How many Bitcoins are irretrievably lost and what does that mean? – Mish Talk
How many Bitcoins will there be?
The maximum number of Bitcoins is 21 million. But if 30 percent of them are lost, the actual available supply of usable Bitcoins is 21 – (.3 * 21) = 14.7 million.
That estimate is probably in the ballpark. Estimates of lost keys are usually 20 to 30 percent.
That would make the final available supply of 14.7 million to 16.8 million, not 21 million.
How many remain to be mined?
There were 19,124,681 bitcoins in existence in August 2022.
That means approximately 1,875,319 remain to be mined.
What does this mean?
One way of looking at things is that there is less chance of a large wave of whale dumping if 30 percent of the coins are lost.
Another way of looking at things is that a large percentage of Bitcoin holders are underwater.
Current estimates are that about 50 percent of Bitcoins are below the price people paid. I don’t think it takes into account lost Bitcoins. If correct, the percentage of people underwater is much higher than 50 percent.
A decent percentage of those underwater will probably want to sell if they can ever get back to even.
Meanwhile, the number of people who haven’t heard of Bitcoin has dropped to about zero.
In 2012, the amount of people who can eventually become true core believers was much higher than today.
More importantly, the amount of big money buyers is likely to have fallen off the cliff.
Price set at the margin
The price of Bitcoin, like everything else, is set at the margin.
And if the big money believers are already in, a whale selling 100 or even 10 Bitcoins will dwarf thousands of buyers of tiny fractions of Bitcoin.
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OK, there is a large pool of buyers who do not own Bitcoin. So what? I hear the same nonsense about gold. It goes like this: If only X percent of the people who don’t have gold buy gold, the price will go to the moon.
Correct. However, there is no likelihood of that ever happening. The same applies to Bitcoin.
And it is important to note that until 21 million bitcoins are mined, the supply of Bitcoin increases every day. The rate of increase in the supply of Bitcoin is shrinking, but the supply (minus lost coins) is always rising.
What about taxes?
The hyped event regarding Colorado was both wrong and irrelevant. Ohio tried this and it certainly wasn’t worth the effort to do so.
Since the transaction is net negative relative to the price, Bitcoin advocates should logically be happy with the failure of people paying taxes in Bitcoin.
Important points
- The pool of qualified buyers is constantly shrinking.
- A large percentage of people will never own either Bitcoin or gold.
- What big money sitting on the sidelines is going to buy Bitcoin? Please don’t tell me big central banks because the idea is ridiculous.
- The pool of major buyers is probably exhausted already.
- Price volatility makes Bitcoin useless as money, but a very useful speculative toy.
- Few if any will withdraw their Bitcoin to pay taxes, buy cars, etc. But when they do, it is a net negative for the price. New buyers must be found in the margin when someone withdraws money.
In the short term, the Fed is looking to squash speculation. Bitcoin has been crushed. It has risen from the ashes before as endless Twitter feeds show.
But Bitcoin’s entire life until recently has been in an environment of ever-increasing liquidity and QE.
Now we have austerity. It will turn around, but when? Meanwhile, the pool of qualified speculators is shrinking along with sentiment against speculation.
The sentiment against speculation is wiped out and it will not turn on a dime no matter what the purported benefit of Bitcoin may be.
Add it all up and the message that it will only be 14.7 million to 16.8 million is meaningless trifle.
This post originates from MishTalk.Com.
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