Bitcoin’s Invisible Burn: Lost Coins Outpace New Supply

Key Takeaways:

Bitcoin’s supply is already programmatically scarce, but it may be more scarce than previously understood. Dormant coins are accumulating faster than new coins are being minted, which means bitcoin’s usable supply is shrinking on a net basis. In light of this, estate planning becomes increasingly important to ensure your hard earned savings aren’t lost forever in the event of the unexpected. 

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Bitcoin is considered scarcer than gold but may be more scarce than previously understood. While bitcoin's supply cap of twenty one million is hard-coded, the real spendable supply is likely much lower when accounting for lost coins, making it a net deflationary asset. Proper custodial arrangements and inheritance protocols are key to ensuring you don’t become an unintentional donor to the rest of the Bitcoin network, making everyone else’s coins just that much more valuable. 

The emission of new coins comes in the form of mining rewards, but the reward is reduced by half roughly every four years (210,000 blocks) in an event known as the halving. This issuance schedule means bitcoin’s inflation rate keeps dropping over time. By mid-2025, nearly 20 million coins had already been mined, just shy of 95% of the total issuance at the time of writing. At bitcoin’s current inflation rate, 3.125 BTC per block, miners add approximately 450 BTC to the supply each day, or about 164,000 BTC per year.

However, “95% mined” does not mean all those coins are available in the market. A hypothetical $100B buyer would struggle to find that many coins without driving the price higher. Bitcoin’s real circulating supply is lower than the mined total, since a large percentage has been permanently lost through forgotten keys, hardware failures, or lack of estate planning.

Unlike fiat money in a bank, if you lose access to your private keys, those coins are gone forever. Bitcoin operates with a pair of cryptographic keys, one private, one public. There is no central authority to reset a password or retrieve lost funds and guessing a private key without any hints is computationally impossible with today’s technology. 

Thus, “lost” BTC sits in its address, nearly indistinguishable from long term holders, entombed on the blockchain until someone guesses or stumbles upon the key. Ledger estimates that 3-4 million BTC are already lost forever. There’s no way to know precisely how much is forever lost, but we can make some educated guesses. 

The Reality of Lost Bitcoin

The number of lost bitcoins is observed using indirect methods, since the blockchain doesn’t explicitly mark coins as lost. One of the most common approaches is dormant address analysis, where wallets that haven’t moved coins for five to ten years or more are flagged as potentially lost. Another major category of dormant bitcoin addresses includes unclaimed mining rewards.  The most prominent example in this category is the roughly 1.1 million BTC mined by Bitcoin’s creator, Satoshi Nakamoto, which have never been moved. Since these coins have remained untouched since 2009–2010, they are widely assumed to be permanently out of circulation. Any hint of them moving, or a return of Satoshi in general, would be a global industry event. 

Burned coins also factor into the equation. These are BTC sent to “burn addresses” that have no known private key, rendering the funds permanently inaccessible. Although rare compared to other loss categories, these deliberate actions do contribute to the total lost coins.

On-chain analytics firms like Chainalysis and Glassnode refine these estimates using clustering algorithms, transaction history, and UTXO age analysis. Their models weigh the likelihood that long-dormant coins are lost, but always include uncertainty, since inactivity could also reflect intentional long-term holding.

Estimates are further supported by real-world examples of loss due to human error, such as James Howells discarding a hard drive with 8,000 BTC, Stefan Thomas forgetting the password to an IronKey with 7,000+ BTC, or the QuadrigaCX founder, Gerry Cotten, passing away without passing on access to over 1,000 BTC. These bitcoin are almost certainly lost forever.

As of 2025, an estimated 2.3 to 4 million BTC, or about 11 to 18 percent of bitcoin’s 21 million cap, are believed to be permanently lost. A 2024 River Financial report put the figure at 3.8 million, much of it tied to long-dormant addresses that have not moved coins in over a decade. While about 19.8 million BTC have been mined, the effective circulating supply is likely between 15.8 and 17.5 million. These numbers will always be approximations, given the decentralized and pseudonymous nature of the network.

Rise Of The Ancient Coins

Dormant coins are accumulating faster than new coins are being minted, which means bitcoin’s usable supply is shrinking on a net basis. According to a recent report by Fidelity Digital Assets, using data from Glassnode, more than 566 BTC per day are aging into the “ancient” category, defined as coins that have not moved on-chain in over 10 years. By comparison, miners now produce only 450 BTC per day following the 2024 halving.

Reasons for this dormancy may include lost private keys, deliberate long-term holding, institutional cold storage, or early adopters permanently exiting the market. Regardless of the cause, this phenomenon creates a striking imbalance. 

The chart above highlights the changing dynamics between new bitcoin issuance and the growth of ancient supply. Since 2019, daily issuance has steadily declined through halving cycles, while the reactivation of long-dormant “ancient” coins has gradually increased. By 2025, the flow of ancient supply entering circulation is comparable to the daily issuance of new coins.

This trend underscores the diminishing role of miner rewards in expanding bitcoin’s supply. With issuance shrinking and a growing share of supply effectively locked or re-emerging only sporadically, bitcoin’s scarcity dynamics are increasingly driven by wallet behavior and long-term holder decisions. While the status of dormant coins can change suddenly if moved, the overall pattern reinforces bitcoin’s deflationary design and the importance of supply-side constraints in shaping its value proposition.

Holder Mortality and Future Losses

A rising concern is that millions of coins are becoming inaccessible due to the deaths of holders who didn’t plan ahead. Inheritance planning was not a high priority when bitcoin was trading under $1000, because not everyone expected it to become a trillion-dollar asset class. Fast forward to today; having a plan is mandatory. 

Legal and estate planning experts in the crypto space have long warned that the situation is worsening. A 2020 survey by the Cremation Institute, highlighted in Bitcoin Magazine, found that while nearly 90% of crypto holders were concerned about what would happen to their assets upon death, only a small fraction had made formal plans for their inheritance. This disconnect between awareness and preparation highlights a vulnerability for long-term bitcoin accessibility.

Meanwhile, bitcoin’s new issuance is decreasing with each halving. By 2028, bitcoin’s annual issuance will drop again to ~82,000 BTC per year. If just 0.5% of current holders were to lose access annually, that would equate to roughly 95,000 BTC disappearing from circulation each year. At a 1% annual loss rate, the number rises to roughly 190,000 BTC,more than double bitcoin’s post-2028 yearly issuance.

Shrinking in Practice

Millions of bitcoins have been lost through forgotten keys, discarded hardware, and dormant wallets. As new issuance slows with each halving, the effect of these lost coins compounds, pushing bitcoin toward greater long-term scarcity. Those who safeguard their keys effectively hold a larger share of the supply that remains liquid.

For investors using ETFs or regulated custodians, estate planning is straightforward. For those holding private keys directly, the risk is different. If your family cannot locate or unlock your wallet, your coins are gone forever. Planning ahead ensures your wealth transfers securely rather than disappearing.

The choice is simple. Plan now, or risk making that donation to other holders unintentionally.

Scarcity makes bitcoin valuable, security makes it last.

Learn how BitGo helps protect your legacy.