Is it even possible to spend a 1-UTXO stash?
As Bitcoin’s value continues to fluctuate wildly, many investors are wondering what happens when you own a large amount of Bitcoin. Specifically, how can you spend only 100 million or 10 million units (UTXOs), given average transaction costs, fees, and market volatility?
To illustrate this idea, let’s take an extreme example: imagine that you own 1 BTC with 100 million UTXOs, each worth 1 sat. In other words, you have a huge Bitcoin supply, about 1 quintillion (10^15) units.
Issuance Cost
If we assume that the average cost of issuing a single unit of Bitcoin is around $30 (as of March 2023) and take into account the fees associated with transactions, the total transaction cost would be staggering:
- To issue 1 BTC: Assuming an average price per BTC of $31.50, it would take around
32 million unique units to issue one unit of Bitcoin.
- Buying and Selling: When you buy or sell UTXOs, you will have to pay transaction fees. These can range from a few cents to a few dollars per transaction, depending on the exchange or platform you use.
Let’s look at an example scenario where we buy 1 million 100 SATs at $2 per unit:
Purchase Costs: $20,000 (1,000,000 units \ $2 per unit)
- Transaction Fees: Assuming a $5 transaction fee, you’ll have to pay an additional $25,000.
- Total Costs
: After purchase costs and transaction fees, the total cost will be around
$45,000.
This is a significant portion of the estimated value of 1 BTC. To put that in perspective, if you were to issue all 100 million at an average unit price of $30, you would need around
3.33 billion transactions, each costing around $10.
Verdict
Spending large amounts of Bitcoin can be extremely costly and time-consuming due to the high transaction fees associated with buying and selling individual UTXOs. This scenario shows that even with large amounts of cryptocurrency, managing your inventory efficiently is key to minimizing costs and staying within budget.