Bitcoin Depot, one of the leading suppliers of crypto ATM, announced the creation of a new Bitcoin (BTC) reserve.
A new Bitcoin (BTC) whale wallet may appear, after Bitcoin Depot announced the creation of a new treasury. The move drives the trend of still storing BTC for long-term value. Bitcoin Depot turned into a buyer, just as other whales and corporations rebuilt their wallets, fed by the recent selling of 50K BTC from the German government’s main wallet.
Bitcoin Depot extends the ownership of BTC by publicly traded companies with a long track record. The reserve will be different from the company’s hot wallet, which holds BTC for sale. Bitcoin Depot follows the model of MicroStrategy, which periodically replenishes a special treasury with more BTC.
Also Read: Cryptocurrency ATM installations surge globally in 2024
Bitcoin Depot is the daughter company of BT Assets, Inc., which recently transferred its assets to the new entity. The company reported more than $31M in free cash flow, and announced it would allocate some of the cash reserves into BTC purchases.
Bitcoin Depot has grown its influence as a fintech company, carrying 11,000 locations for crypto ATMs. However, the company’s installations of new ATMs fell in late 2023. The loss of new locations followed a crash in the stock price.
In June 2023, BTM shares fell from $10.35 to $6.10 and continued to unravel. As of July, the shares trade at $1.61, after months of lackluster performance. The stock drifted, despite the overall market recovery in 2024, which sent BTC to a new all-time high. The firm is relatively late in building up a BTC treasury, as its entry point is now in the $64,000 range.
The company was also beset by troubles as its ATMs were used for money laundering. ATM usage for crypto aims to solve money laundering, by setting daily exchange limits.
Another publicly traded company announces #Bitcoin treasury strategy, following @saylor 's $MSTR (and $SMLR, $SQ)
Bitcoin Depot, $BTM, is the #1 Bitcoin ATM provider in the USA🇺🇸 pic.twitter.com/l9v14I2AS8
— HODL15Capital 🇺🇸 (@HODL15Capital) July 17, 2024
Bitcoin Depot redirects funds to CEO-owned subsidiary
Bitcoin Depot raised some red flags with a recent filing on internal contracts. Kiosk Technicians, LLC, a subsidiary of Bitcoin Depot, entered into an agreement with Lucky Unicorn, LLC, an operator of kiosks.
Lucky Unicorn is the property of Brandon Mintz, CEO of Bitcoin Depot. The agreement is seen as a tool to redirect the earnings of Bitcoin Depot and take a 30% cut from the income of the ATM. Per the agreement:
“In exchange for these services, the Service Provider will receive 30% of the net profits generated by the machines calculated in accordance with the Kiosk Service Agreement.”
Despite retaining more of the earnings, Bitcoin Depot is still failing to revive its stock price. Bitcoin Depot is also seen as a company charging outsized fees to buy BTC and crypto, but this time, at least a part of the free cash will be redirected into the crypto market.
Bitcoin Depot deals with deepening losses
The decision to buy BTC for a treasury coincides with at least two lackluster quarters for Bitcoin Depot. The company has seen its previous reserves dwindle, as ATM usage falls.
Bitcoin Depot still expanded its locations, but that was not enough of a boost to revenues. Buying BTC may be a last-ditch attempt to gain value directly from the crypto market.
The aggressive expansion and high profile is also unable to hide the company’s diminishing inflows and potential reserve challenges. The recent announcement of building BTC reserves has not given a specific amount, to test against the company’s available reserves.
Also Read: Texas police officer stops $40K Bitcoin scam
The Bitcoin Depot plan was to grow ATM kiosks by 25% in the past months, aiming to compensate through aggressive expansion. Bitcoin Depot relies on physical locations, and the kiosk’s decisions belong to the Lucky Unicorn entity. Some of the kiosks were also sold to Sopris Capital in another profit-sharing agreement.
However, Bitcoin Depot may fail to tap the retail interest in new BTC purchases. The ATM charges relatively high commissions, and sometimes causes delays of the funds, or fails to send the coins. Crypto ATM usage has seen shifts as some chains closed down their machines. However, the supply of ATMs worldwide expanded by more than 300 this July, as new machines were installed to replace the closed locations.
Cryptopolitan reporting by Hristina Vasileva
