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May 31, 2016

Australia to auction £8m in confiscated bitcoins

News: The Australian unit of Ernst & Young will organise the auction of 24,518 bitcoins.

By CBR Staff Writer

A total of 24,518 bitcoins worth about £8m are to be auctioned off after being confiscated by Australian police.

The Australian unit of Ernst & Young will organise the auction, in which the digital currency worth about £8m will be sold in blocks of 2,000, each with a market value of around £680,000.

Ernst & Young intends to sell the bitcoin in 12 lots through a 48-hour sealed bid auction between June 20 and 21.

Ernst & Young partner Adam Nikitins said he expects interest from digital asset investment managers, bitcoin exchanges, and investment banks and hedge funds.

Nikitins said: "With each lot of Bitcoin currently valued at more than AUD$1m, we are targeting sophisticated investors who can see the value of investing in a growing digital asset."

Police in the state of Victoria seized the bitcoins in 2013 from a drug dealer based in Melbourne. Last year, the Victoria’s Asset Confiscation Operation took possession of 24,518 bitcoins and said it would try to make the most of it.

Speaking to BBC, Garrick Hileman, economic historian at the Cambridge Centre for Alternative Finance said, "This is a significant amount of Bitcoin. It’s about a week’s worth of new Bitcoin that comes onto the market through mining."

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The Australian bitcoin auction will be open to bidders across the world. It is the first such sale outside the US.

In 2014, the US Marshals Service auctioned around 175,000 bitcoins that had been confiscated from the founder of online dark market Silk Road.

Bitcoin is a type of digital asset, most commonly defined as a virtual, digital or crypto- currency. It was invented by Satoshi Nakamoto, who published the payment system in a whitepaper in 2008.

It was revealed earlier this year that the increasing value of bitcoin is fuelling a resurgence in the mining process that creates them.

Its price soared to $1,137 a bitcoin in 2013, having been just $13 a couple of years earlier.

Hileman said Australian authorities have chosen a safe time to sell the currency as there is some uncertainty about the value of bitcoin in July.

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