Bitcoin service fees hit a 2-year high, and network congestion is just like during the bull market in 2017

The size of the bitcoin mempool hit a more than two-year high in recent days, as the backlog of unconfirmed transactions on the bitcoin network has grown significantly in recent weeks. At the same time, it takes longer to mine blocks and longer to confirm transactions.

The Bitcoin mempool represents all transactions on the Bitcoin network that have been broadcast but not yet included in a block. Miners typically select transactions waiting in the mempool to include in the next newly mined block based on transaction fees. Therefore, low-priced transactions may sit in the mempool for a considerable amount of time before being confirmed.

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Bitcoin mempool surged in May. (Source: Blockchain.com)

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The 7-day average of the mempool size is now 67.87 megabytes, the highest since January 2018, shortly after Bitcoin hit its all-time high. In less than a week, the mempool more than doubled in size.

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According to Blockchain.com, the average time for a transaction to be included in a block has now increased from about 7 minutes to 16 minutes.

The large increase in unconfirmed transactions may be the result of a significant decrease in Bitcoin mining activity after the third halving event. Since miners are leaving the network, it takes longer to mine blocks, slowing down the network. According to BitInfoCharts, it usually takes 10 minutes to mine a block, with recent average mining times as high as 14 minutes.

However, the Bitcoin network can adapt to changes in computing power. The difficulty for miners to find new blocks will be adjusted according to the level of computing power. This is to prevent blocks from being generated too quickly. However, adjustments to the mining difficulty occur approximately every two weeks.  

Bitcoin’s average transaction fee has also surged in recent weeks as competition for block space has intensified and is now $6.64 per transaction, ten times higher than at the same time last month. Average transaction fees are now near their highest level in two years.

The average cost of sending a transaction on the Bitcoin network has increased by 2,213% since the beginning of the year.

According to data from Bitinfocharts, which shows that the average transaction fee for Bitcoin climbed to $6.64 on May 20. That was the highest level since July 2018, two years ago.

At the end of last year, the average fee was as low as $0.28—a surge of 2,213% since January 1.

The sudden spike in the average cost of a bitcoin transaction appears to be due to increased activity on the network ahead of the halving of bitcoin’s block reward.

Bitcoin blocks can only process about 1MB of transactions at a time. When the network is heavily used, people are forced to pay higher transaction fees for the privilege of having their transactions included in the next block.

Users can still set lower transaction fees in their wallets. However, they run the risk of being ignored by Bitcoin miners, who naturally seek higher fees.

Bitcoin users are even free to set their fees to zero. This was common in Bitcoin's early days, but today, miners are more likely to ignore such transactions or reject them entirely.

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