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Bitcoin Network Fees Surge to New Highs and Transactions Slow Down after China Mining Rig Explosion

CryptoWhale
CryptoWhale
Bitcoin transaction fees have hit an all-time high after an explosion in Xinjiang, China, drove miners offline last week.
According to data from BitInfoCharts, the average (mean) fee is now USD 58.42, eclipsing the former record of USD 55.16 set in December 2017.
The drop in hashrate, which coincided with the increase in BTC mining difficulty, has caused a rise in unconfirmed transactions, resulting in an upsurge in fees as users outbid each other to have their transactions sent to the front of a fast-growing queue.
And with Bitcoin’s automatic difficulty adjustment not due to take place for around 11 days, these new record fees may persist for some time yet.
Bitcoin transaction fees hit new heights
While mean Bitcoin network fees are at an all-time high, median fees have hit a three-year high of USD 26.89, per the same data compiler. That – in the current market – is equivalent to roughly BTC 0.00049.
This figure is still relatively high, and has been caused mostly by a blackout in Xinjiang.
Alex Zhao, the CEO of Standard Hashrate Group, explained that miners in Xinjiang would likely be out of action for at least a week.
He said,
“A malfunctioning substation exploded in an industrial development zone designated to receive electricity utility fee abatement. This triggered a mandatory week-long shutdown and a safety inspection of the entire industrial development zone, which currently hosts a significant portion of Bitcoin hashrate.”
The effect is noticeable, as indicated by the number of unconfirmed transactions in the Bitcoin mempool. Dipping as low as 47,000 on April 15, the number rose to around 136,000 on April 18, and currently sits at 117,000.
Ongoing disruption
The disruption is likely to continue in the short term.
“I’ve personally had a BTC transaction pending for the last nine hours, with no confirmation in sight. This is not fun,” Mati Greenspan, Founder of Quantum Economics, wrote in his newsletter yesterday. “Unless we see a quick recovery in the hash rate, it seems safe to say that things are gonna be a bit slow for a while.”
The mining difficulty of Bitcoin is adjusted around every two weeks (or more precisely, every 2016 blocks) to maintain the normal 10-minute block time. The 7-day simple moving average block time on April 19 was more than 12 minutes.
Major Correction Incoming?
Over the last few days, many Bitcoin maximalists/influencers have tried their best to reassure the herd that Bitcoin is fully decentralized and that this event is actually “bullish for Bitcoin” as it allows for “diversification” in mining.
While I am pro-Bitcoin, I will always prefer facts over fiction. Regardless of anyone’s personal bias, this event is not bullish in any regard. The only way we can see a rise is if Tether prints more money to cover up this hole.
Bitcoin has lost its edge with this news, and people are waking up to how blatantly overvalued the market truly is. Anyone transacting Bitcoin will now spend 9000% more in fees than any bank, and wait on average, 4600% longer. Does that sound like the future of finance to you?
The last time Bitcoin saw unconfirmed transactions, and transaction fees surge beyond 50$ was during the peak of the Bitcoin/ICO Bubble in December 2017. Could we be repeating this major correction?
In my opinion, this event exposes Bitcoin’s weaknesses in being a payment provider or globally accepted currency. With that, I expect this bubble to implode within the next few weeks or months, especially considering Tether’s required audits coming up later this spring, which should shed light on their price manipulation scheme.
Thanks for reading! Have a great day everyone.
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CryptoWhale
CryptoWhale @cryptowhale

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