Average transaction fees in Bitcoin surpassed $ 12.5 yesterday, the highest level since January 2018.
When the density in the Bitcoin network reached the peak of the last 3 years, transaction fees started to increase significantly. According to the data of Blockchain.com; As of yesterday, the average fee per transaction reached the highest figure since January 2018 and was $ 12.53 in dollar terms.
With the Bitcoin price increasing from $ 11,200 to $ 13,800 in the last 12 days, there was an increase of 573 percent in transaction fees.
Denis Vinokourov, head of research at London-based top broker firm Bequant, commented on the subject: “Bitcoin mempool (memory pool) is on the back of increased transaction volumes… This causes congestion in the network and therefore increases fees.”
As is known, memory pool is where unapproved processes are collected. When Bitcoin transactions are attempted, BTCs first fall here and wait for the approval of the miners. Bitcoin miners can also process only 1 megabyte (MB) worth of transactions per block mined every 10 minutes.
When there is an increase in blockchain density, transactions experience delays and backlogs. As the demand supply exceeds, miners increase their profits and earnings by prioritizing higher-fee transactions. This causes users who do not want to wait to suggest more prices for transaction fees.
As is known, congestions in the network are usually seen during price rallies. After this significant increase in Bitcoin over the past 12 days, the number of unconfirmed transactions in mempool has increased by 1800 percent, and thus the congestion has worsened.
As of Tuesday, there were 121,340 unapproved transactions in mempool, and the total size exceeded 73 MB. According to data from Blockchain.com, this figure is the highest since the bull market frenzy of December 2017.
Falling hash rates is causing congestion
In addition to the increase in price, the decline in hash rates seems to have played a big role in the congestion. In other words, during the price rally, the mining power and mining blocks required to confirm transactions decreased. This increased wait times and caused network congestion.
The 7-day moving average of Bitcoin’s hash dropped from 146 exahash per second (EH / s) to 120 EH / s. In other words, the mining power required to confirm transactions dropped in the middle of the price rise, increasing wait times and network congestion.
Another reason for the decrease in hash rates is stated to be the end of the rainy season in Sichuan region of China, which is seen as a mining center. It is commented that the fact that miners who are looking for cheaper hydroelectric resources have started to move to other regions may reduce the hash rates.