Question of Consolidating UTXOs

[alastantiger]

I have 12 Unspent Transaction Outputs (UTXOs) from dollar cost averaging every month for 12 months since 2022. What is the best way to consolidate these 12 UTXOs into a single UTXO, to take advantage of reduced transaction fees and what else should I know before proceeding?

Thank you.

[1714565930]

1714565930

[Charles-Tim]

Send all at once to a single address, using 7 sat/vbyte.

It is worth knowing that if you know you want to be consolidating, it is better you are using pay-to-taproot address (bc1p) to receive and send. This will make the consolidating fee cheaper when you are consolidating using the pay-to-taproot address. Pay-to-taproot addresses is the best to use.

But if you are sending to multiple addresses, just like campaign managers on this forum, bc1q addresses (segwit version 0) are better.

[Zaguru12]

To make Charles-Tim opinion much simpler, since you have multiple outputs and you are consolidating to a single address then you would have to create the new address as a taproot address, although not all wallets support it currently so I would say you should look into everything about taproot addresses. Here is a thread by Charles-Tim on how to do that.

what else should I know before proceeding?

Read about everything you need on this thread created by LoyceV on consolidation of little inputs. You can ask questions on the thread on where you are stuck.

[un_rank]

You can possibly have a fee of 4.5 to 5 sats/vbyte^[1] confirmed if you are not in a hurry, which you do not have to be when consolidating inputs.

what else should I know before proceeding?

Read the links above and switch to an address which saves up on fees to increase your chances of paying a lot less than you ordinarily would have to.
Also use a wallet that allows RBF, so you can adjust the fees slightly after making the transaction if the need arises.

[1] https://jochen-hoenicke.de/queue/#BTC,1w,fee

- Jay -

[LoyceV]

Send all at once to a single address, using 7 sat/vbyte.

That's more than necessary.

I have 12 Unspent Transaction Outputs (UTXOs) from dollar cost averaging every month for 12 months since 2022. What is the best way to consolidate these 12 UTXOs into a single UTXO, to take advantage of reduced transaction fees and what else should I know before proceeding?

Saving fees starts when you withdraw from exchanges: what percentage have you paid in withdrawal fees in the past year? If you DCA for instance $1000 per month, I get that you want to withdraw it. But if you buy, say, $50 per month, and pay, say, $5 to withdraw, there's room for improvement.

Since you're using DCA, I assume you plan to hodl long-term. In the past year, low fees were quite common until March (ignore the few drops where Jochen's mempool was wiped). In the past month, anything with around 3.1 sat/vbyte would have been confirmed. So if you're not in a rush, go low. Or, and that's what I'm doing: wait. I have a few dozen inputs to consolidate, but I'm in no rush to do so. I'll do it when mempool clears far enough, so I can use 1.1 sat/byte again.

[Charles-Tim]

Send all at once to a single address, using 7 sat/vbyte.

That's more than necessary.

I only give a fee that can make his consolidating transaction to be confirmed very fast. But if he wants to wait for long before confirmation, he can use lower fee rate.

With bc1q addresses, consolidating 12 inputs with a fee rate of 7 sat/vbyte will take 6006 sat and if bitcoin is at $29100, the fee is $1.74
With bc1p addresses, consolidating 12 inputs with a fee rate of 7 sat/vbyte will take 5208 sat and if bitcoin is at $29100, the fee is $1.51

If alastantiger see the fee to be higher, he can use a lower fee but making sure the wallet supports replace-by-fee in case he changed his mind.

[n0nce]

I have 12 Unspent Transaction Outputs (UTXOs) from dollar cost averaging every month for 12 months since 2022. What is the best way to consolidate these 12 UTXOs into a single UTXO, to take advantage of reduced transaction fees and what else should I know before proceeding?

Thank you.

If you want advice regarding privacy as well, it would help to know whether these UTXOs have been received on the same address or if you used a fresh address every time.
In case that you did, you gained some privacy by doing so, but would lose it when consolidating.

One idea, if you are planning to consolidate a bunch of smaller inputs, is to submarine swap them into a Lightning channel of yours, e.g. using Boltz.

[NotATether]

With bc1q addresses, consolidating 12 inputs with a fee rate of 7 sat/vbyte will take 6006 sat and if bitcoin is at $29100, the fee is $1.74
With bc1p addresses, consolidating 12 inputs with a fee rate of 7 sat/vbyte will take 5208 sat and if bitcoin is at $29100, the fee is $1.51

Taproot does not discount additional fields from fee calculation like Segwit did, so how come the fee is significantly lower than for Segwit?

AFAIK, the witness data for spending Taproot inputs should not be smaller than that for Segwit inputs (due to the nature of Taproot placing hashes in order to prove a leaf of a script has been unlocked). So at least to be it is quite strange to see that native segwit addresses are more expensive.

[un_rank]

AFAIK, the witness data for spending Taproot inputs should not be smaller than that for Segwit inputs (due to the nature of Taproot placing hashes in order to prove a leaf of a script has been unlocked). So at least to be it is quite strange to see that native segwit addresses are more expensive.

Native Segwit is cheaper for majority of transactions, except in cases where there is a high number of inputs and low number of outputs, like when consolidating many smaller UTXOs into a single transaction. Charles-Tim explains more in this topic^[1]
Taproot is also essentially a version (1) of Segwit.

[1] https://bitcointalk.org/index.php?topic=5370591

- Jay -

[Charles-Tim]

Taproot does not discount additional fields from fee calculation like Segwit did, so how come the fee is significantly lower than for Segwit?

