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does anyone know of a way to get nginx (or any other method) to minify html output on the fly? It seems straightforward to me and can shave a few kb off and help speed up the site.

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I'm not sure of an extension that has this capability, but, is it worth it? There will be a CPU impact on each request, it means your website will need more CPU as your load increases. I assume you're already using the gzip extension to compress the text before you send it, so, all whitespace will be removed as part of that process. You can also pre-gz your files, that will save CPU time on each request. – Andrew Taylor Jan 14 '11 at 13:42
@AndrewTaylor, so that's why you'd better cache it afterwards. – poige May 2 '12 at 14:35

My recommendation: forget minify and use the gzip module. It will work better and accomplish the same goal. But, as of course, you can do it. There's a 3rd party module named strip, especially for this topic.

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Good find. Doesn't look production-ready, though, so I second your recommendation of using gzip instead - saves much more than minifying the HTML. – pjmorse May 2 '12 at 14:07

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