Coinstar Plans Massive Expansion of Coinme Bitcoin ATMs as Usage Spikes 40%

Coinstar, the coin counting kiosk maker hosting 3,500 Coinme bitcoin ATMs, is looking to double its cash-for-bitcoin capable supermarket machines.

The doubling would happen "within a year," Vice President of Product Michael Jack told CoinDesk. He said Coinme bitcoin ATM growth "both on a per location and overall basis, has been very strong."

The company already has plans to plug Coinme's exchange API into more kiosks, though Jack did not specify how soon this would happen. Coinstar has a global fleet of nearly 20,000 kiosks, according to its website.

The deliberations come as Coinme lays claim to a veritable accomplishment of the COVID-19 era: It's bringing in new customers, even while other businesses flounder. Coinme CEO Neil Bergquist told CoinDesk that 40% of transactions since late February are by first-timers.

One reason for the surge may be the placement of Coinme bitcoin ATMs almost exclusively in supermarkets and pharmacies, just about the only brick-and-mortar establishments that remained open to consumer foot traffic through COVID-19 lockdowns.

Read more: Bitcoin ATMs Expand Despite Shelter-in-Place Rules

That twist of fate let Coinme "provide uninterrupted access" to customers, Bergquist said.

As panicking shoppers flocked to grocery stores in mid-March on lockdown supply runs, some were apparently also bulking up on crypto: Bitcoin transaction volume at Coinme kiosks is up 40% since late February.

Coinme also saw a “slight uptick” in $1,200 transactions – the same dollar amount as coronavirus stimulus checks sent to Americans by the Treasury Dept. – “although we're not seeing a strong correlation,” Bergquist said.

“The recent increase in sales certainly helped remove any concerns around company performance and durability during the pandemic,” Bergquist said.

Cash injection

The news immediately follows Coinme's Thursday announcement that it had raised $10 million in Series A funding from Coinstar, Blockchain.com Ventures, Hard Yaka, Nima Capital and Pantera Capital, who led the ongoing round with $5.5 million. Pantera now controls a seat on the Coinme board of directors.

Even before the spike, Pantera partner Paul Veradittakit said his VC firm likes Coinme’s boots on the ground business model. He said it appeals to consumers curious about bitcoin and who are certainly familiar with the concept of ATMs but perhaps not ready to open an account with an online exchange.

“People aren't there yet in terms of education, people aren't there in terms of technology,” he said. “This is the way to get the mainstream user, the general public, the folks that are going to grocery stores” to buy bitcoin.

Bergquist said Coinme would use the cash to expand its business in Latin America. Because it builds an exchange API rather than an actual machines, Coinme can plug bitcoin buying into just about any compatible device: “kiosks, ATMs, [Point of Sale], and merchants” in Latin American countries, Bergquist said.

“They want to be the backend, they want to be the pipes to make money move around the world in a much more seamless way,” said Veradittakit.

CORRECTION (8 May 15:17 UTC): A previous version of this story incorrectly reported that Michael Jack was President of Product Management and that Coinstar would roll out new machines that feature Coinme. Coinstar is updating its existing fleet.