Bitcoin Transaction Fees See Sharp Decline Since December Peak, Network Congestion Persists
On Jan. 10, 2024, the fee for high-priority transactions is set at 42 satoshis per virtual byte (sats/vB), amounting to $2.66 per transaction. The average transaction fee stands at 98.9 sats/vB, equivalent to $11.17 per transfer. Although there has been a decline in onchain fees, they currently remain at their highest level since May 2021. Moreover, the network is still experiencing congestion with 262,143 transactions awaiting confirmation.
Since mid-December 2023, when Bitcoin’s onchain fees peaked at $37 to $40 per average transfer, there has been a significant decrease. The average onchain fees have plunged by over 69% from that peak, currently standing at 0.00025 BTC, or $11.17 per transfer as of Wednesday. According to bitinfocharts.com, a transaction with a median size fee will incur a cost of 0.000096 BTC, or $4.32.
Data from mempool.space shows that for high-priority transactions, the cost is now 42 sats/vB, translating to $2.66 per transaction. As of Jan. 10, 2024, the fee for a no-priority transaction is $2.28 per onchain transaction. The mempool is currently clogged with 262,143 pending transactions, and block intervals are exceeding the usual 10-minute average. Mempool.space reports the average block time as approximately 10 minutes and 54 seconds.
To process all the unconfirmed transactions, it will take 546 blocks or 743.83 megabytes (MB) of block space, said an industry expert. The backlog of unconfirmed transactions has seen a reduction over the past week, coinciding with a slowdown in Ordinal inscription mints. The Bitcoin hash price, which estimates the daily value of 1 petahash per second (PH/s) of hashing power, stands at $85.66. This figure is slightly down from the $93.05 per PH/s it reached at 7 a.m. Eastern Time the previous day, Tuesday.
Last week, onchain fees stood higher, with 351,371 transactions in the queue awaiting miner approval. The cost for a high-priority transfer was then 129 sats/vB, amounting to $7.73, marking a 190% increase compared to today’s rates. The congestion that’s plagued Bitcoin for a year now, coupled with the current fee structure, reflects the dynamic nature of Bitcoin’s network and the ongoing challenges in balancing demand, transaction processing speed, and cost.
Bitcoin transaction fees have witnessed a significant decrease since mid-December 2023, reaching their highest level since May 2021. The average onchain fees have dropped over 69% from their peak, currently standing at $11.17 per transfer. However, the network is still grappling with congestion, as evidenced by the 262,143 transactions awaiting confirmation.
Despite the decline, concerns remain about the high fees and slow processing times. Industry experts predict that it would require 546 blocks or 743.83 megabytes of block space to process the existing backlog of unconfirmed transactions. The reduction in the backlog over the past week is attributed to a slowdown in Ordinal inscription mints.
It’s worth noting that Bitcoin’s hash price, which measures the daily value of hashing power, has slightly decreased from previous levels. Additionally, last week’s onchain fees were higher, with a 190% increase compared to today’s rates. This ongoing congestion and fee structure highlight the ongoing challenges in achieving a balance between demand, transaction speed, and cost within the Bitcoin network.
Despite the improvements in onchain fees, Bitcoin’s network congestion persists. The current scenario underscores the need for scalability solutions to address the growing demand and ensure more efficient transactions. As Bitcoin continues to evolve, finding a balance to provide faster and cheaper transactions remains a top priority for the cryptocurrency’s developers.
