How deep is the Bitcoin Well


Despite an increase in volatility, Bitcoin (and cryptocurrencies in general) have seen tremendous growth and adoption in the market, with institutional and retail interest fueling rising valuations, liquidity and opportunity. It seems we are in the early innings of a very long game for the blockchain industry as adoption rates rise, investors adopt cryptocurrencies as part of a respectable portfolio, and mainstream media identify cryptocurrencies as an asset class in their own right. Then there’s the whole decentralized financial, fiat currency argument, which could be a whole article in itself, but maybe on another day. The reality is that Bitcoin appears to be well on its way to becoming a legitimate investment / currency, as confirmed by Elon Musk. You can interpret that as you wish.

Today we’re looking at what will be the newest publicly traded provider in the world of bitcoin finance and the first publicly traded bitcoin ATM company to be. Bitcoin Well Inc. (TSXV: BTWC) goes through a reverse acquisition by Red River Capital Corp. to the stock exchange. The shares will begin trading today on the TSX Venture Exchange as a Tier 2 technology issuer.

What exactly is Bitcoin Well? The company provides convenient and secure online and in-person solutions to help you buy and sell Bitcoin and other cryptocurrencies through a trusted Bitcoin ATM network and suite of web-based transaction services. Founded in 2013 by CEO Adam O’Brien, the company is an industry leader and a trusted voice in Bitcoin transactions and education. Today they have over 145 owned and operated cryptocurrency ATMs across Canada and have recently expanded into the UK. But don’t just slide this in as an ATM company, this is a fintech company through and through. Bitcoin Well is expanding its online service offering with additional support for bill payments and interactive selling, point-of-sale systems and gift cards through proprietary software. The ultimate goal is to do everything you can at a bank and more, just using Bitcoin or other cryptocurrencies in a seamless way.

The main difference between Bitcoin Well and others in the industry like crypto exchanges, PayPal, Mogo, and the like is that the company uses a non-custodial platform or direct-to-consumer model. The time between depositing funds in the ATM and delivery of Bitcoin to your wallet is approximately 8 seconds. The fact that the company never holds client funds during the transaction has numerous advantages. First of all, as a consumer, you are not at risk of default (remember Quadriga), non-delivery or delay in trying to access your bitcoins. It also reduces the cost of Bitcoin Well as it doesn’t need to be regulated by a stock exchange. In addition, the company is not exposed to fluctuations in the price of Bitcoin unless they choose to.

But now we come to the interesting part of the story. Revenue is driven by transactions, which are likely to increase as Bitcoin either rises or becomes more volatile. The company has a gross profit margin of 8% based on its first quarter results and is already generating significant revenues. Record results for the first quarter included an increase in revenue of over 342% to $ 27.5 million in the first quarter of 2021 compared to $ 6.2 million for the same period in 2020. Average revenue per machine in the first quarter 2021 was over $ 83,000, down even below $ 113,940 per machine in 2020, largely due to restricted access to certain machines due to COVID-19-related restrictions. Keep in mind that the land and brand cost of these ATMs is approximately $ 20,000 while the additional cost of the rest of the infrastructure to add a new machine is nominal. I like this math.

Mergers and acquisitions are a core strategy of the company and they recently announced the acquisition of Paradime LTD o / a AlphaVend, currently the UK’s second largest Bitcoin ATM operator. Bitcoin Well now owns and operates 26 machines in England, Scotland and Wales and is building a presence in major metropolitan areas such as London, Manchester and Glasgow. Additional growth will result from the organic expansion of ATMs and cooperation with hosts (e.g. cafes and convenience stores). And don’t forget the tech side of the business as the company continues to expand into more traditional banking services. We all know what income can be generated from bank fees.

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