With a trend of growing number of bitcoin machine installations worldwide many business owners start to consider hosting a bitcoin ATM at their premises. This post is supposed to help take a decision about how to house a bitcoin machine.

Generally there are several ways of doing it:

• Organizing all on your own and later on also self operating machine(-s);

• Finding someone who will be ready to finance and install machine at your location;

• Some options in between the above two scenarios.

Operating bitcoin machine on your own

When not to pursue…

The first option is rather a tedious task. Running a bitcoin ATM is a separate business by itself. In order to run a machine one should do all preliminary research work, e.g. finding out what is the legal status of such a business in the area and which licenses are required, then generally obtaining all permissions to do it within legal framework, which is usually time requiring and costly process. Apart from initial investments in legal advice services and obtaining permission, and then investment in machine hardware itself, business owner also will need to organize and maintain running of a bitcoin ATM on ongoing basis. This means to provide liquidity for bitcoin machine operations, and also organize the exchange process and provide all connected services, e.g. customer support.

One of the main issues is to close a cash to bitcoin exchange cycle as banks are not willingly open accounts for such a business. Using existing corporate accounts for this new activity is not recommended as it might lead to a bank account closure, which will entail extra risks for existing business. When running a bitcoin machine yourself, be prepared to provide proper support services, as Bitcoin is still a new and young phenomenon and many users will not have advanced knowledge or experience.

So concluding, running bitcoin machines on its own is a separate business, which will require a lot of effort and resources, and if you don’t want to do it as a full time endeavor, probably it is not the best idea to organize yourself.

When to pursue..

On opposite, if you are interested in bitcoin ATM business and especially when there are several locations available where ATMs can be installed, then running bitcoin machines on your own might be much profitable in the future than just providing and renting a place for them. If you’d like to pursue this opportunity you can read what are the most important aspects of running a bitcoin ATM or general knowledge base articles on how to start bitcoin ATM business.

Sharing the business together with a bitcoin ATM operator

This is a way to get a machine at your location as a compromise of two options above.

Usually there are several cost centers when a new ATM is planned to be launched:

Legal research and obtaining of all required permissions and licences;
Investment into the purchase of machine itself and setting it up at a location;
Funding of the required operational liquidity, which basically means freezing some money for machine to run (making funds immediately available for customers, and later on exchanging funds and topping up bitcoin wallet balance);
Operational costs, like support, accounting, compliance officer’s job, cash collection etc.

If you approach an existing operator, they in most cases already have been licensed and beared the legal costs, which means they can run more machines without much investments there (if it is not a new geographical area). Liquidity for operating a machine is also to some extent covered by operators, as for running a network of machines usually a liquidity pool is used which is shared among all machines and not a separate one per machine. In general with growing network a bitcoin ATM operator will need to have more funds, but marginally it will be less compared to the case when a separate liquidity for a machine needs to be provided, which is roughly eur 13-17K for a separately operating machine. The last expenditure item is also mostly covered by existing operators, as they already have a dedicated support team, who answers emails, messages, phone calls. They have people doing accounting and taking care of compliance procedures.

So the only meaningful participation for a business owner is sharing the investment into hardware of bitcoin machine itself and this is often suggested by operators as well. You can invest into purchasing a machine and getting it delivered, so you own the machine itself, however, the operator will run this machine based on their existing infrastructure. Compensation for such a business set up is usually a share in the profits, which machine brings. Might be 50/50 or other ratios individual operators suggest. There are pros and cons for this approach. Pros are that it is a good balance among two scenarios explained in the beginning of this article. You as a business owner has more deeper involvement into the bitcoin ATM business, but at the same time it is limited to mostly initial investment and helping organizing the operation of machine later, e.g. placing it at a better position within the store. Also you will be owning the machine, and in case of terminating relationships with operator, machine will be in your possession and you potentially could operate it yourself later on or find a different operator, who will fill the gap. On the other side, such a setup brings more risks to the business owner, as there is a substantial initial investment (purchasing a machine with delivery and setup varies in eur 12-14K range). In case a machine is not profitable enough, initial costs for machine purchase are covered solely by business owner.

Summary: If you want to install a bitcoin ATM at your shop/store — you can find existing operator who will install machine and you provide a space for it for a rent payment, on the other extreme end — you can fully fund and operate a bitcoin machine on your own and bear all risks. There is a solution in the middle, when you participate in the investment partially and get compensated according to the profits machine generates.