Bitcoin Transaction Fees Soar to $40, Sparking Debate and Push for L2 Solutions Amid Mempool Backlog

On Saturday, Dec. 16, 2023, Bitcoin’s transaction fees spike to a high of $40 per transaction at 1:48 p.m. Eastern Time. The jump in onchain fees surpassed the high reached on May 8, 2023, when the average transfer cost topped $31 per transfer.

Skyrocketing Bitcoin Fees Surpass $40

Bitcoin transaction fees are climbing and at the time of writing, a high-priority transaction tapped $40 just before 2 p.m. on Saturday, Dec. 16. Miners have been raking in the fees and an example of this is the fact that block height 821,485 came with 7.314 BTC in fees, which is over the size of the 6.25 BTC block subsidy. Presently, the hash price per petahash per second (PH/s) is coasting along at $108 per PH/s per day.

The recent spike in Bitcoin’s transaction fees to $40 each significantly surpasses the previous 2023 record of $31 per transfer set on May 8. Data from mempool space reveals that for high-priority transactions, individuals are spending 674 satoshis per virtual byte (sat/vB), while for lower-priority ones, the cost is around 602 sat/vB or $35.78, as observed on Saturday afternoon.

Notably, some transactions on Saturday have even exceeded $50 per transfer. Presently, there are eight unmined blocks, each brimming with high-priority transactions. Furthermore, 311 blocks are waiting to be processed to address the backlog of 383,607 unconfirmed bitcoin (BTC) transactions in the mempool.

These pending blocks, amounting to over 531 megabytes (MB) of block space, translate to an estimated clearance time of just over two days and three hours, considering the average ten-minute block interval. The significant rise in onchain BTC fees has ignited a flurry of comments and discussions across social media, with numerous observers weighing in on the situation.

“The average Bitcoin transaction fee is now $50 with 300,000 transactions waiting to be confirmed. This is beyond ridiculous and unusable,” Blockchair’s lead developer Nikita Zhavoronkov said. “Historically, this is the point when people start running away to alternative blockchains en masse.”

Others were quite pleased with the high fees. “Remember all the [Ethereum] maxis who said Bitcoin had a security budget problem? It’s fixed,” Dan Held posted on X. Others talked about layer two (L2) solutions and whether or not they could alleviate the issue.

“Bitcoin fees have crossed 600 sats/vB today. That’s a 600x increase in 1 year,” Muneeb Ali, the co-creator of Stacks said. “And you are still debating if devs want to build on Bitcoin, anon? Bitcoin L2s are becoming more critical every day.”

“Will be great to see the L2s blossom in a higher fee environment,” Held responded to the Stacks executive’s X thread. “I think the bitcoin fees are reaching a tipping point to make this happen,” Ali replied.

What do you think about the soaring Bitcoin network transaction fees? Share your thoughts and opinions about this subject in the comments section below.