Old Bitcoin wallets keep waking up: How many of the 1.8 million ‘lost’ coins are really gone?

As the chart above reveals, hundreds of thousands of “lost” Bitcoins—defined by Chainalysis as those that haven’t stirred since 2014—have moved wallets in the last few years. The chart depicts the net change in the total amount of Bitcoins held in wallets of four different sizes, including those holding fewer than 50 and those with 1,000 or more. Unsurprisingly, the “fewer than 50” category accounts for the vast majority of old Bitcoin wallets as the graphic below shows.

Both graphics show a disproportionate number of old wallets that contain exactly 50 Bitcoins. This reflects the fact that in the currency’s early days, the block reward—the prize awarded to miners who added a block to the blockchain—was 50. (Since then, a series of “halving” events have resulted in the reward being cut to 25, 12.5, 6.25, and just last week to 3.25 Bitcoins.)

Now that the number of Bitcoins mined each day is less than 10% of what it once was, the wallets from long ago—many of them holding sizable fortunes—may attract greater interest.

$121 billion

Those who take only a casual interest in crypto may be surprised to learn there are around 1.75 Bitcoin wallets, many of which contain significant amounts of money, that have been totally inactive for a decade or more. As of mid-March, these wallets (which don’t include the 30,000 or so wallets associated with Bitcoin creator Satoshi Nakamoto) contained 1,798,681 Bitcoins that are today worth around $121 billion.

These 1.8 million “lost” coins account for around 8.5% of the total supply of 21 million—93% of which have already been mined—that will ever exist.

In most cases, it’s impossible to know for sure what became of a given wallet, but it’s a safe bet many are indeed gone forever. In Bitcoin’s early days, the currency was all but worthless—it only crossed the $1 mark in 2011—so many people who received it may have forgotten about it entirely or not bothered to safeguard the private keys needed to open a wallet. Misplaced keys would have been especially common in the pre-2012 era when companies like Coinbase, which hold private keys on users’ behalf, did not exist.

But not all of the dormant wallets are lost or abandoned. Bitcoin is famous for its large collection of “HODLers” who vow to never sell their supply (or to at least hold on to it for a very long time). It is these people—those with “diamond hands,” in crypto parlance—who are responsible for the small number of wallets that have become active since 2018.

So why are they selling? An analysis of newly active wallets by Chainalysis found that, on seven occasions, there was a statistically significant correlation between Bitcoin price changes and wallet activity in a given week. Most times, however, an uptick in wallet activity did not appear to correlate with an obvious external event.

Overall, the pace of old wallets waking has been fairly predictable. The week of March 25, for example, showed a typical pattern where 172 long-dormant wallets became active—169 of which contained fewer than 50 Bitcoins, and one of which had over 1,000. Many Bitcoin owners own more than one wallet, especially those who came to the scene before 2014, so the number of people who activated wallets that week is likely far below 172.

The Satoshi wild card

The Chainalysis survey data suggests that old wallets will continue to wake up at a steady but slowing pace until the number of lost Bitcoins becomes more or less fixed—perhaps around 1.5 million.

One can imagine, though, a future scenario where the rate of wallets waking up accelerates. Namely, that might occur when pre-2014 HODLers grow old and bequeath long-held Bitcoin to their children, who in turn sell them. Such an event, however, would still be decades away since most early Bitcoiners were in their twenties or thirties.

Finally, as noted above, the “lost” Bitcoin figures exclude the wallets controlled by Satoshi, who owns around 1.1 million Bitcoins by Chainalysis’s estimates. A recent Fortune report on Satoshi’s fortune—worth around $75 billion—found that most longtime crypto watchers believe the Bitcoin creator faded into myth long ago, and that it’s extremely unlikely they will ever touch their wallets again.

If this is the case, the total number of missing Bitcoins is currently around 2.9 million—nearly 14% of the total supply. In the long term, the best guess is these Bitcoins will become the digital version of lost treasure that is never found.