Search for Satoshi's Mysterious Bitcoin (BTC) Stash Continues with BitMEX Analysis

Few people are surrounded by as much mystery as Bitcoin’s creator, whose legacy comprises the most popular blockchain project in the world and a manifesto that gave rise to an ideology centered on digital money. Satoshi Nakamoto has left practically no clues about himself, but people keep digging relentlessly through troves of data to find some sign pointing to his identity or a glimpse of what many suspect to be his enormous Bitcoin stash.

BitMEX is the latest entity to start tracking down Satoshi Nakamoto’s purported wealth by looking at a previous analysis by Sergio Demian Lerner, who first came up with the figure of one million BTC.

Looking at the Lerner hypothesis

In mid-April 2013, Lerner showed the world his first analysis of the Bitcoin creator’s possible movements in the blockchain up to a year after its genesis block was mined. He suggested Nakamoto may have mined “almost alone” during that period due to a constant hash rate of 7 Mh/s.

Users in the forum where he posted immediately shot down the assumption, saying that network hashrate calculations based on the bootstrap.dat file he used for his analysis were not precise enough to warrant such a conclusion.

Within a couple of days, Lerner performed a more in-depth analysis of the situation and put a figure to Nakamoto’s wealth: roughly a million BTC.

This time, he took a fingerprint of the Bitcoin network’s mining history between January 3, 2009 and January 25, 2010, demonstrating that one particular miner was working during the period and also mined the first block after the genesis block, representing the activity as black dots on the graph.

“I can’t assure with 100% certainty that all the black dots are owned by Satoshi, but almost all are owned by a single entity, and that entity began mining right from block 1, and with the same performance as the genesis block,” he wrote.

This was the first thorough analysis of what is believed to be Satoshi Nakamoto’s mining activity in the early days of Bitcoin.

What does BitMEX add?

Although BitMEX’s analysis mostly agrees with Lerner’s 2013 hypothesis, there are some points where the exchange begs to differ. The break-off is in August 2009, where BitMEX loses confidence that the extranonce pattern continues to belong to Satoshi Nakamoto.

“After August 2009, the pattern breaks down to some extent. The gradient of the slopes varies considerably… At the same time, the height of the slopes is inconsistent and there are many large gaps between them. Therefore although the image still looks compelling, the evidence that the miner is one entity is somewhat weak, in our view,” BitMEX wrote.

After analyzing the nonces per block in each discovery, BitMEX concluded it could only account for 740,750 of the estimated one million Bitcoins. The evidence for the other 227,650 BTC in the original 2013 estimate is considered too weak to confidently associate them with the creator.

While BitMEX believes “this is all too much to be a coincidence,” it also said that extranonce analysis is “essentially useless” when it comes to estimating the exact number of coins the dominant miner mined during 2009.

“In conclusion, although there is strong evidence of a dominant miner in 2009, we think the evidence is far less robust than many have assumed. Although a picture is worth a thousand words, sometimes pictures can be a little misleading. Even if one is convinced, the evidence only supports the claim that the dominant miner may have generated significantly less than a million Bitcoin in our view. Perhaps 600,000 to 700,000 Bitcoin is a better estimate,” BitMEX wrote.