The US Government’s Bitcoin

The US government’s Bitcoin holdings are an accident of law enforcement.

In 2013, the FBI shut down the Silk Road and seized approximately 144,000 Bitcoin. At the time, they were worth around $28 million. The government auctioned most of them in 2014, at prices between $350 and $632. The buyer was Tim Draper, a venture capitalist who paid roughly $48 million.

At 2024 prices, those coins were worth approximately $10 billion.

More seizures followed. In 2022, federal agents recovered 95,000 Bitcoin stolen in the 2016 Bitfinex hack — worth around $3.6 billion at the time of recovery. The Silk Road-linked case of James Zhong added another 50,000 Bitcoin, hidden since 2012 and recovered in 2022.

By 2024, the US government held an estimated 200,000 Bitcoin across various seized wallets. Not through deliberate strategy — through enforcement. It became one of the largest known sovereign Bitcoin holders entirely by accident.

The 2014 auction now occupies a specific place in the story of government Bitcoin management. The decision to sell at the time seemed sensible — the price was fine, the asset was speculative, convert it to dollars. In retrospect, it was one of the most expensive asset disposals in US government history.

The current debate is shaped by that lesson even when nobody says it directly. The question of whether to keep auctioning seized Bitcoin or to hold it as a strategic reserve is, in part, a question of whether the government wants to make the same decision twice.

Tomorrow: what institutional adoption actually means for Bitcoin’s price — and what it doesn’t.

— The Daily Bit