In a sign of Bitcoin’s rise to prominence, the first major acquisition of a company involved in the virtual currency has happened after gambling site SatoshiDice was sold to an undisclosed buyer for around $11.5 million.
The deal value is estimated in US dollars because the transaction was, of course, completed in Bitcoins: 126,315 of them to be precise, according to Bitcoin-focused news site Coindesk. The acquirer of the company has not been disclosed at this point.
SatoshiDice is an online casino that uses Bitcoins for transactions. It launched in April 2012 and claims to be “the most popular Bitcoin game in the world”. Techweek Europe reported the site’s income as being above $50,000 per month back in January 2013.
The site is a lucky dice game and its system is simple. Users send Bitcoins to the site and pick a number. ‘The Ghost of Satoshi’ rolls a lucky number and those who selected a number that is lower than the one on the dice win.
To date, the site has seen more than 5.3 million bets placed and has paid out more than 3.9 million wins. The company says winnings are dispatched within 30 seconds, while it charges a small transaction fee on each bet.
SatoshiDice is ‘listed’ on MPEX, a Romania-based Bitcoin securities exchange. Panama-based founder Erik Voorhees says the deal represents a 277 percent premium on its sale price and a 175 percent premium on the company’s valuation according to MPEX.
Addressing possible concern and disappointment among the Bitcoin community via a popular forum, Voorhees said:
While I know some S.DICE owners intended to hold for a long time, and will thus be dismayed by the buyout, it is my sincere hope that this compensation level will be amenable. It is substantially higher than the contract mandates, and it is almost 3x higher than all private owners are being paid. It has not been easy to negotiate to this level, but I believe it is the right thing to do.
The deal is the first significant buy-out of a Bitcoin industry company and highlights the potential revenues and money that is circling around the industry.
US authorities have taken a closer interest in Bitcoin this year, including an investigation into Mt. Dox, the world’s largest Bitcoin exchange. Officials seized Dwolla’s payments to and from the service in May for conducting “unlicensed money transmitting”.
Mt. Dox reopened its US dollar trading service on July 4 following a two-week suspension in which it made changes to its service to allow it to cater for increased demand. The company did not say if the temporary shutdown was ordered by the US government or was the result of an investigation.
Headline image via zcopley /Flickr