Bitcoin Core to Remove OP_RETURN Limit in Controversial Upgrade

In an update published on GitHub by Bitcoin developer Greg Sanders on May 5, the Bitcoin Core team announced that the next software release will, by default, relay and mine transactions with OP_RETURN outputs larger than 80 bytes—and allow for any number of such outputs per transaction.

The decision removes a soft cap that has been in place for years, originally intended as a signal that Bitcoin’s block space should be used sparingly for non-payment, proof-of-publication data. But Sanders said the limit has outlived its usefulness, pointing to evolving use cases and inefficient workarounds already employed by users.

“This was a gentle signal, not a hard rule,” Sanders wrote, noting that the cap had become more harmful than helpful. “Large-data inscriptions are happening regardless and can be done in more or less abusive ways; the cap merely channels them into more opaque forms that cause damage to the network.”

A Technical Shift with Far-Reaching Implications

The proposal (PR #32359), introduced by veteran developer Peter Todd at the request of Chaincode Labs, targets a more streamlined and transparent handling of arbitrary data in Bitcoin transactions. OP_RETURN, a special type of output that doesn’t bloat the unspent transaction output (UTXO) database, became widely used during the 2024 ordinals inscription boom.

Under current rules, OP_RETURN outputs are capped at 80 bytes. However, some users have been bypassing the limit through inefficient methods—such as using fake output addresses—which can degrade network performance. Some miners have already been ignoring the cap entirely.

Supporters argue that removing the restriction will lead to a cleaner UTXO set, consistent behavior across the network, and better alignment with how Bitcoin is being used in the real world.

Critics of OP_RETURN limit removal. Source: moonsettler

A Divisive Decision

Despite technical benefits, the move has triggered pushback from parts of the Bitcoin community. Critics argue that the change lacked proper consensus and bypassed broader community input.

“There is no consensus at the moment on this OP_RETURN issue,” said Marty Bent, managing partner at Ten31 Fund. Prominent Bitcoiner Samson Mow also voiced concerns on X (formerly Twitter), warning users that they can opt not to upgrade and continue using Bitcoin Core 29.0 or alternative software implementations.

Opponents worry the decision deprioritizes Bitcoin’s core mission as a financial asset and opens the door to bloating the blockchain with non-monetary data. Some even raised the issue of possible undisclosed conflicts of interest tied to parties advocating for the change.

Community and Network Ramifications

Three possible options were considered before the decision: keeping the limit, increasing the limit, or removing it entirely. While not unanimous, the removal option reportedly received broad developer support.

As Bitcoin continues to evolve beyond its original monetary focus, the debate over OP_RETURN highlights growing tensions between innovation, governance, and the network’s foundational values.