More than 4 million Bitcoins have been lost

Author: Martin

Behind the myth of digital gold's scarcity lies countless wealth that can never be awakened.

In the cold winter of 2017, British programmer James Howells knelt at the edge of the Newport landfill, trying to convince the city government to allow him to dig up an accidentally discarded hard drive—which contained the private keys to 7,500 bitcoins. At the time, Bitcoin was priced at approximately $19,000, making this fortune worth $140 million. However, the city government rejected his request, citing environmental damage.

Eight years later, with Bitcoin's price exceeding $100,000, this asset has swelled to $850 million, yet the hard drive continues to rot beneath hundreds of thousands of tons of garbage. Howells's tragedy is not an isolated case: An American programmer forgot the password to $200 million worth of Bitcoin, leaving him with only two attempts to try again; an early miner lost 5,000 Bitcoins mined in 2009 due to hard drive damage; and 650,000 of the 850,000 Bitcoins stolen from the Mt. Gox exchange remain missing. In the early summer of 2025, a Bitcoin wallet that had been dormant for 15 years suddenly revived, transferring $50 million worth of Bitcoin to an exchange. The reappearance of this wallet, dormant since 2010, caused quite a stir in the blockchain world. However, such "resurrections" are rare. According to research by blockchain analysis firm Chainalysis, the vast majority of long-dormant Bitcoin wallets remain dormant forever, their private keys long forgotten or destroyed, leaving the Bitcoins inside as untraceable digital treasure chests on the blockchain. 1. Disappearing Bitcoin: Shocking Data As of August 2025, how many of the 21 million Bitcoins in its maximum supply have been permanently lost? 1. Core Data Range: • 2.87 million–3.79 million coins (17%–23% of mined supply) Based on Chainalysis research from July 2025, this analysis includes analysis of blockchain transaction activity, coin age, and dormant addresses, covering scenarios such as early mining losses and forgotten private keys. • 2.3 million–3.2 million coins (11%–15% of total supply) Separate online research breaks down the loss into three categories: Satoshi Nakamoto coins (1.1 million), coins untouched for over seven years (1.8 million–2.4 million), and coins mistakenly sent to black hole addresses (approximately 100,000).

• Over 6 million (over 30% of the mined total)

Cane Island’s June 2025 report stated that if the loss of private keys, hardware damage, and lack of heirs are taken into account, the amount lost may be even higher, and it is predicted that the number will exceed 7 million in September 2025.

2. Impact of actual circulation

• Mined: 19.88 million (94.66%)

• Remaining unmined: 1.12 million (5.34%)

• Permanently lost: 2.87 million to 3.79 million (17%-23% of circulating supply)

• Actual circulating supply: only 16 million to 17 million

The latest research shows that more than 6 million bitcoins are either permanently lost or in a highly illiquid state, which means that nearly one-third of the Bitcoin supply has actually withdrawn from market circulation.

2. Why does Bitcoin "disappear"? The essence of losing Bitcoin is the permanent loss of access to the private key. Unlike traditional bank accounts where passwords can be retrieved through identity verification, the decentralized nature of Bitcoin means that if the private key is lost, the funds are lost forever.

1. Early adopters became the hardest hit (2009-2013):

• At that time, the value of Bitcoin was negligible (1BTC was less than one cent), and users lacked awareness of safe storage

• Storing private keys in volatile media such as text files and emails

• Equipment was scrapped or paper wallets were discarded at will

• Famous case: James Howells accidentally discarded a hard drive containing the private keys of 8,000 bitcoins, which is now worth nearly $900 million

2. Modern loss cases still exist:

• Hardware wallet failure and no backup

• Lack of private key inheritance planning, leaving no one aware of the key after the holder’s death

3. Classification of loss reasons

4. The dormant whale wallet

3. Halving effect: scarcity is upgraded

In May 2024, Bitcoin successfully completed its fourth block reward halving, and the miner block reward dropped from 6.25 BTC to 3.125. This mechanism reduced Bitcoin’s annual inflation rate from approximately 1.7% to 0.85%, officially entering a new cycle of greater scarcity.

After the halving, only 450 new bitcoins are added every day, and its scarcity is comparable to that of gold. At the same time, although the "loss rate" of Bitcoin has decreased, it still continues:

• After the high loss rate in the early days (2009-2013), modern wallet technology has been greatly improved

• Human errors are still inevitable: loss of private keys, forgotten backups, hardware failures, etc.

• Intergenerational inheritance problems emerge: the death of early holders has caused some bitcoins to be permanently "sunk"

Historical data shows that the first three halvings (2012, 2016 and 2020) were all accompanied by significant price increases. The increase in scarcity is the core support for Bitcoin's value storage properties. Bitcoin's absolute scarcity is thus reinforced: 1. The stock-to-flow ratio (S2F) has soared. The amount lost is equivalent to the effect of three halvings: If 3.79 million coins are lost, the actual scarcity is 22.7% higher than the theoretical value. 2. Opportunities for on-chain data distortion Traditional analysis models have become ineffective due to the large number of dormant coins, but new tools such as the two-year rolling MVRV-Z score more accurately capture fluctuations in active supply. In 2025, this indicator shows that the scarcity of the circulating supply reached a historical peak.

3. The Ultimate Logic of Digital Gold

Compared to gold's 2% annual supply growth, Bitcoin has effectively entered a deflationary state due to losses. A Bitwise report indicates that by 2025, institutions will be vying not just for Bitcoin, but for "the irreplaceable blockchain genesis block asset."

Four. The Collision of the New Ecosystem and Scarcity

Innovations in the Bitcoin ecosystem are also reshaping its scarcity. The BRC-20 token standard, introduced in 2023, is based on Bitcoin's ordinal technology and allows data to be engraved on a single "satoshi" (the smallest unit of Bitcoin), creating a unique digital asset.

This innovation has a dual impact:

• Positive side: It expands the concept of Bitcoin as "digital gold", realizes tokenization, and attracts a wider user base

• Challenges: It triggers a surge in Bitcoin network transactions, pushes up transaction fees, and intensifies competition for block space

The prosperity of BRC-20 further highlights the status of the Bitcoin mainnet as a scarce digital space. With the development of Bitcoin Layer2 solutions (such as Lightning Network and Stacks), every byte on the main chain becomes more precious.

1. Scarcity: The cornerstone of Bitcoin's value

The scarcity created by Bitcoin loss and halving provides a solid foundation for its status as "digital gold":

2. Permanent supply reduction:

• Lost Bitcoins are equivalent to permanent destruction, irreversibly reducing the total circulation

• Unlike HODLers who may sell in the future, lost Bitcoins will never return to the market

3. Impact of market dynamics:

• A reduction in available supply drives up value when demand is stable or growing