In the wake of a Bitcoin (BTC) price rally in October, the cost of transacting on the Bitcoin network has significantly increased. Data from mempool.space on Tuesday revealed that users paid average transaction and block fees of 0.00017510 BTC ($6.08) and 0.5796 BTC ($20,131) respectively, surpassing the U.S.'s average Big Mac price of $5.58 in July 2023, as per the Economist's Big Mac Index.
The surge in transaction fees is attributed to the limited block space on the Bitcoin blockchain, which caps the number of transaction confirmations. When there are high volumes of transactions on-chain, competition for this limited block space intensifies, leading users to outbid each other to get their transactions confirmed.
This increase in transaction costs has resulted in a windfall for Bitcoin miners, who have collected 983.46 BTC ($34.16 million) as mining rewards on Tuesday alone. The substantial rewards underscore the escalating demand for Bitcoin transactions amid a period of bullish market activity.
The recent price rally in October has not only driven up the value of Bitcoin but also increased demand on the network. As a result, transaction fees have soared, making it more expensive for users to transact on the Bitcoin network. This trend highlights the challenges faced by the Bitcoin network in scaling to meet increasing demand while maintaining manageable transaction costs.
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