CoinGrinder

CoinGrinder is the coin selection algorithm Bitcoin Core reaches for when fees are high. Its goal is narrow: find the combination of coins that covers the payment with the least total input weight, because when a block is expensive, every input you can leave out of a transaction is money saved.

That makes it the complement to Branch and Bound, the algorithm Core runs alongside it. Branch and Bound wants a set of inputs that matches the payment so closely that no change output is needed, and it will happily use several small coins to get there. At a low fee rate that is the right trade, since the inputs are nearly free and the change output is the expensive part. At a high fee rate the arithmetic flips. Each extra input now costs more than the change output it might avoid, and the best transaction is the one with the fewest, largest inputs, even if it has to send change. CoinGrinder is the search for that transaction.

The search itself is another bounded depth-first walk over the coins, this time sorted by effective value, largest first and lighter coins preferred on ties, with the bound pruning any branch that cannot beat the lightest solution found so far. Like Branch and Bound it has an attempt budget and gives up gracefully, leaving the wallet's other algorithms to produce a fallback. The wallet then compares every candidate with its waste metric and keeps the cheapest.

The algorithm was written by Mark "Murch" Erhardt, whose 2016 thesis had already reshaped Core's coin selection once, and it landed in version 27.0 in April 2024, after a review that began in mid-2023, when that year's Ordinals-driven fee spikes had shown exactly the problem it was written to solve. It is gated on the fee rate: Core runs it only when the transaction's fee rate exceeds three times the wallet's long-term fee-rate estimate (the -consolidatefeerate setting, 10 sat/vB by default, so 30 sat/vB and up), because minimizing input weight at ordinary fee levels would mean never spending small coins and letting them pile up as dust.

That last point is the user-facing lesson. CoinGrinder protects you from overpaying during a fee spike, but it does so by ignoring your small coins. Those still need to be swept up eventually, and the time to do it is a consolidation during a cheap week, when spending a dozen inputs costs almost nothing.