Running Arizona's first Bitcoin ATM was a crazy experience to say the least.  The Robocoin units were out with a $20,000 price tag and so initially I thought that was interesting but didn't have the money to invest in something that no one knew the user demand in certain geographic locations.  I had no clue if there would be any demand at all for a Bitcoin ATM in Tucson, Arizona.  I saw a video of some guys who created a small Bitcoin ATM out of a suit case and a change acceptor from a pay phone.  I started thinking that there had to be some open source solution using consumer grade hardware that someone had hacked together.  That was right when the Project Skyhook Bitcoin ATM came out.  I got super excited and almost just impulse bought it. I slept on it a night or two and ultimately pulled the trigger.  At the time there were only about 150 Bitcoin ATMs in the world.  As a computer nerd I felt really excited to be on the for front of something big in the tech world.  

Locations To Put The ATM

It is kind of laughable but I didn't even have a place to put the ATM once I got it in.  I figured I would just use my ability to sell to convince a local retail shop that it would be a cool thing to have.  I had a lot of ideas on where it could go but I had no connections to any of the business owners.  

I got lucky that Bookmans Entertainment Exchange was owned by a very technical guy that had heard of Bitcoin but hadn't gotten to dive into it.   Bob is his name and he was super stoked about having the ATM at one of his stores and learning more about the technology.  He has had electric car chargers at his store locations since the 90's.  He is extremely good about getting press and creating a very cool retail experience. 

Initial Press Push 

In mid 2014 you could get some pretty good attention for just putting a Bitcoin ATM in a retail location both from the cryptocurrency news outlets and regular news outlets. Here was a picture I took and then here was the picture that was drawn for a Cointelegraph article.  

That was so cool to see my Bitcoin ATM redrawn for the main image of a Cointelegraph article.  I really felt like things were going well. There was a ton of local press as well and I was on the news showing the functionality of the ATM.  Two weeks into the life of the Bitcoin ATM tragedy struck!  

In Arizona there are extremely violent monsoon rains that come with a lot of lightning and thunder.  Even though I had really good surge protection at my house I wouldn't leave my mining equipment plugged in.  If a storm hit like that I would yank all the power cords and let the storm pass.  Better safe than sorry.  There was one valuable machine still plugged in!  The ATM at Bookmans.  

I didn't think a lot about it because clearly they would be setup to not get the point of sale systems, routers, and switches blown out by storms.  Later that night someone was having a problem using the ATM.  I went over there to check it out and it was FUBAR. 

My worst fear was realized when I saw that the power cord was plugged directly into a regular electrical outlet instead of going into one of the UPC Battery Backups that the point of sale systems were plugged into.  I didn't actually go behind the counter and plug it in when we installed it.  There were like 3 or 4 people helping with the installation.  They had a facilities manager and a maintenance guy there encase we needed to fabricate anything.  There were also a couple managers.  So it was kind of crowded and they got behind the counter and plugged it in. I was so upset that someone didn't know you have to plug expensive computer equipment into a surge protector.  

I had a sickening feeling that the ATM was totally jacked up.  The electric surge went up the ATM and through the network cable and blew out one of Bookmans' switches as well.  I ended up unlocking the ATM and taking it home to figure out the full extent of the damage.  

The next day the Arizona Republic called me because they wanted to do a story on the ATM.  I was still upset and told the reporter what happened with the lightning strike and how I was working on fixing the machine.  That ended up being a much bigger story than just the installation of the machine.  After that story ran it ended up on all kinds of media outlets.  Check out the Google results below.  It even ended up on Popular Science!  

The story was so popular that I had people contacting me from all over the world.  I actually didn't realize how big of a story it was until a guy living in Mexico City contacted me and was offering to help out.  He was saying how my ATM was getting more attention then the Robocoin machines.  Right around that time there was a Robocoin machine that got installed on the Las Vegas strip.  

