Imagine you had Bitcoin worth millions locked away in a lost safe for which you no longer have the key.
This is the predicament that Mark Michaels*, a 24-year-old electronic engineer from Pretoria, finds himself in.
Michaels mined 20 Bitcoin more than 10 years ago when the cryptocurrency was still only worth a few cents.
An avid techie from a young age, he started playing around with computers in 2003, when he was just six years old.
“We had a home computer that was generally used by my parents for work, but my older brother and I were allowed to use it with our own accounts under their supervision,” Michaels said.
Before discovering gaming and using the computer for schoolwork, his time on the PC mainly consisted of drawing in Paint, as it was the only software that he could make sense of at the time.
His first experience of Internet access at home was on a Vodacom 3G dongle which came with 200MB of data per month. His family later upgraded to 384kbps ADSL.
Late in primary school, he built his own PC, which boasted an AMD Phenom X3 processor and 512MB RAM.
He eventually upgraded from the built-in graphics to a dedicated Nvidia GeForce GTS 250.
When Michaels was in Grade 7, he started using this rig to mine Bitcoin after reading about the technology on the Internet.
“I believe I used the original Bitcoin wallet software, which required a wallet key and password to access,” he said.
For mining, he recalls using one of the first command-line miners available for Nvidia GPUs.
“I don’t remember exactly how long I mined for, but it was for a few weeks to a couple of months continuously.”
He managed to mine around 20 Bitcoin with this setup. During that year, Bitcoin’s value climbed from $0.0008 to $0.08.
At its highest price and with the average exchange rate of R7.31 to the dollar at the time, it was worth around 58 South African cents.
Aside from the fact that he was a minor with a limited bank account, there were also no crypto exchanges that would allow him to sell the Bitcoin for money.
“Eventually, I got bored of it, as you couldn’t do much else on your PC while it was busy, and the Bitcoin you mined was practically worthless,” Michaels stated.
He lost the key and password for his Bitcoin wallet that was stored in a text document on his desktop. Given that he was still young and the currency was effectively worthless, he had no interest in protecting it.
At one point, he deleted the file while cleaning up his computer.
About 7 years later, when Bitcoin had surged to $1,000, Michaels made his first real attempt to try and recover the lost Bitcoin.
“I remember collecting all the hard drives, memory sticks, CDs and DVDs in the house and carefully going through each of them. This took around a week,” he said.
“I also tried running data recovery software on my main hard drive, but this was not of much use. By then, that drive had been formatted and reused multiple times.”
If he still had access to this wallet and sold his Bitcoin on Saturday, 14 August 2021, when the cryptocurrency reached $48,000 (R709,00), he would have around R14.18 million.
According to the cryptocurrency data firm Chainalysis, around 20% of the world’s existing 18.5 million Bitcoin was lost or is in stranded wallets.
Michaels said he had made peace with losing access to his old Bitcoin. He likened it to coming up with a set of Lotto numbers and then deciding not to buy a ticket — and then those numbers winning.
“There are various stories similar to mine, which goes to show the risk and possible reward from being an early adopter of new technologies,” Michaels said.
He said he never got into cryptocurrency to make money — it was more about being a cool technology with possible use in the future.
“I am now a qualified electronic engineer, and I still love researching and trying new technologies as they come out, even when they might not have an immediate use.”
He currently owns various cryptocurrencies, but not in large amounts.
“I do not actively invest money in crypto. It is mostly just for playing around on the markets and seeing how things change,” Michaels said.
“I also still mine Ethereum when my current rig is not in use, so it is mostly the little income from this that I distribute among various altcoins.”
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*Not his real name.