Crypto Miners Debate $500K Bitcoin Fee Refund to Paxos for 'Fat-Fingers' Error

Miners can choose to return large fees out of goodwill, even though they do not have any obligation to do so.

AccessTimeIconSep 14, 2023 at 6:38 a.m. UTC
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Bitcoin miners are pondering the refund of a hefty $500,000 bitcoin (BTC) fee paid by crypto services company Paxos for a mere $2,000 bitcoin transaction earlier this week – an incident the latter blamed was “due to a bug.”

Paxos’ transaction was picked up by mining company Stake.fish, which uses its computing resources to mine and stake several networks. Stake.fish founder Chun Wang said in an X post earlier this week that whoever was behind that transaction had three days to claim the transaction and likely receive a refund.

A bitcoin fee is what a user pays to miners, or entities who maintain the network, to get their transaction included in the blockchain. The more a user pays, the higher the chance their transaction will be picked up immediately as miners are prioritize bigger payouts.

Paxos runs a crypto exchange and issues its own USDP stablecoins, making it one of the most sophisticated players in the industry.

Last Sunday, however, an apparent bug in the corporate operations side of the business led to a network fee of 20 bitcoin (worth just over $515,000 at the time) to send just 0.7 bitcoin (worth less than $2,000), Paxos said in an email to news outlets.

These fees usually range from $5 to $20, depending on network congestion and demand, as of Thursday.

Paxos likely reached out to Stake.fish to claim the fees. But in a Thursday post on X, Stake.fish’s Wang suggested the claim was made after the initial deadline, citing timezone differences.

“I was annoyed and regretted agreeing to refund that 20 BTC,” Wang said. “Especially when I saw the person claiming it kept saying EST instead of EDT/UTC. Last time a Zcash guy did that, I blocked his entire company.”

An X poll under Wang’s post seemed to gather community sentiment for the eventual decision. Of nearly 1,700 voters as of Asian afternoon hours, 37% felt the fees should be distributed to miners, 27% felt it should be returned to Paxos, 21% voted on freezing the bitcoin, while the remaining favored a 50% split between miners and Paxos.

“50/50 seems reasonable,” said @chjango, a Cosmos developer. “50% to miners in the network who should’ve gotten it otherwise. 50% back to paxos and let them appreciate the -50% cost of doing business and learn how to properly implement change outputs.”

“They’ve been around long enough to know better than to make such an amateur mistake.”

Edited by Parikshit Mishra.

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Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.


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