28 Oct 2020 Arjun Agarwal
Bitcoin Transaction Fees Increased Almost Tri-Fold After Bitcoin’s Bull Run
The cost per transaction for the world’s largest cryptocurrency to date, Bitcoin, has skyrocketed, following Bitcoin’s price performance. The crypto leader broke above $13,000 on October 25 and experienced several waves of price growth since then. The price per BTC even reached a yearly high of $13,837.70, but currently trades at $13,202.58 as of press time.
The price increase made Bitcoin’s average transaction fees also skyrocket - from around $3,5 on October 25, to $10.198 as of press time. The dramatic rise in transaction fees marks the third time the cost per Bitcoin transaction moved past the $10,00 level.
Crypto analytics company Glassnode reported that nearly a quarter of all Bitcoin miners earnings (22,25%) come from validation of transaction fees. This leaves 77,75% for actual block validation reward, which means that currently, mining is very profitable. Glassnode also stated that the current levels are at their highest since the January 2018 Bitcoin craze. However, during Bitcoin’s all-time high run, average transaction fees were as much as 45% of the total mining reward for block validators.
The transaction fees for Bitcoin’s blockchain are in a steady increase for several months, starting the year with fees below the $1 mark. However, since Bitcoin’s third halving, which has cut down miner rewards to 6.25 BTC per block, the fees surged as high as $6.647 per transaction. After the surge, transaction fees settled between $1 and $5 prior to October 25th's transaction fees surge.
Despite the current transaction fees increase and the price increase of the crypto leader, some miners are still considering mining Ethereum to be a more profitable option. Data from Messari prove that mining fees for Bitcoin’s runner-up exploded alongside the DeFi ecosystem boom.
The massive increase of DeFi projects, running on Ethereum’s blockchain, managed to push transaction fees to levels higher than Bitcoin’s due to Ethereum’s inability to scale adequately. Ethereum fees surpassed Bitcoin’s on several occasions this year alone, with the most noticeable being on October 25th.Bitcoin Ethereum Blockchain Cryptocurrency Crypto Market Blockchain Development bitcoin news bitcoin news today Defi