Analysis Reveals Self-Custody Losses Exceed Exchange Losses in Bitcoin
A recent analysis by River has shown that the amount of Bitcoin lost through self-custody surpasses the amount lost on exchanges. The firm estimated that over $1.5 billion worth of Bitcoin, equivalent to approximately 1.6 million Bitcoin, had become inaccessible due to mismanagement in self-custody. This surpasses the $1.1 billion lost in exchange-related incidents like the Mt. Gox hack and FTX’s bankruptcy, which accounted for around 1.2 million Bitcoin.
Methodology Used by River
River employed a detailed methodology to arrive at these estimates, taking into account wallet inactivity over various timeframes. By using probabilistic estimates, they determined the likelihood of funds being permanently inaccessible.
Key Findings
- Wallets dormant for over ten years, excluding those associated with Satoshi, represented the largest share of estimated losses.
- Wallets inactive for shorter periods showed significantly lower probabilities of loss.
According to River, their refined estimate of 1.6 million lost BTC offers a more realistic perspective compared to previous studies. For example, the 2020 Chainalysis report suggested that 3.7 million BTC were lost, indicating a discrepancy in earlier estimates.
