The number of Bitcoin ATMs (BTMs) is growing everyday, and so are the number of people entering the industry. In order to operate a lucrative BTM business, many costs and risks need to be considered.
The revenue from a BTM depends on several factors, explains Vlad of Coinatmradar, a website that tracks BTM locations. The machine’s location is of utmost importance. A profitable BTM is often found in a conveniently accessible area with high foot traffic and general public Bitcoin interest.
For machines placed in an establishment, the opening hours and type of business are also very important. Restaurants and pizzerias are the most popular locations for BTMs, Vlad noted.
Based on data from 952 BTMs listed on his website worldwide by 20 manufacturers and 193 operators, Vlad said that operators reported on average a BTM brought in roughly $30,000 a month in transaction volume.
On the lower end of the scale, some operators reported bringing in between $20,000 and $25,000 per machine while others reported up to $100,000 per machine. Overall, he noted that:
We find a volume of $30K quite realistic to receive at a good location with enough visibility and promotion on the internet.
The revenue per machine depends on the fee charged by the operator. Currently, the average BTM fee is 8.48 percent for buying bitcoin and 5.64 percent for selling, according to Coinatmradar’s calculations.
There are many costs associated with running a BTM which vary based on factors such as machine type, manufacturer, country, and currency. Currently, the price of a machine ranges from $999 for a one-way Skyhook BTM to $14,500 for a two-way Genesis Coin Genesis1 model.
Vlad estimates that bitcoin ATM hardware costs, including price per machine, delivery, taxes, and installation, are usually in the range of $10,000 to $15,000.
Additional costs of running a BTM business include those relating to renting a space, advertising, customer support and machine maintenance. There are also legal costs which can be substantial and could include licenses. The cost of stocking bitcoins and cash is also a big consideration since a BTM will be useless if it is out of money.
He added that:
Many people don’t assess all risks and all activities required to run a machine.
In addition, a new category of expenses relating to theft and vandalism of BTMs is becoming significant. These expenses should be factored in prior to starting a BTM business as well.
Steps to Starting a Bitcoin ATM Business
Below are some key steps to take when starting a BTM business.
Having a business plan: A good business plan will help you formulate your business strategies and ascertain if it will be profitable as well as when breakeven will be.
Check the regulations: Some jurisdictions may require ATM businesses to get a license. The cost may be ballooned and the process lengthy which could lead to unexpected costs and delay to starting the business.
Establish a banking relationship: Some banks have problems doing business with Bitcoin companies. Some businesses have had their bank accounts closed because banks are ‘de-risking’ by closing customers’ accounts they feel are high risk. Establishing a good relationship with a bank is important in order to minimize the risk of the BTM’s business bank account being closed unexpectedly. Coinatmradar recommends having several banking relationships “to eliminate the potential risk of accounts closing at one bank”.
Secure a good location: A BTM needs a good location to be profitable, but at the same time, BTMs can help the establishments they are located in. Store owners told Coinatmradar that a BTM can increase their sales up to 10-30 percent “because of new customers, who come to use a Bitcoin ATM.”
Choose the BTM type and manufacturer: There are one-way and two-way BTMs. The latter allows customers to sell bitcoin for cash as well as buy bitcoin, but they are more expensive. Some of the most popular BTM manufacturers include Genesis Coin, Lamassu, General Bytes, Bitaccess, and Skyhook.
Plan for customer support and maintenance: A BTM operator should strive to provide excellent customer service, and a point of contact for customer support is vital. Operators also need to constantly monitor whether each machine is operational and that bitcoins are topped up around the clock.
Are you thinking of starting a BTM business? Let us know in the comments section below.
Images courtesy of Shutterstock, Coinatmradar, Genesis Coin
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How to Start Your Own Bitcoin ATM Business