Bitcoin with exposed public keys grows 3.5 times faster than new supply

Divide 222,000 newly exposed BTC by 64,000 BTC of new issuance and the ratio comes out near 3.5 to one ^[3][14]. New coins cannot account for that. Coins already in circulation are moving into addresses whose public keys sit on the ledger. Many address formats keep the public key behind a hash until the owner spends, and once revealed it stays visible permanently ^[10]. Exchanges supplied 123,000 BTC of the increase ^[4], about 55% ^[15]. That is a majority, and a thin one. The other 99,000 BTC came from everyone else, and that remainder alone outran new supply by roughly one and a half times ^[16].

The rates differ more than the amounts. Exchange balances behind visible keys grew about 7.4% in the five months since May, from roughly 1.67 million to 1.79 million BTC ^[2][17]. The roughly 4.47 million exposed BTC held elsewhere grew about 2% ^[18]. Exchanges hold about 29% of the exposed total ^[19] and are adding to it at more than three times the pace of the rest ^[23].

Across custodians the exposed share runs from 2% to 100%. Coinbase keeps 10% of its holdings behind exposed keys and Binance 83% ^[5], a gap of about eight times ^[21]. In the figures CoinDesk reported, Fidelity holds about 375,000 BTC with 2% exposed, or roughly 7,500 BTC ^[6][20], while Grayscale is at 49%, Revolut at 99% and Robinhood at 100% ^[6]. US, UK and El Salvador government holdings show no exposure under Glassnode's method ^[11]. Keys become visible through address reuse or directly in some output types, including early pay-to-public-key outputs and Taproot ^[9]. The sources do not split the 123,000 BTC exchange increase by cause. A venue reusing deposit addresses and one that moved reserves into Taproot outputs count the same in this metric.

CoinDesk notes that the figures measure address usage, not immediate security risk, and that no practical attack on bitcoin or ether wallet keys has been demonstrated ^[8]. On that reading the climb costs holders nothing until a capable quantum computer or a mathematical breakthrough exists ^[9]. Ethereum researcher Justin Drake puts the clock closer. He urged the industry to prepare for "bunker mode" and said that in a worst case AI could uncover a shortcut to breaking wallet cryptography "in months, not years," before quantum computers arrive ^[12].

I think the exchange slice is a decision being deferred. Crypto Briefing describes migrating reserves to fresh addresses as an operational task, not a protocol overhaul ^[13], so Binance's 83% could fall without any change to Bitcoin itself, and until a venue does that work its customers carry the exposure. The counter-thesis is that exchange hygiene treats the smaller pile. About 4.47 million exposed BTC sit outside exchanges ^[18], and Crypto Briefing notes that a meaningful share may belong to owners who will never move them because keys are lost or holders are inactive, coins no one else can migrate ^[24].

The view fails if exchange exposure falls and the total share still climbs past 31.2% ^[1]. That share has risen 1 percentage point since May, out of the 5 to 6 points it has gained since the 2023 low ^[22].