10 Lost Crytocurrency Fortunes


Cryptocurrencies are an emerging technology that seeks to replace our current financial system (as in, money that is backed by a nation-state). In the modern financial system of credit cards and online shopping, transactions involving money needs the approval of a bank or credit card to prove that the exchange of money has taken place. Cryptocurrencies get around this by getting other crypto users to do complicated math, called mining, to confirm that the transaction went through. This keeps your shopping habit data out of the hands and the banks and marketing firms.

Since the advent of the first cryptocurrency, Bitcoin, this new technology has been seen as a scam by some and the future of all financial transactions by others. Released in 2009, the value of one Bitcoin peaked at $19,783.06 on December 17, 2017, before crashing back to Earth and bottoming out at around $4,000. It has since bounced back and in August 2019, it was hovering around $10,000. Many people have made a lot of money, but in this list, we look at the many others who have lost huge fortunes dealing with cryptocurrencies. 

10. Wired threw away a fortune

As the world’s premium technology magazine, Wired is sent many new products to test and review. One of these products was a Bitcoin miner, a specialized computer that does complicated math to confirm other people’s Bitcoin transactions. By confirming these transactions the mining machine has the potential to earn Bitcoins. 

While the machine was plugged in at Wired HQ it earned 13 Bitcoins, which would have been worth about $260,000 at the coin’s peak value. Wired discussed selling the Bitcoins or donating them to charity but the powers that be thought it would be unethical to “harvest” the Bitcoins. Michael Calore, a senior editor at Wired, said that if they kept the machine running the magazine might be seen as promoting crypto. To keep their journalistic integrity and independence they destroyed the keys needed to use the coins, essentially “burning” them. The coins still exist but without the keys, there is no way to cash them out.

9. Bitcoin miners endanger nuclear plant to mine cryptocurrency

The faster a crypto-miner solves crypto-math the bigger the chance they will be rewarded with more crypto. To maintain their profits a crypto-miner needs faster and more powerful computers. For a while, a lot of crypto mining was taking place on university campuses around the world. There, students with high IT skills were taking advantage of the free dorm power and high speed internet to mine crypto. One student at Imperial College of London mined 30,000 dogecoin by hacking the university computers to mine while everyone slept. As the CPU power to solve the equations increased, miners moved to use university supercomputers. The National Science Foundation was forced to ban one researcher for using their expensive-to-run supercomputers to generate Bitcoins. Students using campus IT resources like this cost universities a fortune and new students are threatened with expulsion if they are caught mining.

All this mining requires custom software that frequently has malware buried in the code. These have the potential to open the door to outside parties, allowing the hacking of university supercomputers and their university high speed internet connections. At St. Francis Xavier University in Nova Scotia, Canada, cryptocoin mining was the cause of an attempted cyberattack that shut down its network for four days

Worryingly, it’s not just young students taking advantage of high speed government computers. Risking another Chernobyl disaster, workers at the South Ukraine Nuclear Power Plant cooked up a scheme to mine on the job. They hooked up their mining rigs to the plant’s internal network and sat back watching the supercomputer rake in the crypto. What they didn’t realize (or didn’t care about) was that their mining rigs opened up a back door to the internet, allowing anyone to hack the nuclear plant and do whatever they want. 

8. Man throws away 7,500 Bitcoins

Instead of physically holding money or a coin, crypto users use a private key — a long text string, sometimes more than 50 characters long; not something you can easily memorize. People either write them down or save them on their computers. Cryptocurrency is famous for being decentralized and as such there is no help desk, no customer service and, most importantly, no backup or “god mode” to recover lost crypto. To do anything with cryptocurrency you need to have the key for the coin. 

Years ago, Syl Turner did some Bitcoin mining and for his efforts made about two Bitcoins. He forgot all about them and during some computer maintenance, he reformatted his drives and erased the keys for the two coins, making them forever out of reach. 

James Howells was also a crypto miner in the early days of Bitcoin. He eventually gathered 7,500 Bitcoins and stored them on a hard drive. In 2013 he accidentally threw the hard drive away, with all the keys for his Bitcoins. The precious keys, along with all his other trash, ended up at a local dump. In 2017 at the peak of Bitcoin value, his buried Bitcoin treasure would have been worth about $150,000,000. 

This plot point may sound familiar, as it was used in the hit HBO show Silicon Valley. On that show, billionaire investor Russ Hanneman has his minions combing the city’s dump looking for a thumb drive with $300 million worth of Bitcoin on it. In another story line of the same season, the Silicon Valley crew created their own cryptocurrency, Gilfoyle’s “Pied Piper Coin.”

7. Bitcoin mixup

One of the curious features of Bitcoin (or flaw depending on your view) is that transactions are public. You can’t see the identity of who is transferring their coins, but you can see the actual transactions take place. A number of companies specialize in tracking crypto moving through the interwebs. One of these companies, Chainalysis, identify wallets that are linked to criminal activity. Their blockchain analysis was key to identifying two rogue FBI agents who had been stealing Bitcoins from criminals.

Often it takes a while for the transfer of Bitcoins to be approved by miners. To speed up the confirmation process users can offer a bonus fee. One unlucky user accidentally mixed up the amount he wanted to transfer and the bonus fee. In April 2016 Bitcoin was worth about $580. On April 26 that year, someone wanted to transfer 291.241 BTC which at the time was worth about $168,920. To get the transaction done quickly the user offered a fee of 0.0001 BTC (about 6 cents). However, they flipped the amounts and mistakenly transferred 0.0001 BTC (about 6 cents) for a bonus fee of 291.241 BTC (about $168,920). 

