Bitcoin Transaction Fees Soar to $47 As Market Crashes

Close to 130,000 transactions also await confirmation.

By Tim Hakki

In brief

• Bitcoin miners are working through a vast backlog of unprocessed transactions.
• Computing power on the Bitcoin network has also plummeted.

Price charts flash only red numbers and steep percentage drops today after Bitcoin dropped 15% overnight to lows of $52,144. 

For many, this is the day to get out of the market. The subsequent exodus has caused a traffic jam on the Bitcoin blockchain. 

Close to 130,000 transactions await confirmation on the blockchain according to data by Johoe-Hoenicke. And Bitcoin’s average transaction fees are currently at a four-month high of $46.88, up over 200% since April 4, when the average transaction fee was $15.56.

The big Bitcoin bottleneck

Blockchain critic David Gerard chalked today’s unprecedented congestion to Bitcoin holders running “to the exits.” 

One trader Decrypt spoke to, Darius Sit of QCP Capital, attributed the crash to a rumor that the US Treasury is about to chase after large financial institutions for laundering crypto. Should that rumor turn out to be true, traders could be selling their crypto in fear that the price could fall even lower. 

Making things worse are power outages in China’s Xinjiang province, a hotspot for Bitcoin mining. Fewer operational Bitcoin miners places upward price pressure on the average transaction fee. 

Bitcoin’s hashrate, (an indicator of the effective computing power of the global Bitcoin network), dropped from 145 exahash on April 16 to 105 exahash a day later. It’s currently at 120 exahash a second, according to BitinfoCharts.

While some traders run for the exits, others no doubt consider today’s crash an opportunity to grab Bitcoin at bargain prices. One man’s trash is another’s treasure, after all.