Bitcoin Transaction Fees Decline as Network Congestion Eases

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The total amount of fees paid to miners was 80 BTC as of Tuesday, down from its 11-month high of 201 BTC on May 21, according to the data provided by the blockchain intelligence firm Glassnode.

It was at 57 BTC on May 3.The percentage of miner revenue from fees has also pulled back to 9.4% from the 28-month high of 21% registered on May 20."The fall back in transaction fees are related to a normalized transaction activity and recent mining difficulty adjustment, which occurs around every two weeks," said Wayne Chen, CEO of Interlapse Technologies and founder of virtual currency platform Coincurve.

Users pay fees to miners for processing transactions on the blockchain.

Transaction fees are determined by the state of the network and the size of the transaction.

Bitcoin's block size is 1 MB, which means miners can process only 1 MB worth of transactions per block mined roughly every 10 minutes.

If the number of transactions exceeds 1 MB, the network gets congested and miners prioritize transactions with higher fees.

The recent decline in fees could also be associated with the downward adjustment in the mining difficulty and the resulting drop in block interval time.

The mining difficulty, a measure of how hard it is to mine blocks, was adjusted lower by 6% to 15.14 terahashes per second on May 20, as the hashrate, or the mining power dedicated to mine blocks fell following the halving.

Halving doubled the cost of mining, forcing inefficient miners to shut down operations.

The mean block time had jumped by nearly 150% immediately after halving, forcing miners to charge higher fees.

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