Bitcoin transaction fees and volumes have surged to an all-time high, posing a new challenge for the cryptocurrency industry. According to Axel Adler Jr, an analyst with a crypto data firm, the surge in block space demand is caused by the minting of BRC-20 memecoins on the Bitcoin blockchain. The demand has increased the average fee per transaction to over $16, peaking at $29 on May 9, and the average fee per block rose to $31 on May 8. The congestion is primarily caused by the BRC-20 tokens that do not utilize smart contracts and operate only with wallets supporting the Bitcoin blockchain.
Bitinfocharts data shows over 400,000 unconfirmed Bitcoin transactions on the network, indicating the severity of the problem. The high number of unconfirmed transactions is keeping transaction prices elevated, with Blockchain.com confirming that the average transactions per block are at an all-time high of 3,778. This high demand for block space has caused total fees per block to exceed the block subsidy reward of 6.25 BTC temporarily, which was last seen in 2017. Bitinfochart data shows a new all-time high of 534,000 transactions in the seven-day moving average, and even higher spikes of over 600,000 daily transactions this month.
The increasing transaction volume is good news for miners, as profitability or hash price has surged by 66% since the beginning of the month. However, Bitcoin developers are closely monitoring the network and are considering taking action against BRC-20 tokens and Ordinals, which they regard as network spam. Ordinal inscriptions increased from 2.5 million to 4.78 million in just over a week, which has exacerbated the congestion.
Bitcoin developers believe the congestion on the network could lead to a loss of confidence among investors, and are taking action to resolve the issue. While high transaction fees are concerning for users, it is still profitable for miners. Nonetheless, the cryptocurrency industry must find a way to tackle the issue, as it poses a significant threat to the integrity and reliability of the Bitcoin network.
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