Bitcoin transaction costs surge as price increases! Bitcoin transaction costs surge as the network suffers its worst congestion in nearly three years.
As of Wednesday, the average cost for a transaction was 0.00086764 BTC, the highest since June 2018. In USD, the average transaction fee was $11.66.
Mempool refers to memory pool, and is the collection of unconfirmed transactions. When Bitcoin transactions are executed, they are first sent to the mempool, where they wait for approval by miners. Bitcoin miners can process only 1 megabyte (MB) worth of transactions per block. Each block is mined in about 10 minutes at current difficulty.
When the Bitcoin network/blockchain experiences a rise in traffic, it causes delays and a backlog of transactions. Demand outstrips supply and miners increase their revenue by focusing on transactions with higher fees. Users know this and are forced to offer higher fees to avoid long waiting times.
It’s normal to see network congestion during price rallies. Bitcoin has charted a significant rise over the past 12 days – in this timeframe, network congestion worsened by 1,800%.
As of Tuesday, there were 121,340 unconfirmed transactions in the mempool. This is the highest level of congestion since the bull market frenzy of December 2018.
Bitcoin’s hashrate drop seems to have played a big role in causing network congestion. In layman’s terms, mining power dedicated to approving transactions and mining blocks has gone down during this price rally – this in turn has raised waiting times and network congestion.
With the end of the rainy season in China’s Sichuan province, some miners may be shifting to other areas with cheap forms of power, mainly, hydroelectric. This may be a reason for the drop in the hashrate.
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