Bitcoin ATMs are completely cooling down! The daily trading volume of 30,000 units worldwide has fallen below $5,000.

Bitcoin ATM fees 5-20%, averaging 7-10%, far exceeding the per-mille fees on exchanges. Globally, there are 30,000 machines with an average daily trading volume of less than $5,000. Falling victim to the user paradox: those who use Bitcoin are served by exchanges and don’t need ATMs; those who need cash won’t use Bitcoin. The rise of stablecoin payments and U Card have thoroughly defeated Bitcoin ATMs.

Bitcoin ATM fees of 7-10% far surpass those of exchanges

How many people still remember what a Bitcoin ATM is? People’s attitudes toward Bitcoin ATMs represent the perspectives of Web2 and Web3. If you open short videos, you’ll find that videos recorded in Hong Kong or other regions get good traffic, indicating that most people who haven’t used them are curious. But if you’ve been in Web3 for a while, you might show a puzzled expression: Wait, people really use this thing?

It’s not much different from traditional ATMs; Bitcoin ATMs also support both deposit and withdrawal modes. You can choose to withdraw cash by paying with Bitcoin, or deposit cash to buy Bitcoin. Currently, most people are more interested in the first method—when you exchange BTC in your wallet for cash, it feels like a form of performance art, almost like magic from nothing to something.

But those recording these videos are probably gritting their teeth while pretending: because they didn’t even mention what the fee rate is. Orange Capital conducted a survey and also asked AI, and the data shows: 5-20%, averaging 7-10%. From a user perspective, this is hard to accept. It means that whether buying or selling, such high fees are charged, while exchange fees are only a few per mille.

A 7-10% fee is extremely rare in the financial services industry. Traditional ATM cross-bank withdrawal fees are usually a fixed amount of $2-5, which is a very small proportion of the withdrawal amount. Spot trading fees on cryptocurrency exchanges are usually between 0.1-0.5%, and even high-leverage contract trading fees rarely exceed 0.1%. The 7-10% fee of Bitcoin ATMs is equivalent to 70-100 times the exchange fee, and such a price difference is almost impossible in a market with transparent information.

Comparison of Bitcoin ATM and other channels’ fees

Bitcoin ATM: 5-20%, average 7-10%

Centralized Exchange: 0.1-0.5% (spot trading)

Decentralized Exchange: 0.3-1% (including slippage)

Traditional ATM: Fixed $2-5 (very low proportion)

From the vendor’s perspective, it’s even harder to bear, because developing machines costs money, setting up venues costs money, operation and maintenance costs money, and each transaction incurs fee costs. Overall, 5% isn’t considered high; if it were lower, it would be very difficult to operate. This kind of pricing that leaves both supply and demand dissatisfied is a typical feature of a failed business model.

Global 30,000 machines with less than $5,000 daily trading volume, a bleak operation

Orange Capital also conducted a survey, and currently there are nearly 30,000 Bitcoin ATMs worldwide. But these machines are rarely used; their average daily trading volume doesn’t even reach $5,000. At a 5% fee, they could earn about $250 per day. And that’s considered good. The total investment in these 30,000 machines might reach hundreds of millions of dollars, but the daily trading volume is only about $150 million (30,000 × $5,000), with an annual trading volume of approximately $54.75 billion.

At a 5% fee, the entire industry’s annual revenue would be about $2.74 billion. Sounds like a lot, but divided among 30,000 machines, each earns only about $91,000 per year. After deducting venue rent, electricity, maintenance, and compliance costs, most machines might be operating at a loss or just breaking even. This economic model cannot sustain industry growth.

Worse, the low usage frequency means a very long capital recovery period. A Bitcoin ATM’s purchase and installation costs might be between $10,000 and $30,000. If daily income is only $250 (and possibly even lower after costs), it could take several years to break even. In the fast-evolving crypto space, a multi-year payback period means the machine might become technologically outdated before recouping its investment.

User paradox: those who can use it don’t need it, and those who need it can’t use it

In Orange Capital’s view, this is a complete failure of the business model because it falls into the user paradox. Bitcoin ATM operators are essentially OTC market makers, providing market-making services for fiat currency holders and Bitcoin holders. But the problem is:

Would you choose to buy Bitcoin at a 5% markup? Anyone with a normal mind wouldn’t choose this route, so it’s hard to charge such high fees. In practice, the proportion of cash withdrawals from Bitcoin ATMs is higher, but this involves a key issue—if someone wants to withdraw cash, they must first hold Bitcoin; otherwise, they can’t successfully withdraw.

And if someone already holds Bitcoin, they are more likely to use an exchange or DEX. This further reduces the likelihood of buying Bitcoin from a Bitcoin ATM. Limitations on transaction amounts and compliance restrictions are also issues. For example, Hong Kong’s BTM limit is HKD 5,000, and for larger amounts, KYC is required. No choice—this is a compliance requirement. If there were no limits, BTMs could be exploited by criminals for new purposes.

So, it seems that only crypto enthusiasts who go out without cash might use it. But if I have my phone in hand, why would I waste my Bitcoin? Is mobile payment not convenient? And from a HODLer’s perspective, why sell my Bitcoin at -5%? Or tell me a reason to buy Bitcoin at market price +5%?

Rise of stablecoin payments and U Card have thoroughly defeated Bitcoin ATMs

Perhaps the most critical reason for Bitcoin ATM’s complete demise is the rise of stablecoin payments. On one hand, Bitcoin’s exchange rate is unstable, and more and more people are unwilling to sell their Bitcoin; on the other hand, the direct payment scenarios using stablecoins are increasing. When holding crypto assets, people can directly pay with stablecoins.

Another manifestation of the rise of stablecoin payments is U Card. When shopping, you can directly deduct coins from your digital wallet. U Card is globally accepted, so cash is even less needed. As a result, Bitcoin ATMs have become completely useless. When you can use USDT or USDC to pay at any merchant accepting credit cards worldwide, why convert Bitcoin to cash first and then spend?

U Card’s advantages are comprehensive. First, low fees, usually between 1-2%, far lower than the 7-10% of Bitcoin ATMs. Second, high convenience—no need to find a Bitcoin ATM location; any place with a POS terminal can be used. Third, more flexible limits—unlike Bitcoin ATMs with strict single-transaction limits. Fourth, better privacy—although KYC is still required, it’s less monitored or vulnerable to theft compared to public ATMs.

Seeing this, you’ll realize that Bitcoin ATM products are extremely trivial, only serving as a novelty for curiosity seekers. Therefore, repurchase rates are poor because no one would tolerate such high wear and tear unless absolutely necessary. This is also why Bitcoin ATMs have struggled to develop significantly over the years.

In Web3 business models, many want to build infrastructure, thinking that once they do, they can sit back and collect taxes. Whether Bitcoin ATMs or public blockchains, they follow similar logic—lots of development, but more are eliminated. The entire industry updates and iterates too quickly, just like being abandoned by the times without a word.