SPOT Kafe is the kind of bar for which Riga is famous among Erasmus students and backpackers. Its menu of shots is a page long, it has a karaoke night on Wednesdays, and there is a special reserved sign for the local Couchsurfing group.
But it’s the other sign on the bar top that had me excited, the one that reads, “BITCOIN ACCEPTED HERE.”
SPOT Kafe is the first place in Latvia where customers can buy a drink with bitcoins. In fact, it’s one of only a handful of businesses in the country that accept Bitcoin payments. National air carrier airBaltic began accepting bitcoins in July, and a Riga hostel accepts the cryptocurrency, but save for one other Airbnb-type accommodation, that’s pretty much it for Latvian Bitcoin businesses.
Notice a trend? An air carrier, a hostel, a bar popular among tourists — foreign demand seems to be the primary driver of Latvia’s nascent Bitcoin scene.
“Bitcoin is uncommon in Latvia,” said SPOT Kafe co-owner Artem Kushik, who bought the bar in early 2014 with his wife, Natasha. Artem estimates that most people in Latvia have at least heard of Bitcoin but don’t yet use it.
The reasons why are understandable: Few if any people locally earn money in BTC, there are very few places to spend the money, and local media still attach negative connotations to cryptocurrencies.
So, Artem thought he would try out Bitcoin at his bar as an experiment. “I understand that I am doing something on the edge,” he said.
Both Artem and Natasha have professional backgrounds in finance. Artem worked for Accenture for seven years, consulting banks on IT matters. He first learned about Bitcoin back in 2010 and even set up a mining rig. However, he admits he didn’t understand the technology at the time and lost track of whatever bitcoins he mined in those early days.
Since January, when the Kushiks bought SPOT Kafe from its previous owner — a local friend of theirs who has since become a regular — Artem has been brainstorming ways to bring in customers, especially during the lean winter months, when few tourists visit the Baltic states.
AirBaltic’s quiet announcement in July that it had become the world’s first airline to directly accept Bitcoin payments was Artem’s “ah-ha!” moment.
“If the guy comes to Riga and flies with airBaltic, what can he do [with his bitcoins]?” Artem said. Until late September, all the guy could do was book a place to sleep.
Results So Far
Two weeks into the experiment with cryptocurrencies, the bar had three Bitcoin transactions, which Artem estimates have been cumulatively worth less than 10 euro. SPOT Kafe processes payments with Coinbase and an Android phone kept behind the bar; Artem said he hasn’t exchanged any of the BTC for fiat simply because there is so little of it.
"In Latvia, Bitcoin has not gained popularity, and our bar mostly attracts tourists. But soon, everyone will be able to evaluate the benefits of this system because it has a number of indisputable advantages, and it is conquering entrenched positions all over the world."
- Spot Kafe co-owner, Artem Kushik
First, though, Artem had to collaborate with SPOT Kafe’s bookkeeper as to how they would claim Bitcoin revenue for tax purposes. The Latvian government has issued no such guidance for Bitcoin businesses, and Artem wants his family’s bar to remain on the right side of the law.
For now, this requires the bar to treat bitcoins as foreign currency and their Coinbase account as a forex trading account.
Artem speculates that future Latvian Bitcoin businesses might have to deal with this legal grey area for a while because
I asked Artem whether any state regulators had given him any trouble.
Not yet, he said, but he appeared to have already prepared for it, at least mentally. “I’m interested what will come.”
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