We unveil the details behind a $2,100 Bitcoin (BTC) transfer, which paid $510,000 to a pool of miners to validate their transaction. The transaction fee turned out to be the largest in Bitcoin’s history.
Chinese journalist Colin Wu reported the unusual transaction where a user paid a transaction fee of half a million dollars, or 20 BTC, to move about $2,100. According to Wu, the person or persons transferred around 1,982,108,632 satoshis to miners who processed his transaction of 0.074 BTC.
User Paid over 200,000 Times the Standard Network Fee
At the time of the transaction, the average fee was around $2,176, meaning this participant paid over 255,000 times the standard fee. The source of the unusually high fee has yet to be determined.
Like the Ethereum network, which increases transaction fees when the network gets congested, the Bitcoin blockchain charges more to disincentivize the user from overloading the network of nodes. Bitcoin fees during periods of moderate congestion can rise to around $60, as they did in the last bull market.
Learn more about Bitcoin transaction fees in our explainer.
A sharp increase to over half a million dollars is highly unusual.
Miner Has Three Days to Return Fee
F2Pool, the Bitcoin mining group the user paid, said the funds would be temporarily frozen. The individual miner who solved the Bitcoin transaction block has three days to return the funds.
Interested in cost-effective mining? Learn more about how you can benefit from joining a pool here.
Should no-one claim the assets, they will be shared with all miners in the pool. The original entity who paid the fee must contact F2Pool and officially request the refund.
Bear Market Tanks Fees
In December 2020, a cryptocurrency company noted a transaction that only charged 0.00006520 BTC for a transfer of $165 million. At the time, the transaction fee in dollars was $1.20 (approximately $167 at current prices).
Last year, Bitcoin’s transaction fee size fell to $0.82. The drastic reduction came because of a dropoff in market activity, which affected the BTC price and market capitalization.
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