Bitcoin Transaction Fees Spike as Bithumb Hurriedly Tries to Clear its Hot Wallet in the Wake of the Recent Hack
Bitcoin transaction fees are currently triple their value less than 24 hours ago. Also, there are reports of transaction backlogs as the network appears congested.
Bitcoin Transaction Fees Triple in Less than 24 Hours
At the time of writing this article, the average BTC transaction fee is $2.75. This figure is more than triple the cost per transaction yesterday. In fact, BTC fees haven’t crossed the $1 mark for most of 2018.
According to Sergej Kotliar, the CEO of Bitrefill, the reason for the spike in BTC transaction is because Bithumb is hurriedly trying to clear out its hot wallet. Bithumb, a South Korean cryptocurrency exchange platform recently suffered a cyber-attack. The hackers stole more than $30 million in cryptos.
Currently big backlogs and high fees on the bitcoin network. Just confirmed that it is Bithumb, cleaning out their hotwallet. pic.twitter.com/21ENfmZj56
Possibly related to their [Bithumb] hack would explain them overpaying 100x on fees for consolidation. This does put [a] strain on the whole network, and everybody’s fee estimators.
Miners usually prefer to mine the blocks with the highest fees first. With Bithumb seemingly desperate to move funds quickly, it appears their transactions are being given priority attention. This situation leaves other “normal” transactions in temporary limbo.
Kotliar, however, does not think the situation will last for too long, saying:
This is a temporary thing. Will likely have blown over tomorrow, two days at most. This is not a repeat of December/January.
Another Twitter account, “WhalePanda” had this to say about the situation:
Bithumb is paying crazy fees to consolidate everything now (assuming it’s not the hacker), driving up the overall fees for everyone on the network. Is this a problem? No, not really. It’s definitely annoying, but not really a problem, it’s temporary.
In December 2017 all the way to the beginning of February 2018, Bitcoin transaction fees reached record levels. Also, the network was bogged down by slow confirmation times which regularly reached more than 20 hours per transaction. However, the introduction of protocol upgrades like SegWit and Lightning Network significantly reduced fees on the network.
The Curious Case of the Bithumb $28 Million Tax Fine
Less than a fortnight ago, Bithumb was cleared of tax evasion charges in South Korea. However, the platform still incurred a $28 million tax bill for unpaid taxes. In the early hours of Wednesday, 20 June 2018, reports emerged that the platform had been hacked to the tune of $30 million. The proximity between the two events has caused some in the crypto community to suspect some foul play.
The platform hasn’t revealed which of the coins in its holdings were affected by the hack. Bithumb has even deleted a few tweets about the hack leading to a few raised eyebrows of people monitoring the situation
Do you think the current spike in BTC transaction fees is a temporary anomaly? What are your views on the Bithumb hack happening so close to its $28 million tax fine? Keep the conversation going in the comment section below.
Images courtesy of Twitter (@ziggamon and @WhalePanda).