A prominent cryptocurrency analyst, Timothy Peterson, has ignited a debate by asserting that approximately 1,500 bitcoins are irretrievably lost every day, meaning that less than 14 million BTC will ever circulate. This figure starkly contrasts with estimates from organizations like Markets.bitcoin.com, which place the circulating supply at around 18.5 million coins.
Research Unveils 4% Annual Loss of Available Supply
Peterson, CAIA Manager at Cane Island Alternative Advisors, supports his claim by highlighting that the daily loss of 1,500 BTC dwarfs the 900 new bitcoins mined each day. He references a research note published by his firm earlier this year, which introduces the term “irretrievably lost” to the bitcoin lexicon. The note defines irretrievably lost coins as “money that is gone, no longer part of any economy anywhere,” and unable to be transacted, with recovery costs exceeding the value obtained.
Using their proprietary methodology, the team estimated that since 2010, about 4% of the Available Supply of bitcoin has been lost each year. This puts the current Available Supply at approximately 13.9 million coins, well below the 18.3 million Total Supply figure commonly publicized. Consequently, it implies that about 28% of all bitcoins have been irretrievably lost. The research cites earlier studies on the same subject by Ratliff (2014) and Chainalysis (2017).
Industry Reactions and Counterarguments
Peterson’s claims, first shared via a tweet on September 14, 2020, sparked significant pushback. Some bitcoiners, like Bitcoin Rabbi, argued that the daily loss figure of 1,500 is too high. In response, Peterson pointed to a Chainalysis report which, upon calculation, suggests approximately 1,900 bitcoins were lost per day as of December 2017, making his estimate more conservative. However, the research note does not provide a direct link to that Chainalysis report.
Another Twitter user questioned the implications, noting that if the loss rate continues, all 21 million bitcoins would be gone within 30 years. Despite the skepticism, many experts agree that the actual circulating supply is likely lower than the often-reported 18.5 million. Irreversible transactions and misplaced private keys contribute to permanent losses, as seen in high-profile cases like a wallet containing 69,370 BTC that hackers have been unable to access for years.
Note: The debate underscores the challenge of accurately estimating bitcoin’s true circulating supply, which has direct implications for market valuation, scarcity dynamics, and long-term price forecasts.