The U.S. government is planning to sell almost 30,000 bitcoins it seized as part of crackdowns by the FBI of the Silk Road online marketplace.
The 12-hour auction of the bitcoins will take place June 27, according to an announcement by the U.S. Marshals Service. It says the bitcoins will be auctioned off in nine blocks of 3,000 bitcoin and one block of 2,656.51306529 bitcoins. Winners will be announced June 30.
At today's price, all those bitcoins are worth more than $17 million.
The price of bitcoin has dropped below $600 since the announcement of the auction, as the liquidation of so many bitcoins likely will flood and depress the bitcoin market for a while.
"The bitcoin market is not yet liquid ... enough to absorb this kind of supply," says Gil Luria, managing director of Wedbush Securities, an equities firm that tracks the bitcoin market. But, he says, "once the market is able to digest the supply, which it will, there's no reason to say (the bitcoin price) won't bounce back."
There are more than 12.8 million bitcoins in circulation right now, according to Blockchain, a bitcoin wallet provider. Bitcoin is set up so that only 21 million bitcoins will ever be created.
The U.S. also has another trove of bitcoins it seized last October from Ross William Ulbricht, the man behind the Silk Road, which served as an online market for illegal drugs and weapons, among other things. Those bitcoins are not part of this auction.
Luria says there are plenty of institutional and individual investors who would be interested in the auction. Those interested must wire a $200,000 deposit to participate in the auction. Deadline for registration is June 23.
Luria did not say how much the auctioned bitcoins may sell for, but he says it will very likely be below market price.
He noted that the U.S. government stands to make a considerable profit on those bitcoins. "They tripled their money by holding onto it this past year," he says. "That'll help subsidize their budget a little bit."
Sick of hearing about bitcoin? How about dogecoin or litecoin? Check out some alternative cryptocoins here.
Still not quite sure what bitcoin is? Here are some analogies (including one comparing bitcoin to Kim Kardashian) that may help explain what the cryptocurrency is and is not.
Follow me on twitter: @allisonsross