May 11, 2023
What’s Going On with Bitcoin Congestion and Transaction Fees? Plus, A Reminder On How to Save When Paying with Bitcoin
Bitcoin fees are known to rise and fall sporadically. However, over the past week we’ve seen an unusual spike in fees, reaching heights of more than $30. As the #1 crypto payment processor, we know how frustrating fees can be - so we’re shedding some light onto these recent shifts and sharing advice on how to save on fees.
BRC-20 tokens and Ordinals are causing congestion and fee spikes
The most likely cause of fee spikes is minting of new BRC-20 tokens, Bitcoin-based tokens akin ERC-20 tokens. A slew of memecoins, like Ordi and Pepe, are being issued in droves. Along with these coins, users are creating “Ordinals”, images, videos or text engraved onto a single Satoshi (sat) – think of them like NFTs but on the Bitcoin network.
The rush of ordinals and memecoins have flooded the mempool with a backlog of unconfirmed transactions that are waiting to be processed alongside traditional Bitcoin-based transactions. You can track mempool size to get an idea of congestion and fee levels associated with the transactions.
How you can save on BTC transaction fees
Patience: Transaction fees spike in times of extreme network congestion. Timing your transactions for low-use times will result in lower transaction fees. Generally blockchain networks tend to be busiest during hours when people in the U.S. are awake. Wait for off-peak hours if you need to save on transaction fees.
Layer-2: Use a Layer-2 solution to make quick, low fee payments. BitPay supports payments made over the Bitcoin Lightning Network.
Alternative networks: If possible, utilize another network that isn’t experiencing surges. BitPay supports 16+ cryptocurrencies, including popular alternatives like Litecoin (LTC), Ethereum (ETH), Bitcoin Cash (BCH), Dogecoin (DOGE) and Polygon (MATIC).
Pay from a custody wallet: Did you know you can pay BitPay invoices from your custody wallet account like Coinbase or Kraken? Utilizing Coinbase + BitPay means your payments are processed off-chain and aren’t subject to as high of fees.
Read our guide to crypto transaction fees and ETH gas fees for a more in-depth look at how fees are calculated.
