New USMS Bitcoin Auction for 30,000 BTC Ends; Price Could Be Above Market Rate

By
Caleb Chen @bitxbitxbitcoin
December 5, 2014

The second Silk Road Bitcoin auction for a 30,000 chunk of Ross Ulbricht’s personal bitcoins, which he agreed to have sold, has ended today. The US Marshal’s Service (USMS) is reporting that 11 registered bidders submitted a total of 27 bids; in contrast, the first Silk Road Bitcoin auction had 35 registered bidders that put in 63 bids. After the first Silk Road Bitcoin auction, it was revealed that many of the bidders only put in under-market bids.

Undoubtedly, said bidders did not return to the second round knowing the true demand for large chunks of bitcoins. However, the fast growth pace of the Bitcoin industry, even since June of this year, means that large chunks of Bitcoin aren’t as hard to come by as they used to be. For instance, the USMS still has 94,341 bitcoins that it plans to auction off in the coming months. Across the world, Australian authorities are also planning to auction off drug-related bitcoins.

Update: Pantera announced that they bid below market rate.

Also read: Another Silk Road Auction

Will the Price Be Above or Below the Market Rate?

One Citi official has recently made headlines for claiming that this month’s Silk Road Bitcoin auction will end below the market price as investors hope to catch a “post-Black Friday sale.” Needless to say, his opinion (and mine) is pure speculation and buzzwords. The USMS will notify the winner by tomorrow, 12/5/14, and payment will be due (by wire transfer) on Monday. Like last time, it is incredibly unlikely that the winner of the auction will reveal what price he bought it at. The rumors from the last Silk Road Bitcoin auction suggest that Tim Draper, the winner of the June Silk Road Bitcoin auction bought his chunk of Bitcoin at an above-market rate. Don’t be surprised if that happens again. Additionally, it would be unreasonable to expect the winner of the USMS Bitcoin auction to turn around and dump his bitcoins on the open market.

Who Bid at this Month’s Bitcoin Auction?

Of 11 bidders, most have previously declared their intention to bid in the upcoming auction either individually or as part of a syndicate. Participants in this month’s Silk Road Bitcoin auction included Binary Financial, Bitcoin Reserve, Bitcoin Investment Trust, Mirror, and Pantera Capital. The latter three also launched syndicates so individuals that could not afford to bid on entire blocks could attempt to get some skin in the game.

The lower amount of bidders and bids can likely be attributed to both the promise of more Bitcoin auctions to come and a lowered media presence this time around. This year, the USMS auction was officially only open for 6 hours, during America’s daytime. Another concern that may have kept bidders at bay may have been security.

In their first auction, the USMS accidentally replied all to an email thread of interested auction participants, which resulted in a leak of potential bidders’ personal emails. The result, as it often is, was a myriad of different phishing emails being sent to purportedly high-worth individuals with a penchant for purchasing Bitcoin; unfortunately, one individual fell for the infamous fake blockchain.info support email and lost access to his private key, causing his bitcoins to be hacked.

What do you think about this time’s Bitcoin Auction? Will the winning bid be above or below market rate? Comment below!

Images from Shutterstock.

Last modified (UTC): December 5, 2014 02:52

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