You are currently viewing the printable version of this article, to return to the normal page, please click here.

EDITORIAL: He tossed $8.2 million into the trash

How a Welsh investor accidentally threw away a fortune

- - Wednesday, January 1, 2014

For a man with a fetish for keeping things tidy, James Howells, 28, is a reckless man when he's in the mood to clean out drawers and cabinets. Mr. Howells, a Welshman, is a "bitcoin miner" who lost bitcoins worth $8 million tucked away in his laptop computer.

After he spilled a glass of lemonade over the keyboard four years ago, he fixed it the only way he could, by dismantling it for spare parts. He carefully extracted the hard drive and put it — safely, he thought — in a desk drawer. This summer, he cleared out the clutter in the drawers.

"You know," he told London's Sunday Times, "when you put something in the bin, and in your head you say, 'that's a bad idea.' I really did have that feeling."

The feeling was not good. He had thrown away a hard drive with $8.2 million on it. Bitcoins are a mysterious digital currency that exists only in computers, barely understood by those who don't "mine" bitcoins in a complicated game that is hardly understood better by the players in the game. Bitcoins can be exchanged for conventional currency on several exchanges, with the appropriate computer software. But there's nowhere to go for a refund if you lose the file, which can only be opened with a "key" or code, or password, and it is known only to the person who put it there.

Bitcoins are worth only what a speculator thinks they might one day be worth, and the value fluctuates wildly. Three years ago, a bitcoin was worth $1.50. Last month, a bitcoin was reckoned to be worth $1,000, and rising. This sent Mr. Howells to his town dump in Newport, South Wales, determined to dig through the landfill in the desperate hope that he could find the hard drive. He figured it had to be still buried there. Trash men at the dump agreed, but said the hard drive, about the size of a hymn book, was buried under several layers of trash of various unsavory kind, three or four feet deep in a dump the size of a football field.

Dark and mysterious or not, bitcoins continue to attract speculators with an intricate knowledge of how both websites and commodity markets work. "There are big risks with bitcoins," a London analyst tells The Sunday Times. "If you think about it, there's no such thing as 'real money.' All financial systems are kept going by confidence. If the merry-go-round stopped tomorrow, there wouldn't be enough gold to go around for everyone holding financial instruments based on gold."

It's the way trading in bitcoins flourishes outside conventional currency that frightens many investors. Bitcoins seem like Monopoly money, because you can't usually spend them on the street. But you can buy supper at a rare bitcoin restaurant if you know where to look, or ride into space on them. Richard Branson, the president of Virgin Airways, promises to accept bitcoins as payment for a space ride one day soon on Virgin Galactic. And there's nothing imaginary about James Howells' pain. Throwing good money away hurts.