An Australian firm, Ernst Young is set to auction off 24,500 BTC equaling around £8M. The sum is set to be auctioned off in blocks of 2,000 as to not effect market value.
An Australian newspaper has previously reported that 24,500 bitcoins were taken by police after they busted a man in 2013 for selling drugs online. In 2015 the Victoria Asset Confiscation Operations Department said that they had taken 24,500 bitcoins and were going to try to make the best of the situation.
“This is a significant amount of bitcoin. It’s about a weeks’ worth of bitcoin that comes onto the market from mining,” said Dr. Garrick Hileman, an economic historian at the Cambridge Center for Alternative Finance.
It’s estimated that around 4,000 new bitcoins are generated every day from mining. They decided to sell them in blocks of 2,000 because selling a large amount on an exchange for cash would have a negative effect on the market.
“Generally the view is that anytime 10,000 bitcoins sell; the market price can be moved significantly. The Australian authorities have chosen a safe time to sell becomes there is some uncertainty about what will happen to the value of bitcoin in July. The bitcoin protocol is designed to reduce the number f new bitcoin miners are given as a reward for processing transactions every four years. The reward will be halved on July 14th, so priced could go up due to the reduced supply of new bitcoins, but there is a question about whether security could decline, if rewards for miners are reduced significantly. So it’s a safe time to sell, as there is no guarantee about what might happen in July,” Dr. Hileman stated.
This Australian bitcoin auction will be open to bidders worldwide, and is the first of its kind outside of the united states. In the U.S. in 2014 the U.S. Marshall Service auctioned off 175,000 bitcoins that had been taken in the Silk Road bust. The U.S. auction only had 11 bidders, due to the extremely high price of each block for sale.
Dr. Hileman believes that the sale is a great acknowledgement that they see cryptocurrency is not illegal.
“Anytime a government sells bitcoin, it is acknowledging that this is a different asset to drugs, for example, that would not be sold in an auction. That was one of the big takeaways from the U.S. Marshall Service auction; they set a precedent that bitcoin was not illegal. Australia has been going through its own regulatory process, and this makes a standing that bitcoin is legal to use in Australia,” Dr. Hileman closed with.