The world of cryptocurrency is witnessing a boom in accessibility, with Bitcoin ATMs leading the charge. From a meager 10,000 in October 2020, the number of these cash-to-crypto converters has ballooned to over 38,000 globally. This surge isn’t just a fad; experts predict continued growth fueled by a perfect storm of convenience, profitability, and strategic expansion.

Beyond The Bank Branch: Stepping Into Crypto With Cash

For many, traditional financial institutions remain a barrier to entry in the crypto world. Bitcoin ATMs bridge this gap by allowing users to buy cryptocurrency with cash, eliminating the need for bank accounts or navigating complex online exchanges. This fosters financial inclusion, particularly for the unbanked population and those who prefer the familiarity of physical cash.

Source: Coin ATM Radar

The benefits extend beyond accessibility. Bitcoin ATM transactions often offer a layer of privacy compared to online exchanges, where users might need to provide extensive personal information. Additionally, some users value the immediate nature of the transaction – cash goes in, cryptocurrency goes straight to their digital wallet. This eliminates the waiting period associated with bank transfers commonly used on online exchanges.

A Lucrative Market With Room To Grow

The growth of Bitcoin ATMs isn’t solely driven by user demand. Operators are finding these machines to be a lucrative business proposition. Transaction fees charged on top of the spot price of Bitcoin provide a healthy profit margin.

With the crypto market experiencing a bullish year in 2024, the potential for even greater returns is enticing for entrepreneurs venturing into this space. As of the most recent count, there were 38,279 deployed Bitcoin ATMs worldwide, according to statistics available on Coin ATM Radar.

Bitcoin market cap currently at $1.23 trillion. Chart: TradingView.com

As the cryptocurrency market has recovered over the past 11 months, about 6,000 new crypto ATMs have been installed; these are made by 43 different companies and are available in 72 countries.

Bitcoin remains the leading digital asset used in crypto ATM transactions, followed by Bitcoin Cash and Ether, the world’s second-largest cryptocurrency. While over 80% of crypto ATMs are currently installed in the US, a growing market is emerging in countries like Canada, El Salvador, Germany, Hong Kong, and Spain.

Governments Greenlight Crypto Growth

Furthermore, regulatory environments in many countries are becoming increasingly crypto-friendly. Governments are recognizing the potential of digital assets and are implementing frameworks that support the responsible growth of the industry. This regulatory clarity fosters trust and encourages further investment in Bitcoin ATMs, expanding their reach and solidifying their role in the financial landscape.

Challenges And The Road Ahead

Despite the optimistic outlook, the Bitcoin ATM industry isn’t without its hurdles. Some operators lack the necessary experience or financial backing to navigate the complexities of this nascent market. This can lead to security vulnerabilities and ultimately hinder user confidence. Additionally, regulatory uncertainties persist in certain regions, creating a wait-and-see approach for potential investors.

Industry leaders are actively addressing these challenges. Educational initiatives are being rolled out to inform users about the benefits and risks associated with cryptocurrency transactions. Additionally, robust customer support systems are being established to ensure a smooth user experience. Building trust and fostering a sense of security will be paramount in encouraging wider adoption of Bitcoin ATMs.

Bitcoin miners are currently facing significant “capitulation,” pushing them to innovate for additional revenues.

Bitcoin miner capitulation occurs when miners are forced to shut down due to unprofitability or unsustainable operating costs. This can happen when the cost of mining (including electricity, hardware, and operational expenses) exceeds the revenue generated from mining the bellwether asset.

Bitcoin Miners Face Economic Pressures Amid Capitulation

Data from CryptoQuant shows a 7.6% drop in Bitcoin mining hashrate this month, now resembling levels last seen during the FTX exchange collapse in December 2022. Unlike that period, today’s decline follows Bitcoin’s recent halving, cutting miner rewards to 3.125 BTC.