6. $200 million for a pizza

Without the ability to quickly and easily transfer cryptocurrency, the crypto concept is dead in the water. Mainstream adoption of cryptocurrency is the hope of everyone who holds some sort of crypto coin. Some of the biggest cheerleaders of crypto are its celebrity backers. The Winklevoss twins (Cameron and Tyler of Facebook infamy) have been lobbying behind the scenes to push crypto into the mainstream, and have even developed an exchange system called Gemini. (The twin star sign… get it?!) Also pushing crypto is Ashton Kutcher, who famously donated $4 million in crypto coin XRP to TV daytime talk show host Ellen’s charity. 

These weren’t the first hype events and in its history crypto in no stranger to publicity stunts. In its infancy, it took a lot of technological prowess to use Bitcoins. On May 22, 2010, to encourage adaptation and cash in on some internet fame Laszlo Hanyecz ordered a pizza for 10,000 Bitcoin. This was probably the first real-world transaction involving cryptocurrency. At the time Bitcoin’s value was extremely low but at its price peak that 10,000 Bitcoin pizza would have been worth about $200,000,000.

5. Mt. Gox

It is possible to keep your crypto in an electronic “wallet.” This can be in the form of a physical thumb drive you can keep in your pocket. Other wallets might take the form of a file or program on your computer. However, for ease of use, some people prefer to keep their crypto in exchanges which act like banks or investing companies. 

One of the first of these was Mt. Gox. Launched in July 2010, in three years it was handling over 70% of all Bitcoin transactions worldwide. In 2014 the company closed its doors when it was revealed that most of the coins it was storing were missing. Years of investigations found that almost right away nefarious actors were stealing Bitcoins totaling about 600,000, which at Bitcoin’s peak value would have been worth about $12 billion.  

Complicating the settlement of account holders is the extreme rise of the value of Bitcoin. Mt. Gox shut down in 2014, and a small number of its Bitcoin holdings were recovered. However, since then the value of Bitcoin has soared. That small amount of Bitcoin that was recovered is now worth much more than the 2014 value of the stolen coins. Mt. Gox account holders were on the way to getting their fortunes back but now some of them are suing for a bigger piece of the pie. One of the key individuals in the recovery, Andy Pag, says, “The more bitcoin’s price goes up, the more vultures are circling around. My personal worry is that we’re just going to be bogged down in litigation.” If the lawsuits ever end some people might actually get their money back. 

4. Cryptocurrency and the environment

People around the world are just now starting to understand that giant fortunes mean nothing if the world as we know it is crushed under the full weight of climate change. In that sense, one of the biggest losers of the crypto movement has been the environment. Modern society’s energy consumption and the never-ending need for more power is one of the main drivers of climate change around the world. 

The most efficient way to be a successful miner is with endless racks of computers powered by the cheapest electricity available. The bigger the number of computers the higher the power consumption. Mining has become such big business that it consumes more energy than the entire nation of Switzerland, pushing up the demand for energy and contributing heavily to climate change. While some suggest that this can be offset by using renewable energy, others argue the push should be to convert all the world’s fossil fuel generation into renewable energy, then focus on creating power for the crypto industry.

3. The town that lost big

Early adopters of new technology are sometimes big winners, but more often they are big losers. Some of these early adopters are communities that are looking for novel ways to invest their town’s money. One of these small towns was in the Lone Star state.

Rockdale, Texas is the site of a giant coal deposit. In the ’50s this caused the town to boom when Alcoa built an aluminum smelter that used the cheap energy produced by mining and burning coal. Globalization caused the plant, and then the mine, to close when it couldn’t compete against dirt-cheap aluminum produced in the third world. 

Bitmain, a Chinese crypto mining company, was seen as the town’s savior when it announced it would build a giant computer array in the town. This would take the form of huge warehouses full of computers that would use the cheap electricity of the nearby coal-powered plant. These computers would do nothing but mine Bitcoins. The town invested a fortune in hopes of luring the company to set up shop, but it all went nowhere when Bitcoin’s price fell, making the project unviable. When its fortunes were on the rise Bitmain was once going to release an IPO and sell stock. Since then they have abandoned that plan and are in survival mode.

2. In death do us part

On April 16, 2018, Matthew Mellon of the Mellon banking fortune died of a drug-related heart attack in Mexico. To his grave, he also took the location of the crypto keys to a huge amount of Ripple coin (XRP), another popular type of cryptocurrency. Before his death he held an estimated $1 billion in RippleWithout the keys none of the XRP coin can be used.

QuadrigaCX is a Canadian cryptocurrency exchange founded by Gerald Cotten. On December 9, 2018, Cotten died under mysterious circumstances of Crohn’s disease while opening an orphanage in India. As the founder of the company he held all the passwords to access QuadrigaCX — all of which were lost when he died. About $250 million Canadian (roughly $190 million in the US) owed to its 115,000 customers is still missing. 

1. Stolen treasure

With the advent of personal computers and the internet, early on there simply didn’t exist many people with the knowledge to criminally take advantage of the situation. This was beneficial to the rapidly expanding user base that very often did not have any idea how the technology they used worked. Now, criminals and state sponsored hackers have stepped up their game and stepped out of the shadows to take advantage of an internet filled with security lax devices.

Since their inception, cryptocurrencies have been difficult to use and almost totally dependent on being stored and used on electronic devices. Such devices are often left unsecure by oblivious users and are easy prey to hackers and scam artists. In the first half of 2018 $1.1 billion was stolen through various scams and unauthorized access of unsuspecting electronic devices. With the internet allowing criminals to operate across borders with little to no police presence, these sort of attacks are only going to get worse.

Jon Lucas covers events that happened on this day in WW1. You can follow the action on Twitter, Tumblr or Instagram

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