Bitcoin mining is an important part of the bitcoin ecosystem. Miners participating in mempools help confirm transactions for which they receive a reward once a transaction is approved. Most of the time, the mempool is ‘free’ and transactions go through easily with low fees, but there are times when the mempool gets full, driving up transaction fees. This happened in early March.
Bitcoin Transaction Fees Rising
At the start of the month, bitcoin faced higher transaction fees. These higher fees were the result of transaction clustering in the mempool. Once the mempool became so full that there were too many transactions to confirm, fees had invariably increased as transactions are confirmed based on the fee they incur. Transactions with higher costs were therefore confirmed first.
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To compete in this flooded pool, incoming transactions had to incur a higher transaction cost per vByte (virtual byte), which is equal to the size of the transaction. This caused rates to rise from March 1 and continue for the next two days. Due to these increased transaction costs, average transaction costs per day had risen to $691,000 in the past week.
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This volume had filled up on the second day, March 2, where transaction costs rose to $1.3 million. However, by the third day, miners could have cleared all transactions in the mempool, albeit at a high transaction fee, and the mempool was empty by the third day, March 3. Transaction costs were subsequently reduced as a result of this approval.
Miners’ income up
Bitcoin transaction fees were not the only ones to register an increase, as miners’ earnings also showed an increase. Miners’ daily earnings for the same period were also up 6%. However, this was actually due to the price recovery BTC had seen in the past week as the hashrate had fallen again in the same storage day period.
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In terms of transaction costs, although there had been a significant increase over this week-long period, costs were still relatively low. They have been at one of their lowest points in the past seven months, and the recent gains have not come close to the highs of digital asset history.
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Transactions per day were also up 3.04% from the previous week. The cost per day increased by 99.81% and the average number of transactions increased by 2.54%. Only the number of blocks per hour declined for the period, declining slightly by 1.67%.
Featured image from Investopedia, chart from TradingView.com