Miners are also grappling with reduced revenues from alternative sources as network activity diminishes. Initially, they benefitted from high fees during the Bitcoin-based Runes protocol frenzy post-halving. However, earnings have sharply declined as network activity slowed.

As of June 29, daily Rune transactions have plummeted from a peak of over 753,000 on April 23 to 21,861, marking a drastic 90% decrease. Consequently, total miners’ earnings from Rune transactions have fallen below 2 BTC in the past week, down from a peak of over 1000 BTC on April 20.

Read more: Making Passive Income From Crypto Mining: How to Get Started

Facing these economic pressures, miners are powering down their machines and have intensified selling activities this month. Last week, BeInCrypto reported that miners had offloaded approximately 30,000 BTC, valued at $2 billion.

To further diversify revenue streams, miners are increasingly turning to artificial intelligence (AI) and other Proof-of-Work (PoW) assets. Companies like Core Scientific and Hut 8 have secured significant funding for AI expansion. Matthew Sigel, VanEck’s head of digital research, reported that Morgan Stanley’s Head of Sustainability Research, Stephen Byrd, explained that these moves show that miners see potential profitability in AI ventures amid evolving market dynamics.

“I do respect the idea that Bitcoin mining could become more profitable. There’s a game theory here…the more people who exit Bitcoin mining and become data centers, the more attractive it is for those who remain,” Byrd reportedly said.

Read more: Top Cryptocurrency Mining Pools To Join 2024

On the other hand, Marathon Digital, the largest BTC mining company, has announced its entry into mining Kaspa, a PoW project. The firm stated that it has mined 93 million KAS, valued at approximately $15 million as of June 25.

It is no secret that Bitcoin miners are currently experiencing significant financial stress, especially following the completion of the fourth halving event. As a result, these vital network participants are being forced to offload their BTC holdings to offset the increasing operational costs.

Interestingly, the latest on-chain data shows that the Bitcoin market is experiencing a wave of capitulation from miners that is reminiscent of December 2022, barely a month after the FTX collapse. The question now is — what happened the last time and how could it impact the current cycle?

Is BTC Ready To Resume Its Bull Run?

In a recent post on X, CryptoQuant’s head of research Julio Moreno revealed that the Bitcoin miner capitulation has hit levels comparable to December 2022. December 2022 also represented the bottom of the previous cycle after the collapse of FTX.

The fall of the Sam Bankman-Fried-led exchange marked a low point for the crypto industry, triggering widespread panic and sell-offs. Ultimately, this enormous selling pressure potentiated a sharp decline in the price of Bitcoin.

At the time, the capitulation among the Bitcoin miners was characterized by a 7.6% drawdown in the Network True Hashrate. According to Julio Moreno’s post on X, the Network True Hashrate Drawdown is also currently at -7.6%.

A chart showing BTC's Network True Hashrate Drawdown and price | Source: jjcmoreno/X

The Network True Hashrate Drawdown metric calculates the reduction in the computational power dedicated to mining Bitcoin, reflecting miners’ struggles to maintain operations in a tight financial condition. Naturally, the significant drawdown in the Network True Hashrate and the associated miner capitulation have several potential impacts on the Bitcoin price.

As seen over the past few weeks, these can lead to an increase in selling pressure, as miners look to sell their BTC holdings. This could put serious downward pressure on the price of Bitcoin, driving its value to lower levels.

At the same time, periods of significant miner capitulation have historically preceded market recoveries. Moreover, as highlighted in the post, the Bitcoin market reached the cycle bottom the last time (December 2022) the Network True Hashrate Drawdown was at this point. This suggests that BTC could really be primed for a price rebound soon. 

Bitcoin Price At A Glance

As of this writing, the price of BTC stands around $60,889, reflecting a 0.2% increase in the past 24 hours. The premier cryptocurrency is still deep in the red on the weekly timeframe, with an over 5% decline in the past week.

The price of BTC on the verge of $62,000 on the daily timeframe | Source: BTCUSDT chart on TradingView

Featured image from iStock, chart from TradingView