BitMEX Supports Removing Bitcoin’s OP_Return Limit for Enhanced Mempool Efficiency

BitMEX has expressed support for the removal of Bitcoin’s OP_Return limit, citing potential enhancements to mempool efficiency. This stance comes amidst a broader debate within the cryptocurrency community regarding the implications of such a change. The OP_Return output type in Bitcoin Core is designed to store arbitrary data within the blockchain, but it currently faces size restrictions that prevent nodes from propagating transactions exceeding the limit.

Proponents of removing the OP_Return limit, such as BitMEX Research, argue that this change could make Bitcoin’s mempool more functional. By allowing users to set appropriate transaction fees, the network could better accommodate a variety of transactions, including non-financial data like images and text. This perspective is supported by the rising popularity of initiatives like Ordinals, which have seen significant transaction fees spent on storing images within the blockchain.

However, opponents of the change worry about potential unintended consequences. They argue that limiting the size of the blockchain helps prevent spam and unnecessary bloat, ensuring that Bitcoin remains focused on financial transactions. The debate highlights the tension between maintaining Bitcoin’s core functionality and adapting to new use cases that could drive further innovation and adoption.

BitMEX Research also points out that Bitcoin miners, driven by profit, will always seek to maximize their revenue. With the rise of Ordinals and similar initiatives, miners have found new ways to generate fees through non-standard transactions. Removing the OP_Return limit could align the mempool with the economic realities of blockspace markets, allowing miners to include non-financial transactions if they generate higher fees. This could help maintain faster block propagation and reduce incentives for miners to adopt private, centralizing alternatives.

Node runners, who operate the decentralized nodes that validate Bitcoin transactions, would also benefit from the removal of the OP_Return limit. By eliminating the restriction, Bitcoin’s blockchain would be better equipped to handle non-financial data without increasing pressure on nodes. OP_Return outputs do not inflate the UTXO set, and blocks with such outputs would remain manageable. This change could help ensure a functional mempool and a transaction selection algorithm that benefits miners, ultimately supporting the economic success of Bitcoin.

As the demand for blockspace by Bitcoin increases and non-financial transactions gain popularity, it may be time for Bitcoin Core to adjust and accommodate better management of transaction fees and block propagation. The ongoing debate reflects the community’s efforts to balance innovation with the preservation of Bitcoin’s core principles, ensuring that the network remains efficient, decentralized, and adaptable to new use cases.