Average Bitcoin transaction fees up over 2,000% in 2020

In brief:

  • Average transaction costs for Bitcoin have increased by 2,213% since January 1.
  • Since the date of halving Bitcoin’s reward in half, costs have continued to rise by 144%.
  • More than 94MB pending transactions in the Bitcoin mempool means the network is now as congested as it was in January 2018.

The average cost of sending transactions on the Bitcoin network has increased by 2,213% since the turn of the year.

That is according to data from Bitinfocharts, showing that the average transaction cost for Bitcoin on May 20 rose to $ 6.64. Those are the highest average costs of a Bitoin transaction since July 2018 – almost two years ago.

At the beginning of the year, average fees were as low as $ 0.28 – a peak of 2,213% since January 1.

Bitcoin costs have risen 2.213% since Janaury 1. Image: Bitinfocharts.com

The sudden spike in the average cost of a Bitcoin transaction seemed to be the result of increased activity on the network prior to halving Bitcoin’s block reward.

But the block reward cut – from 12.5 BTC per block to 6.25 BTC – continued on May 12, and fees continued to rise. Since halving, average transaction costs have actually risen by more than 144%.

The costs usually go up when the Bitcoin blockchain is heavily used. That idea is supported by data from Blockchain.com, which reflects a deeply lagging mempool of pending Bitcoin transactions.

Bitcoin’s mempool has not been so hidden since January 2018. Image: Blockchain.com

On May 20, the mempool showed 94 MB of Bitcoin transactions awaiting processing. The mempool hasn’t been so hidden since January 2018 – during the peak of Bitcoin’s biggest bull run to date.

For reference, Bitcoin’s blocks handle 1MB transactions at a time. When the network is used intensively, people are forced to pay higher transaction costs to have their transactions included in the next block.

Users are still free to set lower transaction fees in their wallets. However, they run the risk of being ignored by Bitcoin miners, who are naturally looking for higher paid fees.

Bitcoin users are even free to zero their fees. This was a common occurrence in the early days of Bitcoin, but today miners are more likely to ignore or completely reject such transactions.

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