Giant Bitcoin ‘Taproot Wizard’ NFT minted in partnership with Luxor Mining Pool

Independent developer Udi Wertheimer claims he created a giant image of what appears to be a bald, bearded wizard donning sunglasses and promoting “magical internet JPEGs” on the Bitcoin blockchain via the Ordinals protocol.

His announcements in the Discord channel “taprootwizards.com” and on Twitter further fanned the flames of division between Bitcoin purists and Ordinals followers. The block minting the non-fungible token (NFT) was mined by bitcoin mining firm Luxor Technologies, which said it was “the largest Bitcoin block” ever mined.

Battle lines were drawn when the Ordinals protocol, which stores non-fungible tokens on Bitcoin, was launched on the dominant blockchain last month. That settlement created two factions — purists who insist on using bitcoin (BTC) exclusively for payments and Ordinals fans who welcome NFTs, including this “Taproot wizard” sketch that nearly filled an entire 4 megabyte (MB) block, incurred no transaction fees (although a premium off-chain fee was likely paid) and left Bitcoiners of both stripes mystified.

The image itself is a throwback to an early Bitcoin meme with a similar wizard, crudely rendered in MSPaint, inviting anyone and everyone to “join us” on the then-popular r/bitcoin subreddit.

Bitcoin transaction blocks are limited to 4MB, while individual transactions are limited to 1MB unless a user directly approaches a miner to process a larger non-standard transaction (such as the wizard NFT) that fills an entire block. The image, which was a whopping 3.94MB, prompted many Bitcoiners to ask: Who would go through the trouble of processing this non-standard NFT coin (or “inscription” in Ordinals parlance) and why?

Earlier Thursday, Wertheimer tweeted about the Taproot Wizard, stating that “we’ve made history” and linking to the Taproot Wizards Discord channel. The channel contains a January 31st announcement from Wertheimer referring to the future embossing of Taproot Wizard.

He and Luxor CEO Nick Hansen collaborated to ensure that the Taproot wizard NFT was included in a block mined by Luxor, according to a Luxor spokesperson.

Amid much criticism online, Luxor Chief Operating Officer Ethan Vera tweeted that the company views Taproot Wizard as “short-term R&D” as it looks to maximize revenue potential for both the company and its customers.

“Luxor’s payout method is based on a full-pay-per-share model, meaning miners are paid an equal market rate for their hashrate based on the total value of bitcoin and transaction fees mined in a given time frame,” Colin Harper, Head for research and content at Luxor, told CoinDesk.

“Miners are paid the same regardless of how many (or how few) blocks Luxor mines in a given time frame. As such, any transactions that were not included in the NFT block would be included in subsequent blocks and the variance would even out. This blocking did not affect compensation for miners.”

Veteran Bitcoin Core developer Luke Dashjr, who strongly opposes having Ordinals on Bitcoin, says he has developed a rudimentary “spam filter” that screens inscriptions and prevents them from being forwarded through the Bitcoin network. An inscription is when arbitrary content (such as text or an image) is added to sequentially numbered satoshis (sats) — the smallest units in Bitcoin — to create unique “digital artifacts.”

Critics of Ordinals argue that NFTs will compete with traditional payment transactions by displacing blocks and increasing transaction fees.

Casey Rodarmor, the creator of the Ordinals protocol, disagrees, but is unfazed by Luke’s new invention. In fact, he welcomes it.

“It filters inscriptions from an individual core node’s mempool,” Rodarmor told CoinDesk. “I actually told him how to look for inscriptions to filter them.”

UPDATE (February 2, 2023 18:00 UTC): Adds data size for NFT and a quote from Luxor’s head of research and content, Colin Harper.