The 24,518 bitcoins will be sold mostly in blocks of 2,000 - each with a market value of about £680,000.
Ernst & Young, the firm organising the auction, said the bitcoins had been "confiscated as proceeds of crime" but did not elaborate on the case.
One expert said the authorities had chosen a "safe" time to sell.
Australian newspapers have previously reported that 24,500 bitcoins were seized by police in the state of Victoria in 2013, after a man was arrested for dealing illegal drugs online.
