The Bitcoin world has been waiting for more than six months to see where the millions in cryptocash seized from the Silk Road black market for drugs would end up. Now that fortune is about to be sold off, like so many mafiosos' cars or drug dealers' bling, to the highest bidder.

On Thursday the U.S. Marshals' office announced that it will be selling nearly 30,000 in bitcoins that were taken from a Silk Road server after the drug-selling site's seizure last October, worth about $17.5 million at current exchange rates. But instead of liquidating the coins through an exchange, they're going to be sold in ten blocks of about 3,000 bitcoins each via an email-based auction held on the Marshals' service website. The coins officially go on the block in two weeks, and buyers will have 12 hours to put in their bids.

In fact, the 29,656.5 coins up for sale are a small fraction of the total seized bitcoin hoard from the Silk Road case. It also has another 144,342 coins whose fate is still in limbo. That larger fortune, currently worth over $83.6 million, was seized from Ross Ulbricht, the 30-year-old alleged to have run the Silk Road under the handle the Dread Pirate Roberts. In a court motion last December, Ulbricht confirmed that the coins were his but contested the government's seizure of them, demanding their return.

The announcement of the auction on the U.S. Marshals' website. The announcement of the auction on the U.S. Marshals' website.

The government's bitcoin bake sale could potentially play havoc with the cryptocurrency's economy. The current auction represents around only a quarter of a percent of the total number of bitcoins in circulation. But the still-contested 144,000 coins represent close to 1.1 percent. If that larger pot of coins is sold off in the same auction style, it could potentially flood the market with cheap coins and lower their price. In the hour following the Marshals' news, the price of bitcoin fell about 2 percent.

But Gavin Andresen, the chief scientist of the Bitcoin Foundation, argues that the sale could be good for bitcoin: As he sees it, even the Department of Justice now participates in the bitcoin economy. "The fact that they're going to liquidate them instead of destroy them gives bitcoin some legitimacy," he said in an interview about the potential sale of the coins last year. "They see them as something of value."

In fact, the Silk Road case may help define bitcoin's identity in another way: The judge overseeing Ulbricht's case is currently considering a motion from his lawyer to dismiss the charges based in part on the argument that bitcoin isn't money. The argument cited an earlier decision by the IRS that bitcoin should be treated as property rather than currency.

It's not clear why the Marshals decided to sell their 30,000 coins in a traditional auction rather than on a bitcoin exchange, nor why it chose to stage the auction now. The agency's public affairs office didn't respond to further requests for comment.

Joshua Dratel, the lawyer representing Ulbricht, says he wasn't consulted on the sale. But he speculates that the feds may have timed their auction to capitalize on a recent uptick in bitcoin's price. The cryptocurrency hit $665 per bitcoin earlier this month before sliding below $600 in recent days. "I wouldn’t be surprised if they’re watching the price of bitcoin on the market just like everyone else," he said.