People are making a fortune buying government-seized bitcoins

The old saying goes that one man’s loss is another man’s gain. That’s been proven true in the bitcoin market.

Over time, the US government has seized hundreds of thousand of bitcoins from individuals who used the cryptocurrency in the process of breaking the law. Perhaps the most high-profile example came in October 2013, when the FBI raided online marketplace Silk Road, a hub for transactions involving illegal drugs and criminal activities.

But those confiscated bitcoins don’t just sit in the US government’s digital wallet. They get auctioned off to the highest bidder. And due to the cryptocurrency’s recent surge to record levels, the winners of those auctions have made a killing — about $US250 million in total.

Below is a rundown of four major bitcoin auctions since the Silk Road bust, breaking down the profits made by each winning bidder, assuming they haven’t sold out of their positions. All numbers calculated using Wednesday’s intraday high of $US2,398 a coin.

  • June 30, 2014: 30,000 bitcoin sold at a value of $US19.4 million (price per coin: $US647)

    • Position would be worth $US71.9 million — net profit: $US52.5 million
    • Buyer: Venture capitalist Timothy Draper
  • December 9, 2014: 48,000 bitcoin sold at a value of $US18.1 million (price per coin: $US378)

    • Position would be worth $US115.1 million — net profit: $US97.0 million
    • Buyer: SecondMarkets, an exchange started by Barry E. Silbert, who runs the Bitcoin Investment Trust fund
  • November 30, 2015: 44,000 bitcoin sold at a value of $US14.6 milion (price per coin: $US332)

    • Position would be worth $US105.5 million — net profit: $US90.9 million
    • Buyer: Unknown
  • August 22, 2016: 2,700 bitcoin sold at a value of $US1.6 million (price per coin: $US585)

    • Position would be worth $US6.5 million — net profit: $US4.9 million
    • Buyer: Unknown
  • Total profit: $US245.3 million

Bitcoin’s surge above $US2,300 a coin and a series of new highs has been driven by a recent glut of good news. The cryptocurrency has gained in 26 of the past 29 sessions, doubling its value over the period.

Wednesday’s climb came after China was downgraded at Moody’s and a bitcoin scaling agreement was reached by the Digital Currency Group, representing 56 companies in 21 countries, at the Consensus 2017 conference in New York.

At the beginning of April, Japan announced bitcoin had become a legal payment method in the country. Additionally, Ulmart, Russia’s largest online retailer, said it would begin accepting bitcoin even though Russia had said it wouldn’t explore the cryptocurrency until 2018.

The gains also seem to be boosted by speculation the US Securities and Exchange Commission could overturn its ruling on the Winklevoss twins’ bitcoin exchange-traded fund. The SEC was accepting public comment on its decision until May 15, but it hasn’t announced whether it will overturn its rejection of the ETF.

Get the latest Bitcoin price here.

NOW WATCH: Here’s the workout routine a retired US Navy admiral uses to stay in tip-top shape

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.