The cost of transacting on the Bitcoin blockchain fell sharply last week as the network reverted to less frantic levels of activity.
- The average fee per transaction in U.S. dollars fell by 58% from the two-month high of $6.47 to $2.72 in the four days to Aug. 9, according to data source Blockchain.com.
- The sharp drop comes alongside a decline in the size of the memory pool (mempool) – the store of valid transactions waiting to be confirmed on Bitcoin's blockchain.
- The number of unconfirmed transactions topped out at a 2.5-month high of 56,648 on July 28 with a total block size of 53.5 MB and has been on a declining trend ever since, according to data provider Bitcoin Visuals.
- As of Sunday, the mempool had 3,656 unconfirmed transactions, the lowest since July 12, with a total block size of 9.9 MB.
- When there is a dramatic rise in transaction activity, the mempool can become congested, leading to longer waiting times.
- This happens because miners can validate only 1 MB of transactions per block mined every 10 minutes.
- Miners respond to congestion by prioritizing transactions offering higher fees, forcing other users to increase mining fees.
- As such, average fees paid tend to rise with the size of the mempool and drop with the easing of congestion.
- The mempool expanded sharply in the second half of July, as bitcoin rose from $9,100 to levels above $10,000, confirming a bullish breakout.
- The number of pending transactions surged by over 1,900% in the 16 days to July 28.
- During that period, the mean fee volume increased by more than 650%.
- The number of unconfirmed transactions jumped to a 28-month high of 267,068 in mid-May after prices rose into five figures, extending the meteoric rise from the low of $3,867 reached on March 13.