An enormous number of unprocessed transactions showed how activity on the Bitcoin network is rising.
Last Friday, regular transaction fees for Bitcoin hit $17.206, surpassing its previous 2021 high of $17.086, set on January 12.
Friday’s regular fees are also the highest since January 2018, when traders were furiously trying to cash out before Bitcoin’s price crashed completely.
Transaction fees cover the utility cost of the considerable computing power needed to process blockchain transactions.
To deal with a transaction, miners must make an effort to solve complicated math puzzles. To do this, the bitcoin network rewards them with freshly minted Bitcoin.
High transaction fees mean a high demand. Fees rise when the demand for processing transactions exceeds the supply of miners willing to process them. To make it worth their time, miners hike up their fees so that network participants process only the most critical transactions.
An apparent reason for the fees rise is because Tesla CEO Elon Musk became the highest-profile advocate of Bitcoin. After his PR boost, which came in the form of a one-word Twitter bio, the coin’s price surged from $32,000 to $38,000.
A correction followed afterward, with Bitcoin’s price at some point hitting a low of $32,940 the next day.
There is an enormous backlog of Bitcoin transactions.
A data from Blockchain.com says that there are now over 71MB of transactions yet to be processed on Bitcoin’s blockchain. To put it into context: Last January 7, there were 25MBs worth waiting to be processed. By January 15, this had swollen to 85MB, an astounding increase of 240%.
This will probably stay high until miners process the surge in buyers cashing in from Musk’s lofty vote of confidence, and even more cynically, a wave of traders cashing out with a hasty buck.
The all-time high for Bitcoin’s average transactions fee had been set on December 21, 2017. By that time, Bitcoin’s price was nearing $20,000, its highest price ever – until Bitcoin’s latest bull run overshadowed that achievement. However, back in 2017, the demand for processing transactions was so high that the average transaction fee hit $54.90.