Figuring Out What Was Wrong

So the Skyhook ATM is mainly three components.  It is a Raspberry Pi, a Google Nexus 7 Tablet, and a bill acceptor.  I was really worried that the tablet and the bill acceptor were blown out.  I wasn't as worried about the Raspberry Pi because those are pretty cheap.  And I knew the case would still be fine if I had to replace everything.  

I got so lucky!  

It was just the Raspberry Pi that got blown out by the lightning.  Once that was figured out it wasn't long until the machine was back in service.  

The Bugs 

As time went on there were random little issues with the ATM.  At first I was worried that the lightning had actually damaged some of the other components and there were residual effects from that.  That didn't seem to be the case because other people on Reddit were having all types of issues with their Skyhooks as well.  The machine connected to a Blockchain.info wallet and there were a few changes with that overtime which caused some issues.  

There were some programmers working on the code to try to improve it but the owners of Project Skyhook pretty much went MIA.  They weren't working on the code and wouldn't respond to e-mails.  I looked at the code and it was pretty complex and I pretty much knew that I would have to spend every day for a month trying to get anything done with it and it wasn't worth my time. 

The system already proved to me that there was a demand for a Bitcoin ATM in Tucson.  

That is when I decided it might make more sense to go with a better unit as I expanded the network.  I talked to the founder of  Lamassu. Those units were interesting because you could expand them to two way units in the future.  Bookmans had several different locations in Tucson, Phoenix, and one in Flagstaff and I wanted to expand to all those locations.  

Bitcoin Price Drop

So the plan all along was to mine alt coins with my GPU farm and then convert those to Bitcoin and sell Bitcoin for more than spot price though the ATM.  The ATM was getting traffic at 10% above Coinbase spot price.  I figured if I could at least mine a Bitcoin at half price then sell it for a 10% markup that would be pretty good.  

The demand was beyond the capability of my GPU farm so I had to supplement with coins from Coinbase and honestly that was easier to keep track of as far as cost basis.  The unfortunate thing was that the entire time I was running the ATM the price was falling.  

At times it was like trying to catch a falling knife.  

I kept averaging down as the price fell building a larger and larger base but the price fell out of range and I couldn't keep buying more and more coins.  At one point I had to just shut the ATM off and put a note on it saying to contact me if they wanted to purchase.  That way I could purchase the coins and sell them for more and not take on the volatility risk.  The Skyhook ATMs had no rebuy script at that time.   

The Worries

There were some technical worries along the way even after the lightning strike situation got resolved.  Those weren't my main concern though.  It was more about the regulations and how this stuff was being viewed.  I had done my due diligence as far as the regulations are concerned for the ATM but when I went out to California for the premier of The Rise And Rise Of Bitcoin, seeing @charlieshrem as a normal guy was good but it sort of scared me knowing that he might go to "Club FED".  I hadn't dug real deep into the specifics of his case but just the premise that he might be going to prison for selling digital coins was freaky.  

Also when I went to some local Bitcoin Meetups it freaked me out as well the way people would talk.  Everyone was super paranoid about everything.  They sort of acted like I was a bad ass for having the ATM and was making a huge statement with it.  I never really viewed it that way.  I am just a guy who likes technology and computers and was just testing the market out with that machine.  

Ultimately I decided the best thing was to sell the machine.  The Skyhook was only a test and if I was going to expand I would need to get more advanced units anyways.  Plus a lot of people wanted these units and the company wasn't shipping them anymore so suddenly the used units had good demand and were bringing a decent price within 80% of the original pricing.  Here was the video I posted to show the unit working for potential buyers.  

Summary

The ATM was a good test and showed that there was demand in the Tucson market.  There are now four Bitcoin ATMs in the Phoenix market. Ultimately I was in talks with a company out on the East coast who wanted to partner to build out the ATM network in Arizona.  I'm open to the potential of partnering with others to build this out!  

Thank you for viewing my post and please consider following me @brianphobos