Investors are pleased to see bitcoin back in a bull trend, but there is a downside: the cost of sending it is sharply rising.
The average bitcoin transaction fee soared by as much as 547% in the month to August 6, increasing from just $1 to $6.47, according to the latest data from Bitinfocharts.
The fee dropped to $2.73 on August 9, but that is still about a 150% hike from just a month earlier, Bitcoin.com reported.
Bitcoin users paid $6.65 to send a transaction over the blockchain on May 20, just nine days after the top crypto’s scheduled supply reduction, which is the highest in three months.
Fees are paid each time a transaction is processed and confirmed by a miner, who receives both the fees and the block reward as revenue.
As a percentage of revenue for miners, fees got to about 12% on August 6, before dropping to around 6% three days later.
Transaction costs are chiefly driven by rising demand for processing transactions through the bitcoin network – itself a result of soaring bitcoin prices.
Fees are also determined by other factors such as the size of the transaction and mining difficulty – all of which appear to be ticking higher.
Bitcoin has risen to an 11-month high of $12,000 after several weeks of sub-$10,000 performance. The crypto’s resurgence is viewed by analysts as a primer for a sustained rally toward a price of $28,000 by year-end.
By comparison, transactions processed via blockchain networks such as Bitcoin Cash, Dash, and Ethereum are considerably cheaper.
As per the Bitinfocharts figures, Bitcoin Cash transaction fees averaged just $0.0069 (or under 1 cent) as of August 9, down 24% from $0.0091 three days prior. A month ago it cost $0.0056 to transact over the network.
For Dash, each transaction cost $0.0032 on Sunday. The coin has moved only very marginally since July 6, remaining below 1 cent throughout the period.
Ethereum, the second-largest cryptocurrency by market capitalization, has trended upwards as investors pile into the asset in anticipation of the network upgrade called Ethereum 2.0, among other matters.
Ethereum’s average fees have ballooned 253% from $0.55 on July 6 to $1.94 yesterday.