Abstract: We look at the recent controversy related to the potential removal of the OP_Return policy limit in Bitcoin Core. We reflect on the economic reality, that miners want to produce the most profitable blocks, regardless of whether the blocks contain spam or not. We note that if a spammer wants to outbid other users, they can. As evidence for this, we note that miners have received over 7,000 bitcoin in fees related to Ordinals. We argue that those running nodes may want an effective mempool, one that more reliably predicts what miners may mine, to help users receive new blocks faster and determine appropriate fees for their transactions. We are therefore somewhat supportive of removing the limit.

Many regard these images as spam. In our view, in this context, we like to think about spam from the perspective of the intent of the person creating the transactions. Are they trying to deliberately cause harm to others or are they trying to benefit personally? With this in mind, we do not think storing images in the blockchain is always spam, as the people doing this seem to mostly be doing it for their personal enjoyment or to speculate and to try to profit.

If larger OP_Return outputs are kept non-standard but people still want to use them anyway, miners will just launch businesses which receive these transactions directly, bypassing the public memory pool. [...] This would mean that the differences between the transactions in the blocks miners produce and what users expect to see, will increase. This could break technologies like Compact blocks, which helps blocks propagate across the network faster, by removing the need for nodes to download transactions twice (once for the mempool and again once it’s in a block). It is probably sensible for Bitcoin Core to preemptively remove the limit to make sure Compact blocks do not break. If it does break and block propagation delays increase, then this could benefit larger miners and larger pools, at the expense of smaller miners, increasing mining centralisation.

If one assumes that the blockchain is full, then increased usage of OP_Return actually makes it easier to run a full node. Remember, OP_Return doesn’t benefit from the witness discount, therefore the maximum size of a block consisting of OP_Return outputs is 1MB, far smaller than the 4MB maximum. At the same time, the OP_Return outputs do not bloat the UTXO set.