A system is provided for electronic data compression by automated time-dependent compression algorithm. In particular, the system may track instances in which a particular dataset is used, copied, or accessed over time. For certain datasets (e.g., datasets that have not been accessed for a threshold amount of time), the system may use a time-based compression algorithm that progressively removes the least significant bits of such datasets as time passes. The compression of the datasets may continue until the system detects that further compression would cause the dataset to be unreadable or unrecoverable. In this way, the system may minimize the computing resources allocated to storing datasets that are not frequently accessed.