Participants in mining activities may want to securely store their mining proceeds by using a Ledger device. This article explains why sending a large amount of small transactions to a hardware wallet is troublesome, offers potential solutions and provides instructions on how to properly send mining proceeds to an address controlled by your Ledger device.
Note: Failing to follow the instructions in this article may lead to your funds becoming inaccessible on the Ledger device.
Receiving a large amount of small transactions is troublesome
Receiving a large number of small payments, or dust payments, on an address controlled by your hardware wallet causes:
- the saturation of the synchronization of your Blockchain transactions; and
- an extremely long duration of transaction construction or validation.
Therefore, hardware wallets are not directly suited for receiving a large amount of small transactions, such as the proceeds of mining activities.
Imagine that you have received 1,000 payments of 0.001 BTC and that you want to spend the total of 1 BTC. The secure chip in the hardware wallet will then have to construct a transaction of 1,000 inputs and sign each single input. This might take a few hours or might not succeed at all, since the chip may overheat and make a computation error.
In case you received a large amount of small payments
If you have already sent a large number of small payments to your hardware wallet:
- Try to consolidate your coins by sending a few larger payments to yourself. If you have received 1,000 times 0.001 BTC, consolidate these inputs by sending 0.1 BTC to yourself and repeat this 10 times.
- Alternatively, import your 24-word recovery phrase into a software wallet, preferably an offline one, and empty your wallet into an address that is derived from a newly generated seed.
Prevent problems by batching small transactions
- Set up a software wallet that receives the small payments;
- Regularly batch these proceeds into a larger transaction to send onto a hardware wallet.