Recently we added a new geographic area in all of our charts — Europe, and it brought to light some interesting insights about comparison of the bitcoin ATM market in the U.S. and in Europe. In this article we check each statistic separately to find differences and similarities.
Installations of bitcoin ATM’s in the U.S. surged over last years. Although 2018 and 2019 were bear markets the crypto ATM business was growing rapidly. The largest players significantly increased their networks of machines reaching 500-600 ATM’s per company. The top US operators are three companies: CoinCloud, Bitcoin Depot and Coinflip. Each of them has individual history behind, but all target significant growth and expansion. This reminds the growth of ATM companies over 2014-2016 bear market period, but on a new scale level, and usually a bear market is a good time to build the business processes in order to prepare for a next bull market cycle.
In our past blog posts we covered interview with Daniel Polotsky a co-founder of Coinflip and Interview 2, and Brandon Mintz from Bitcoin Depot and Interview 2, who talk about how their companies evolved.
The bitcoin ATM landscape in Europe is not that bright compared to the US market. As it is seen from the chart there was accelerating growth in 2018, but in 2019 the speed of new installations was decreasing and almost stopped in the first half 2020 or even reduced.
Such market dynamics can be explained with a newly introduced regulatory directive AMLD5. It was proposed in the middle of 2018 and went into force on 10th January 2020. It explicitly includes virtual currency exchange services and custodian wallets. All countries within EU has to follow the directive. In practice it meant very reduced limits to conduct anonymous trades (without registration) and increased KYC/AML requirements. Each member state can only reduce the threshold amounts further. Some countries like Netherlands went under full registration mode for trades since 0 amount. As a result, the volume transacted over ATM’s reduced significantly. As a result companies closed or sold their business. One of the largest advantages of the ATM’s, is you can trade immediately, but also without registration. If the latter factor is removed and users need to fully register, the advantage disappears and many customer naturally moved to online exchanges where fees are much lower, or to P2P trades in order to preserve the privacy of their transactions.
Based on information received from operators the monthly turnover after applying new rules reduced by 50-80% of what it was before. We observed some ATM operators closed and sold business since middle 2019 in anticipation of the new law.
Types of ATM’s Used
US market is dominated by ATM’s produced by Genesis Coin (42% of all ATM’s). A US-based company who’s on crypto ATM market since 2013. This is the largest producer by installations worldwide currently (mostly due to US market dominance). The company develops a solid software that scales very well. Many large US operators utilize networks of their machines.
The top sold models are Satoshi 1 (1-way) and Satoshi 2 (2-way) kiosks. In the past two years the company introduced Finney3 — a small-factor 1-way model and Satoshi Edge 2-way model, which looks like an improved Satoshi 2 model.
Second largest manufacturer, whose machines are used by american operators is General Bytes (23% share). This is a Czech-based company, who also entered the market at the beginning of its creation (2014) with easy to recognize orange ATM (BATM2 model). The third largest position is Bitaccess with 12% of installations. A Canadian company is an old provider on crypto ATM hardware market. Initially, selling ATM’s was main part of business, but later the company shifted to other business directions and currently they operate a cryptocurrency exchange faa.st. Most of Bitaccess ATM’s on the market are run by a single operator CoinCloud (95% of all Bitaccess machines).
European market is a little more diverse with respect to types of ATM present, although the domination of largest provider is higher than in the U.S. The largest share on EU market belongs to General Bytes (61%). This can be explained, as the company is based in Europe and it is much easier to work with a local provider. As mentioned above, they have one of the commonly recognized orange small models BATM2. The machine was a best-seller as it was relatively cheap (below $3000) and fulfilling its purpose very well (one-direction only). Later the company introduced their flagman two-way model BATM3, which comes in several variations depending mostly on banknote input and output capacity. Recently the company introduced a new BATM4 model, which in design reminds a Lamassu Sintra machine.
Second largest bitcoin ATM provider in Europe is Lamassu (10%). A currently Swiss-based company, who has production factory in Portugal. The company develops their software as open-source, which is available for others to use. As it is open-source some operators customized this software according to their needs. Lamassu had initially Trofa model, which later was replaced with Douro. Afterwards company has launched its larger two-way model Sintra. And recently they launched a small-factor Gaia model.
Buy / Sell Support at ATMs
The american cryptocurrency ATM market is mostly represented by machines, which support only buy transactions (one-way). 76% of machines don’t allow customers to sell cryptocurrency and receive cash, only allow to buy cryptocurrency with cash.
While in Europe the picture is totally different. 60% of the ATM’s allow both Buy and Sell transaction types.
Operators reported that about 80-90% of the turnover comes from buy transactions, means that customers purchase cryptocurrency with cash. So the U.S. market is much more in line with this information, as most of machines are one-way.
