Weekend Frivolity: Bitcoin, A Cautionary Tale

The New Yorker has a story about James Howells, an early bitcoin miner from Wales, who accidentally sent a hard drive containing his bitcoin folder to the local dump.  He had mined about 8000 bitcoins, and their current value is approximately $500 million.  His attempts to get his village to allow him to excavate the dump in search of missing hard drive have been unavailing, despite his backing by investors who know how to excavate and his offer to share 25% of the proceeds with the village.  

Somehow, I thought this story would amuse me more than it did.  It’s actually quite sad. Mr. Howells’ life is destroyed.  His wife and children are gone, and it seems his children no longer come to visit.  He hasn’t worked in some time.  As. D.T. Max notes in The New Yorker, Mr. Howells has become like the protagonist of Edgar Allen Poe’s “The Gold Bug,” “infected with misanthropy, and subject to perverse moods of alternate enthusiasm and melancholy.”  It’s hard to determine whether this condition is a product of the loss of his bitcoin or of the characteristics that led him to be interested in bitcoin in the first place.

I’m also having a hard time reconciling Mr. Howells’ fate with this story from the podcast Reply All.  In the episode, a journalist has lost a trivial amount of bitcoin, but the hosts are able to enlist a bitcoin hunter to track down her holdings.  I’m not sure why Mr. Howells can’t enlist a similar person to recover his bitcoin.  I guess the bitcoin hunter in the Reply All story had some crucial bit of information that is lacking here.  It may be that Mr. Howells never engaged in any transactions; he just mined.  But if he did engage in transactions, it seems like a hunter could recover his account.

If you don’t want to listen to the Reply All story, which is fascinating, I will share with you my favorite part.  The journalist in question purchased 18 bitcoins so that she could buy drugs.  She didn’t remember how much she had left.  It turned out that she had 0.0021 bitcoin left, which even today is not worth much.  Her comment (and I’m paraphrasing): my mom is always telling me to stop doing drugs, and I tell her, Mom, I’m fine, my life is very on-track.  Now, for the first time, I’m thinking my mom is right!