Ryan Van Velzer

The Republic | azcentral.com

The electricity in the air over Arizona's first bitcoin ATM proved too much for the machine, which was knocked out of commission after lightning struck Bookmans Entertainment Exchange in Tucson Friday said Brian Williams, founder of Javelin Investments LLC and the machine's owner and operator.

It appears the building was struck by lightning and that in turn caused a power surge knocking out some of the ATM's core components, Williams said.

"It's kind of like getting punched in the face. I'm trying to pick up the pieces and trying to figure out where we are at," Williams said.

Bitcoin is a decentralized virtual currency, also known as a cryptocurrency, first introduced in 2009. The currency is recognized as one of the most prominent forms of digital currencies and is currently valued at around $600 per coin.

Williams had just installed the state's first bitcoin ATM, one of only 25 in the U.S. and 145 worldwide, two weeks earlier on Monday, March 14 at Bookmans Entertainment Exchange on west Ina Road in Tucson.

The bitcoin ATM was also William's first, a $1,000 machine he purchased from Oregon-based startup, Skyhook, to see if Arizona residents are interested in using the cryptocurency to make purchases.

About a dozen people used the ATM while it was in service. Most used the machines to buy between $5 and $20 worth of bitcoin, which is then transferred into a digital wallet on the user's phone by scanning a QR code. One person even bought an entire bitcoin, valued around $600, but the amount was so large that Williams ended up doing the exchange in-person using laptops.

Purchasing bitcoins at an ATM is faster and more convenient than purchasing the digital currency online where they need to undergo multiple bank account verifications and wire transfers, Williams said.

People can then use the currency to make purchases at agrowing number of businesses including certain Subway franchises, Newegg, WordPress, Amazon, Soundcloud, OKCupid, an Arizona charity and an Arizona-based company, Arizona's Printer Services Inc.

"We haven't got a whole of bitcoins, but we figured it's another market." said Rod Smith, vice president of Arizona's Printer Services Inc.

Arizona's Printer Services started using bitcoin about 2 years ago, Smith said. Despite most bitcoin owners using the currency to make online purchases, Smith believes that the digital currency is best used when making face-to-face transactions using smartphones, he said.

"The best place to use it, is face to face, if you know who you are dealing with at the other end, it's not a problem," Smith said. "It's going to start going brick and mortar, it's a no-brainer."

At the moment, Williams, the bitcoin ATM owner, is back to the drawing board.

Williams is in the process of determining the damage done to the machine. While he can't be sure that the damage was caused by a lightning strike, he is certain that the surge didn't affect anyone's accounts, including his own, and was able to recover all of the hard currency in the machine, he said.

He also knows that a power surge affected one of the machine's core components. Now he's trying to learn if the surge also affected the machine's bill acceptor and touchscreen interface, Williams said.

"It was a totally avoidable thing. Everything was going great. The community was getting kind of excited about it," Williams said. "The main thing I want is to apologize to anyone that was inconvenienced."

Williams said he hopes he can get the bitcoin ATM up and running again by the end of the week.