What could be an explanation that European market is dominated by two-way machines? There can be several reasons.
The U.S. market is more heavily regulated for a longer time, which resulted in growth of large companies that handle very large networks of ATM’s. Such companies do the business professionally and have all processes well organized, including access to liquidity. Normally, even that it is hard to find bank relationships for bitcoin ATM business, big operators have such an access to financial services. That means it is relatively straightforward to exchange cryptocurrency in fiat and vice versa. This by itself makes operation of one-way machines much easier, as the flow is one directional: the cash is collected from customers, later deposited to a bank and wired to cryptocurrency exchange, where it is exchanged and used to replenish crypto wallet (read more about bitcoin ATM’s money flow process). In case there is no bank account, organizing the exchange process becomes much harder or even impossible.
Europe on opposite at the moment has broader distribution of smaller networks of ATM’s among larger number of operators. Each operator is a relatively small company, some doing this on a hobby level with 2-3 machines. Having a two-way ATM model simplifies the process, as machine itself becomes a liquidity provider, while customers can both buy and sell cryptocurrency, and balance the liquidity for operator. At the same time operator can define rates favoring one type of transactions and in such a way to regulated own liquidity.
Another reason is probably a type of machines. On the U.S. market the dominance is by Genesis Coin and they have a popular Satoshi 1 model (43% of all one-way installations on the U.S. market), and the company is not present on European market. At the same time there is no good solid one-way replacement model from other top providers Lamassu and General Bytes, both their one-way models (Douro and BATM2) are small factor compared to Satoshi 1.
The U.S. market top 3 operators are CoinCloud, Bitcoin Depot and Coinflip as per information we collect. They have a prominent gap from other operators and have networks of ATM’s in the range of 600-700 units. The next closest companies in the top 10 are Rockitcoin with 352 units, Coinsource (284), Bitcoin of America (246), National Bitcoin ATM (240), Bitstop (218), PayDepot (214) and Digital Mint (192).
The interesting information available on the above mentioned chart page is general distribution of ATM’s:
Top 10 operators run 3744 crypto ATMs (65.5%). There are 175 other operators, who run 1972 Crypto ATMs (34.5%).
So there are 185 operators in total in the US. And the top 10 companies mentioned above control 2/3 of all ATM installations.
European market is less centralized. The top operator Kurant (Austria-based) operates 102 units with most of machines located in Austria and a small fraction in Spain, Netherlands and Italy. Second largest operator ShitcoinsClub has 79 units in operation. The company is Poland-based, but operate in various countries of Europe. They had many more machines in Germany until recently when Bafin blocked their activity due to AMLD5 new regulation. Hopefully, they can reestablish their business there as Germany is one of the largest markets in Europe.
The next top companies are smaller in size and are from different countries in Europe: BCB (52 units, UK), iQCashNow (45 unites, Austria-based, operations in Greece and Turkey), Värdex (39 unites, Switzerland), SatoshiPoint (36 units, UK), Coin Fellows (34 units, Germany), The Sun Financial Technology (32 units, Greece, UK, Netherlands etc), RusBit (28 units, Russia), DBS Coins (28 units, UK).
Top 10 operators run 475 crypto ATMs (40.9%). There are 194 other operators, who run 686 Crypto ATMs (59.1%).
Europe has roughly the same number of operators as USA or slightly more – 204 in total. But the distribution is much more even, as only 41% of machines are controlled by top 10 operators, compared to 66% in the U.S.
The fee reporting is enabled by approximately the same share of operator in USA and Europe (~35% report information, ~50% don’t report, ~15% can’t report). The Buy transactions fee structure in the U.S. looks as following:
From the chart it is seen that among 35% of reported ATM’s the majority of operators charge between 9-15% fees (back line on the chart). There are two prominent spikes in number of ATM’s for particular percentage rate and low number of operators, which usually means that those fees are reported by a large operator on the whole network of their machines.
In Europe the fee structure is different and shifted to the left. Most operators (among those who enabled reporting) charge in the range 4-11% above market rate with a peak around 5-7%.
The U.S. and European markets of cryptocurrency ATM’s have more differences than similarities. While the growth of installations accelerates in the U.S., European market stagnates and there are not many new installations highly likely due to AMLD5 regulation. Top providers of ATM hardware in the U.S. are Genesis Coin and General Bytes, while in Europe the market is dominated by General Bytes with Lamassu being second with a large gap in share. Most of the machines in USA support only buy transactions, while in Europe majority of machines allow also to sell cryptocurrency for cash. Top operators in the U.S. control much larger share of the market and also are 6-7 times larger than similar from Europe. Fees charged by operators in Europe are in lower range than in USA.