Bitquery’s Study Highlights Scale and Impact of Fake Address Outputs on Bitcoin
Blockchain analytics firm Bitquery released a comprehensive analysis on September 2, 2026, examining the embedding of text data across 965,135 Bitcoin blocks. The study uncovered that fake address outputs have now exceeded 96,231 in number, collectively locking around 3.2 BTC in outputs that cannot be spent due to the absence of corresponding private keys. Unlike OP_RETURN outputs, which embed data in a way that nodes do not retain as spendable outputs, these fake address outputs are treated as unspent transaction outputs (UTXOs), thereby continuing to occupy space in full node databases.
Technical Distinctions: OP_RETURN Versus Fake Address Embedding
Bitquery identified 4,412,782 OP_RETURN outputs containing readable text data. This standardized method for embedding data is explicitly supported by Bitcoin’s protocol as “null data” outputs, which do not add to the UTXO set and thus impose fewer long-term storage requirements on nodes.
Conversely, fake address text data is recorded directly within output addresses as seemingly valid pay-to-public-key-hash (P2PKH) scripts. Nodes recognize these outputs as standard UTXOs, but since no private keys exist for these artificial addresses, the associated bitcoins remain effectively frozen. This practice inflates the UTXO set, increasing storage and validation burdens for full nodes and impacting network scalability.
Effects of Bitcoin Core 30.0 Update on On-chain Text Data
Bitcoin Core version 30.0, released in October 2025, raised the allowable size for OP_RETURN data from 80 bytes to up to 100,000 bytes and enabled multiple OP_RETURN outputs per transaction. This change has notably accelerated the volume of large text payloads on-chain. Bitquery’s data reveal that OP_RETURN outputs exceeding 80 bytes surged from a few dozen per month before the update to several thousand monthly thereafter.
However, the release of version 30.0 does not solely explain the growth trend. Market participants’ behavior and other ecosystem factors have also contributed. Notably, between March 21 and 26, 2026, a series of 13,062 OP_RETURN transactions collectively spent 0.1014 BTC in fees during a coordinated message campaign targeting Bitcoin Core developer Luke Dashjr. This episode illustrates how relatively low transaction costs enable widespread textual messaging on-chain, though the motivations and identities behind these accounts remain unclear.
Node Operators and Industry Takeaways
This research underscores the critical variations in how different forms of embedded data affect Bitcoin node resources. Fake address outputs, by permanently expanding the UTXO set, pose sustained storage and synchronization challenges that could impact node decentralization and network sustainability.
In contrast, the OP_RETURN method aligns better with design principles aimed at minimizing node data load. Industry stakeholders and node operators are advised to remain vigilant regarding these evolving on-chain data practices, as optimizing node efficiency remains integral amid Bitcoin’s broadening network activity.
Bitquery’s report does not cover all historical data points, noting gaps such as 191,427 missing coinbase field entries and unassessed witness data inscriptions, leaving some on-chain text content unaccounted for. Nonetheless, the findings offer valuable insight into the real-world impacts of textual data embedding approaches on Bitcoin’s node infrastructure. Amid a recent 5.47% price increase over 24 hours pushing Bitcoin’s market cap to $1.63 trillion, managing node storage and operational costs continues to be a key concern for the ecosystem.