Bitcoin News Today: Bitcoin’s Supply Shrinks as Lost Coins Outpace Mining Output

Bitcoin’s effective circulating supply is shrinking as the rate of lost coins outpaces new issuance, signaling an acceleration in its deflationary nature. According to recent estimates from on-chain analytics firms and reports from institutions like Fidelity Digital Assets and River Financial, the number of dormant or permanently lost Bitcoin is growing faster than the supply being added through mining. As of 2025, an estimated 2.3 to 4 million BTC—between 11 and 18 percent of the 21 million coin cap—are believed to be lost or permanently inactive due to forgotten private keys, hardware failures, and lack of inheritance planning. By comparison, miners are currently adding approximately 450 BTC per day to the supply, a decline from prior years due to the 2024 halving event, which reduced the block reward to 3.125 BTC [1].

This deflationary trend is reinforced by the rising volume of “ancient” coins—those that have not moved on-chain for over 10 years. Fidelity Digital Assets reported that over 566 BTC per day are aging into this category, exceeding the daily mining output. The imbalance between dormant coins and new supply highlights the diminishing role of miner rewards in expanding Bitcoin’s availability, shifting the supply dynamics toward wallet behavior and long-term holder decisions [1]. On-chain analytics firms such as Chainalysis and Glassnode use clustering algorithms and UTXO age analysis to estimate the likelihood that dormant coins are lost, though these assessments remain probabilistic due to the pseudonymous nature of the network.

Not all lost coins are the result of user error. A significant portion, including the 1.1 million BTC mined by Bitcoin’s creator, Satoshi Nakamoto, have never been moved since their initial creation. These, along with other unclaimed mining rewards and coins sent to burn addresses—wallets with no known private key—contribute to Bitcoin’s shrinking effective supply. Additionally, real-world cases such as James Howells discarding a hard drive with 8,000 BTC, Stefan Thomas forgetting the password to an IronKey with 7,000+ BTC, and the QuadrigaCX founder, Gerry Cotten, passing away without transferring access to over 1,000 BTC, further illustrate the irreversible nature of Bitcoin loss [1]. These incidents, while isolated, underscore the importance of proper custodial and inheritance planning, especially as Bitcoin's value continues to rise.

The growing concern is not only about lost coins but also the mortality of early holders who did not plan for the transfer of their assets. Legal experts warn that without proper estate planning, millions of coins could become inaccessible due to the deaths of their owners. A 2020 survey by the Cremation Institute found that while nearly 90% of crypto holders were aware of the issue, only a small fraction had formal plans in place [1]. With Bitcoin’s annual issuance projected to drop to around 82,000 BTC by 2028, the risk of annual losses due to human error could soon outpace new supply, further tightening the available supply in the market.

As Bitcoin moves closer to its 21 million coin cap, the compounding effects of lost coins and decreasing issuance are amplifying its scarcity. Investors who hold private keys directly face a unique risk: if their family cannot locate or access the wallet, the coins are effectively gone forever. For those using ETFs or regulated custodians, inheritance planning is more straightforward. However, the overall trend reinforces the long-term deflationary trajectory of Bitcoin, making supply-side constraints a key factor in its value proposition [1]. As the market increasingly recognizes this dynamic, the importance of secure key management and estate planning is becoming essential for long-term holders.

Source:

[1] Bitcoin's Invisible Burn: Lost Coins Outpace New Supply - BitGo (https://www.bitgo.com/resources/blog/bitcoins-invisible-burn-lost-coins-outpace-new-supply/)

[2] I Asked ChatGPT To Explain Bitcoin to Me Like I'm 12 (https://www.nasdaq.com/articles/i-asked-chatgpt-explain-bitcoin-me-im-12-heres-what-it-said)