What are the Benefits of UTXO Consolidation?

In addition to the future fee savings mentioned above…

One benefit is that you get to choose when you consolidate.

You don’t want to be in a situation where you’re in a rush to spend unconsolidated UTXOs. If you’re pressed for time, you’ll likely pay high fee rates if there’s network congestion. You’ll also have to input many UTXOs to fund your transaction, resulting in a high transaction fee.

By consolidating UTXOs in advance, you control when you incur these costs.

You’ll still use many UTXOs as inputs, but if you consolidate at a low fee rate (ie. 1 sat/vbyte), you can cut your inevitable costs.

Consolidating UTXOs can be painful in the short term, but relieves a potentially much bigger pain in the future.

UTXO consolidation also gives you an opportunity to update your addresses. For example, you can “roll over” your legacy addresses’ UTXOs to a new Native SegWit Bech32 address.

In effect, you’re killing two birds with one stone. You're consolidating UTXOs and updating your addresses. #btc #Bitcoin