Bitcoin User Pays $3.1 Million in Transaction Fees

Estimated read time 3 min read

In a bizarre turn of events, a Bitcoin user recently paid a whopping 83.7 Bitcoin (BTC), equivalent to $3.1 million, in transaction fees for transferring just 139.42 BTC. This exorbitant transaction fee has now become the eighth-highest in Bitcoin’s 14-year history.

It all began when the BTC wallet address bc1qn3d7vyks0k3fx38xkxazpep8830ttmydwekrnl attempted to transfer 139.42 BTC to the address bc1qyfem6z7pq3mqn7tcnn0587dhcnhkrqh8km36t4 on November 23rd. However, instead of paying a reasonable fee, the sender ended up paying over half of the transferred amount as a transaction fee.

The receiver’s address only received 55.77 BTC, highlighting the severity of the situation. This unprecedented mining fee was captured by the mining pool Antpool on block 818087. Social media users have speculated that the sender intentionally selected the high transaction fee. While this may have played a role, there are other factors at play as well.

One is the replace-by-fee (RBF) node policy; RBF allows unconfirmed transactions in the mempool to be replaced with different transactions that offer a higher transaction fee, expediting their clearance. The mempool serves as the queue where all Bitcoin transactions await approval and subsequent addition to the blockchain. However, the sender seemed unaware that RBF orders cannot be canceled.

Consequently, they may have repeatedly tried to replace the fees in an attempt to cancel the transaction. In the case of this transaction, the fee was continually increased as a result of these replacement attempts. The RBF history indicates that the last replacement added an additional 20%, resulting in 12.54824636 BTC being paid in fees.

This incident isn’t the first time a Bitcoin user has accidentally paid an exorbitant transaction fee. In September, the bitcoin exchange platform Paxos mistakenly sent a $500,000 fee for a $2,000 BTC transfer. Fortunately, in that case, the F2Pool miner who verified the transaction promptly returned the accidental fee to Paxos.

However, the recent incident marks the largest Bitcoin transaction fee to date in terms of dollars paid, surpassing the September Paxos transfer. The largest fee ever paid in Bitcoin terms occurred in 2016 when someone mistakenly sent 291 BTC as transaction fees.

Mononaut, a developer who specializes in mempool technology, explained that while this recent case shares similarities with the Paxos incident, the likelihood of Antpool returning the funds hinges on their own payout policies and obligations to share transaction fees with miners. As of now, Antpool has not commented on the issue or responded to inquiries.

This costly mistake serves as a stark reminder for Bitcoin users to exercise caution while making transactions. In the rapidly evolving world of cryptocurrencies, it’s crucial to be well-informed and understand the intricacies of the technology to avoid such hefty financial blunders.