Riding the volatile cryptocurrency tide: Fort Worth company bets big on Bitcoin comeback

When Coinsource launched with a single bitcoin ATM in 2015, the concept of cryptocurrency was still largely unknown. One could buy a bitcoin for about $500 then.

Coinsource grew on-par with bitcoin, whose valuation peaked in early 2017 reaching almost $20,000. By 2017, Coinsource expanded its presence to 12 different states.

The value of bitcoin has since taken a significant plunge.

At the start of February this year, the price of one unit of Bitcoin was trading for little over $9,000.

The state and future of cryptocurrencies remain wobbly even today. But Fort Worth-based Coinsource has continued scaling up its business and has become the country’s largest bitcoin ATM (BTM) network provider.

“The customers see these prices is potentially a once-in-a-generation type opportunity to buy at a really good level,” Coinsource CEO Sheffield Clark said. “We’ve seen $20,000 price point before. Logic would tell you it’s going to go back to where it was previously.”

While many top investors, like Warren Buffett and Mavericks-owner Mark Cuban, are choosing to stay away from cryptocurrency due to its instability, Coinsource is prepared to embrace the decentralized digital currency’s highs and lows.

Its unpredictable nature entices customers to bitcoin, Clarke said. The ongoing interest has prompted Coinsource to ramp up its deployment of BTMs.

In the second half of last year, Coinsource rolled out more than 100 kiosks. In just under two months in 2020, the company doubled the machine count and added 300 new machines.

Coinsource recently incorporated a new platform, Platform as a Service (PaaS), in its machines. PaaS makes cloud computing accessibly easier and less time consuming.

With the new platform, Coinsource customers can now purchase licensed kiosks and immediately gain access to a customizable selection of offerings, including Coinsource’s compliance department, licensing regime to operate in certain states, customer support team and nationwide armored car services, which all are a challenge faced by BTM clients.

“Our new offering solves this: you buy a licensed Coinsource machine, and we will take care of the rest,” Clark said. “The massive market demand we’re seeing for this new service indicates that we’ve tapped into something big.”

Remarkably, a large proportion of the increased interest is coming not only from tech-savvy cities, but also from the rural parts of the U.S.

“It’s not just a big city deal,” Clarke said.

A Coinsource machine inside of a central Pennsylvania convenience store yields about $20,000 in sales per month.

Some of its other best performing locations are in Little Rock, Mobile, Missoula and Spokane.

“That speaks to potentially widen options. It speaks to mainstream-type interest,” Clarke said. “And, there’s a lot of real estate out there to put more machines out and service bigger portions of the U.S. to what even we are right now.”

Since its inception, Coinsource BTMs have sold more than $100 million in bitcoin.

Coinsource currently has about 600 bitcoin ATM locations in 40 states. About 75% of Americans live within a 15-minute drive of a Coinsource ATM, according to the company.

Following the PaaS implementation, Coinsource has inked partnerships with at least 11 new entities, which includes the California-based National Cash Systems Inc., a national provider of ATMs. The partnership signals National Cash Systems’ entrance into the cryptocurrency market.

“With the ever-changing landscape of the ATM and financial industry, it’s imperative for us to keep up with technology and be able to offer our customers the latest solutions,” Jessica Jay, vice president of Operations at National Cash Systems, said in a statement.

“As bitcoin and cryptocurrency have increasingly become mainstream and proved their staying power, Bitcoin ATMs have become the obvious next step for our future,” she added.

To provide more options to its customers, Coinsource will soon release a new system that supports buying and selling Ethereum, a global, decentralized platform for money.

Also in the pipeline is the plan to add Dai Stablecoin, a new collateral-backed cryptocurrency that has a one-to-one soft peg to the U.S. dollar.

Last year, Coinsource partnered with Seattle-based Halo Privacy to bolster its two-way transaction network and data security, the two fundamental ideals bitcoin was built upon.

“The concept of money has only shifted a few times in human history and I believe we are at one of those tipping points right now,” Halo Privacy Director Jamie Marden had said announcing the partnership.

Bitcoin, created in 2009 by an anonymous software developer, is the first decentralized electronic currency. There’s no government or a third-party entity that controls bitcoin and other forms of cryptocurrencies. The digital currency, at present, has market capitalization of over $200 billion.

The freedom from traditional financial institutions is an alluring factor that’s keeping cryptocurrencies well and alive, Clarke said.

The self-sufficiency intensifies even more when using a bitcoin ATM kiosk.

“You have to have a bank account to use an exchange because you have to link it to buy [online],” Clarke said. “You don’t have to have a bank account to use a Coinsource kiosk. We really do feel like we are servicing at least the underbanked, if not the unbanked pockets of the U.S.”

The needs of the “underbanked” grow higher in countries with a failing financial industry. Which is why Coinsource is planning to expand internationally to countries where people are losing trust in its weak economy.

Coinsource is considering and scouting for potential locations in Argentina and parts of Africa and Southeast Asia.

There are also plans underway to incorporate some traditional forms of banking at Coinsource ATMs.

“We see it as a digital gold type asset class,” Clarke said. “Customers are coming to the machine and buying and they’re taking their coins with them. We’re not going to store them and keep it out of their control.”