Is it Even Possible to Spend a Stash of 1-sat UTXOs?
As the value of Bitcoin continues to fluctuate wildly, many investors have been left wondering what happens when they hold large quantities of Bitcoin. Specifically, how do you spend a stash of just 100 million or 10 million individual units (UTXOs) on average transaction costs, fees, and market volatility?
To illustrate this concept, let’s consider an extreme example: imagine owning 1 BTC with 100 million UTXOs of 1 sat each. In other words, you have a massive stash of Bitcoin with approximately 1 quintillion (10^15) individual units.
The Cost of Spending
If we assume that the average cost of spending a single unit of Bitcoin is around $30 USD (as of March 2023), and considering the fees associated with transactions, the total transaction costs would be staggering:
- Spending 1 BTC: Assuming an average price of $31.50 per BTC, it would take approximately
32 millionindividual units to spend one unit of Bitcoin.
- Buying and selling: When buying or selling UTXOs, you need to pay fees for the transaction. These can range from a few cents to several dollars per transaction, depending on the exchange or platform used.
Let’s consider an example scenario where we buy 1 million units of 100 sat each at $2 per unit:
Buying costs: $20,000 (1,000,000 units \ $2 per unit)
- Transaction fees: Assuming a $5 transaction fee, you would need to pay an additional $25,000.
- Spending total: With the cost of buying and transaction fees included, your total spending amount would be approximately
$45,000.
This represents a significant portion of the estimated value of your 1 BTC stash. To put this into perspective, if you were to spend all 100 million units at an average price of $30 per unit, it would take approximately
3.33 billion transactions, each costing around $10 in fees.
The Verdict
Spending a large quantity of Bitcoin can be extremely costly and time-consuming due to the high transaction fees associated with buying and selling individual UTXOs. This scenario illustrates how even with an abundance of cryptocurrency, managing your stash effectively is crucial for minimizing costs and staying within budget.