

0:15:38.120 --> 0:15:41.520
<v Speaker 1>you know, we have seen that the usage and the

0:15:41.560 --> 0:15:47.040
<v Speaker 1>installation of these machines, they're not separate from bitcoin prices.

0:15:47.240 --> 0:15:50.000
<v Speaker 1>So again we have no crystal ball. All that we

0:15:50.040 --> 0:15:52.520
<v Speaker 1>know is that right now the price of bitcoin is

0:15:52.920 --> 0:15:55.800
<v Speaker 1>significantly lower than it was a year ago. I don't

0:15:55.800 --> 0:15:57.800
<v Speaker 1>know where will be a year from now, but I

0:15:57.840 --> 0:16:01.720
<v Speaker 1>would have to assume that since the history of crypto

0:16:01.760 --> 0:16:05.160
<v Speaker 1>a t m s has been somewhat tied to bitcoin prices,

0:16:05.560 --> 0:16:08.000
<v Speaker 1>that the future of crypto a t m s will

0:16:08.080 --> 0:16:11.360
<v Speaker 1>also be tied to those same prices. So I think

0:16:11.360 --> 0:16:13.400
<v Speaker 1>you'll have to come and report back on whether your

0:16:13.400 --> 0:16:15.600
<v Speaker 1>hometown still has a Bitcoin a t M as a judge,

0:16:16.240 --> 0:16:19.320
<v Speaker 1>as a meter to whether whether the industry is still

0:16:19.320 --> 0:16:21.800
<v Speaker 1>going strong. Yeah, I'll check in Christmas. I'll be going

0:16:21.840 --> 0:16:25.480
<v Speaker 1>home so soon, so maybe i'll stop it. Great, all right,

0:16:25.480 --> 0:16:29.240
<v Speaker 1>thank you, Carly, thank you. You can find more of

0:16:29.320 --> 0:16:31.920
<v Speaker 1>Carl jana Is reporting on the Bloomberg terminal and on

0:16:31.960 --> 0:16:34.800
<v Speaker 1>Bloomberg dot com. For more, be sure to check out

0:16:34.800 --> 0:16:43.720
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0:16:43.960 --> 0:16:47.240
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0:16:54.160 --> 0:16:56.720
<v Speaker 1>Send us your comments, questions, or suggestions for the show

0:16:56.880 --> 0:17:02.960
<v Speaker 1>to Crypto at Bloomberg dot net. Yeah. The supervising producer

0:17:03.000 --> 0:17:06.520
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0:17:06.600 --> 0:17:10.360
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0:17:10.840 --> 0:17:14.600
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0:17:14.680 --> 0:17:18.640
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0:17:20.680 --> 0:17:23.040
<v Speaker 1>I'm Stacy Marie Schmal. We'll be back tomorrow