According to Bitinfocharts.com, Bitcoin transaction fees have skyrocketed by almost 800% in just a single month. The fees have now shot up to $5.16 as of the 14th of May, the highest figure recorded yet since the 2017 wild bubble run to $19,800.
Pre halving fee spikes signal increasing blockchain use
The BTC transaction fees have experienced a gradual upsurge since the dawn of 2020. However, it was during the eve of the halving event that they shot exponentially. In April 2020 alone, the tx fees have recorded a 673% increment, most of it happening before 30th April where there was a 129% spike to $2.94. The last two weeks prior to the third halving event have carried the bulk of the increment from $2.94 to $5.16.
Data from Blockchain.com’s mempool, also indicates a big backlog in transactions pending approval. The mempool shows the amount of transactions pending on the network awaiting confirmation/verification by the miners. The figure currently stands at 56 MB, representing a considerable drop from 80 MB recorded at the end of April.
However, this is still a really huge backlog of transactions awaiting verification and it may take days to complete. As the mempool grows, then the tx fees follow through as the users are pitted against other users as they try outbid each other to have their transactions included in the block.
This has mainly been attributed to the industry’s anxiety over the halving event. The miners were set to bear the brunt of halving as their rewards were chopped by half (12.5-6.25BTC) while the mining difficulty was also set to increase. There was also a lot of activity from users who anticipated an immediate BTC price increase.
Past halvings show similar fee increases
Notably in the second halving event that transpired 2016 July 9th saw the transaction fees shoot up 200% to $0.24 from a meagre $0.081. But as things changed, the tx fees dropped over 8% in the first three days’ post halving. Notably, the first halving in November 2012 also recorded a 300% spike however dropping considerably post halving to the initial fees before the event.
This now offers users a unique trade off to the users between fast and quality services also now expensive or a much slower but cheaper alternative.