Bitcoin Transaction Fees Dropped 58% Last Week as Congestion Eased
The cost of transacting on the Bitcoin blockchain fell sharply last week as the network reverted to less frantic levels of activity.
Aug 10, 2020 at 2:11 p.m. UTC:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/DAQOJJCZBRFDBN2DCAF7HOCFEQ.jpg)
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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.
Bitcoin memory pool (blue bars) and transaction size
- 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.
Rally-led rise?
- 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.
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