What is the average fee for a Bitcoin transaction?
Jessie Bitcoin’s average transaction fees have reached their lowest level since April 28. The average cost of sending a Bitcoin transaction is now only about $1.
Just over two weeks ago, on May 20, the average cost of a Bitcoin transaction was $6.64. This was the highest average fee in almost two years — not since July 2018.
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At the turn of the year, average fees were as low as $0.28 — marking a 2,213% spike since January 1.
The sudden spike in the average cost of a Bitcoin transaction appeared to be due to the increased activity on the network ahead of the halving of Bitcoin’s block reward.
This means that the average fee for Bitcoin transactions has dropped 83.7% since May 20. The sharp increase in transaction fees towards the end of May coincided with the hype about halving Bitcoin on May 11, after which the block reward for new Bitcoin was halved.
But the block reward reduction — from 12.5 BTC per block to 6.25 BTC — passed on May 12, and fees have only continued to soar. Since the halving took place, average transaction fees have surged by over 144%.
Fees typically rise whenever the Bitcoin blockchain comes under heavy usage. That notion is backed up by data from Blockchain, which displays a heavily backlogged mempool of pending Bitcoin transactions.
On May 20, the mempool showed 94MB of Bitcoin transactions waiting to be processed. The mempool hasn’t been this clogged since January 2018 — during the height of Bitcoin’s biggest bull run to date.
For reference, Bitcoin’s blocks process 1MB worth of transactions at a time. When the network comes under heavy usage, people are forced to pay higher transaction fees for the privilege of having their transactions included in the next block.
Users are still free to set lower transaction fees within their wallets. However, they run the risk of being ignored by Bitcoin’s miners, who naturally seek out higher-paying fees.
Bitcoin users are even free to set their fees to zero. This was a common occurrence in the early days of Bitcoin, but today, miners are more likely to ignore such transactions or reject them entirely.
This part of monetary policy, which is hardcoded into the Bitcoin protocol, has virtually halved mining revenues, meaning that miners had to work twice as hard to receive the same number of Bitcoin rewards.
Along with the increased demand for Bitcoin trading, the halving hype led to a surge in demand, as some people believed that the price of Bitcoin after halving could rise in line with the pattern of previous halves — and demand for processing Bitcoin transactions go through the roof.
However, as new, more powerful miners entered the network, evidenced by the hash rate in the Bitcoin network that has skyrocketed in recent days, there were enough Bitcoin miners to handle transactions.
This means that the current figure is still 277% higher than on January 1. But if the current downward trend continues, the average transaction fee could return to the level of the beginning of the year.