Bitcoin transaction fees have surged to a five-month high, with the average fee approaching $6. This increase is attributed to the rise of Bitcoin Ordinals, non-fungible tokens (NFTs) that store data directly on the blockchain.
The return of Bitcoin Ordinals has led to highly elevated fees as block space is taken up by Ordinals inscriptions. BRC-20 Ordinals add significant transaction numbers for Bitcoin miners to process on-chain, resulting in more competition for confirmations. This has caused a backlog of over 120,000 unconfirmed transactions.
Bitcoin’s Transaction Fees is Higher than a Big Mac
The surge in transaction fees has made using the Bitcoin network as costly as buying a Big Mac. On November 7, users paid an average of 0.00017510 BTC ($6.08) in fees per transaction. The average price of a Big Mac in the United States was $5.58 in July 2023.
The rise in fees is impacting users in low- and middle-income economies, including Bitcoin-reliant communities in El Salvador. The high fees are significantly weighing on users who rely on base layer payments, particularly in parts of Africa and Latin America.
The congestion on the Bitcoin network is due to the popularity of these new tokens, pushing it to its operational limits. This has led users and exchanges to consider alternatives such as the Lightning Network, a layer 2 scaling solution designed to make Bitcoin transactions faster and cheaper.
The current situation highlights the challenges faced by the Bitcoin network as it evolves and adapts to new use cases. As the crypto space continues to innovate, solutions to these challenges will be key to ensuring the network’s accessibility and efficiency.
Bitcoin miners are currently experiencing a surge in their income due to increased fee rates. Data from the on-chain analytics firm, Glassnode, reveals that on November 6, miners’ revenue comprised 8.5% from these elevated fees. This represents the highest daily percentage since the beginning of June.