Native segwit transactions have lower fee if a transaction has the same input counts and output counts. Also if paying to many addresses, the native segwit transaction fee becomes more lower than if compared to pay-to-taproot. Only when pay-to-taproot has lower fee is when the transaction has higher input counts just like when you want to consolidate. I mean while comparing single sig wallet.

[alastantiger]

Send all at once to a single address, using 7 sat/vbyte.

It is worth knowing that if you know you want to be consolidating, it is better you are using pay-to-taproot address (bc1p) to receive and send. This will make the consolidating fee cheaper when you are consolidating using the pay-to-taproot address. Pay-to-taproot addresses is the best to use.

But if you are sending to multiple addresses, just like campaign managers on this forum, bc1q addresses (segwit version 0) are better.

This is so true. I referred to your thread as mentioned by Zaguru12 and there the answer to my question was lying. In that thread you specifically mentioned that  pay-to-taproot address is a good option for consolidation especially for someone like me that has about 12 UTXOs.

I would also stick to LoyceV advice to wait since I am not in a rush. I'll be watching the Mempool.

[o_e_l_e_o]

Taproot does not discount additional fields from fee calculation like Segwit did, so how come the fee is significantly lower than for Segwit?

A taproot input is smaller than a P2WPKH input, but a taproot output is larger than a P2WPKH output.

A standard segwit v0 P2WPKH has 107 bytes of witness data, comprised of 1 byte item count, 1 byte signature length, 71 byte signature, 1 byte pubkey length, and 33 byte pubkey.
A taproot input will have 65 bytes, comprised of 1 byte signature length, and 64 byte signature.
This difference of 42 bytes is witness data and results in a taproot input being 10.5 vbytes smaller.

A P2WPKH output will be 21 bytes long, comprised of OP_0 and the 20 byte pubkeyhash.
A P2TR output will be 33 bytes long, comprised of OP_1 and the 32 byte output key.
This difference of 12 bytes is not witness data and results in a taproot output being 12 vbytes larger.

Therefore whether a given transaction is cheaper if using all P2WPKH addresses or all P2TR addresses will depend on the exact ratio of inputs and outputs.

[Cricktor]

I have a few dozen inputs to consolidate, but I'm in no rush to do so. I'll do it when mempool clears far enough, so I can use 1.1 sat/byte again.

I'm passionate too to use an as low as possible fee rate for my transactions. Looking back at the past months of mempool madness, I'm curious to why you believe that we'll see again mempool states that will allow such low fee rates. Not yet sure, if I can say, I almost lost faith.

This Ordinals, inscriptions or BRC20 shit doesn't seem to fade out. It's my habit to almost daily take a look at the pending transactions state, be it on https://mempool.space or https://mempool.jhoenicke.de/#BTC,1w,weight,0. Sadly, I had to get used to seeing a few hundred thousands of pending transactions as "normality". That makes fee rates near 1-2 sat/vB almost impossible.

[Z-tight]

This Ordinals, inscriptions or BRC20 shit doesn't seem to fade out. It's my habit to almost daily take a look at the pending transactions state, be it on https://mempool.space or https://mempool.jhoenicke.de/#BTC,1w,weight,0. Sadly, I had to get used to seeing a few hundred thousands of pending transactions as "normality". That makes fee rates near 1-2 sat/vB almost impossible.

I don't think anyone expected it to fade out quickly and for things to return to "normal" so fast, but tx fee rate is much better than it was few months ago, so i think it is gradually fading out. It is true that there are usually thousands of pending tx's in the mempool, sometimes over 400k like it is right now, but these days with a fee rate of 6-7 sats/vbyte, a tx can get higher priority and be confirmed asap, unlike when the BRC20 mess began; so probably in a few months time, 1-2-3 sats/vbyte could be possible.

[LoyceV]

I'm curious to why you believe that we'll see again mempool states that will allow such low fee rates. Not yet sure, if I can say, I almost lost faith.

The same happened in 2017, and high fees didn't last. I'm not in a rush for those consolidations, if it takes a year, that's okay.

This Ordinals, inscriptions or BRC20 shit doesn't seem to fade out. It's my habit to almost daily take a look at the pending transactions state, be it on https://mempool.space or https://mempool.jhoenicke.de/#BTC,1w,weight,0. Sadly, I had to get used to seeing a few hundred thousands of pending transactions as "normality". That makes fee rates near 1-2 sat/vB almost impossible.

Of course it will disappear, just like all the other money grabbing schemes before this. That happens the moment there's nobody left to throw more money at the hype, or when they come up with the next money grabbing scheme. Give it time.

[o_e_l_e_o]

This Ordinals, inscriptions or BRC20 shit doesn't seem to fade out.

It's barely been a couple of months

As Loyce says, there was a period of over 6 months at the end of 2017 and start of 2018 where you couldn't get 1 sat/vbyte transactions mined, and the peak fees then were much higher than they were a couple of months ago as well. Go and take a look at literally any of the heavily shilled ICOs which were launched during that ICO craze, and the few which still exist are down >99% from their peak during that time.

The ordinal craze is already going the same way. The hype is over. The prices are falling. 3 months ago a fast fee was around 30 sats/vybte. 6 weeks ago it was around 17 sats/vbyte. Today it's around 7 sats/vbytes.

We just have to hope that the next ICO/DeFi/NFT/Ordinal pump and dump scam isn't built directly on top of bitcoin.

[LoyceV]

We just have to hope that the next ICO/DeFi/NFT/Ordinal pump and dump scam isn't built directly on top of bitcoin.

They should use the power of the Lightning Network. How great would it be: one centrally controlled token-channel and they can do all the BS they want without bugging the rest of the Bitcoin users (and at the same time promoting the use of LN (although not in the best possible way)).