Bitcoin’s high-flying value has lost some altitude lately, but the cost to perform a transaction is reaching record highs. At the same time, other major cryptocurrencies have also become increasingly expensive not only to buy but to use as a means of exchange.
The average fee to perform a Bitcoin transaction rose to a record $41.62 on Wednesday, according to data compiled by Bitinfocharts.com. By way of comparison, this fee a year ago was 29 cents. Indeed, the average fee, which is paid by users when they spend Bitcoin, has shot up even more dramatically in the past 30 days, soaring from $4.92 as recently as Nov. 25.
Another way to look at this charge is to check the median fee, since the average can be skewed by a number of exceptionally large fees. But here the upward pressure has been equally remarkable. The median as of Wednesday was $27.12 per transaction, up from $2.84 just a month ago, according Bitinfocharts.com.
Transaction fees are collected by so-called miners, which are typically organizations running roomfuls of processors to generate new Bitcoin by cracking complex mathematical puzzles. With transaction volume building, miners are able to charge more to give priority to some transactions over others on the blockchain. Fees have been mounting all year as Bitcoin has become more popular and its network has become increasingly congested.
Nor are some of the other large cryptocurrencies immune to rising fees. Ether, the second largest currency after Bitcoin in terms of total value in circulation, logged an average fee of $1.40 per transaction on Wednesday, close to its $1.45 all-time high, reached only two weeks ago. The median fee Wednesday was 67 cents, down slightly from a record 71 cents reached a few days earlier. While that average fee seems much more reasonable than Bitcoin’s levy, it’s up from about 8 cents a year ago.
Meanwhile, Bitcoin Cash, the third-largest cryptocurrency, jumped to 90 cents per transaction on Wednesday, up from 27 cents the day before and around 7 cents at its debut in August. The median fee, however, is just 4 cents, down from a spike to 12 cents a month ago. Bitcoin Cash is a Bitcoin spinoff that started after a mining group effected a so-called hard fork in Bitcoin’s code to create a new chain with higher transaction capacity.
Bitcoin transactions are becoming dramatically dearer as the dollar value of each coin tumbles. The digital currency was trading at $15,622 at mid-morning Thursday, just four days after very briefly crashing through the $20,000 barrier, according to data from Coinmarketcap.com.
Merchant processors, though, are finding ways to cash in on the recent enthusiasm for blockchain, the technology underpinning cryptocurrencies. A standout example is Miami-based Net Element Inc., whose stock was still rising sharply Thursday on the Nasdaq Capital Market after rocketing 272% on Wednesday in the wake of the processor’s news that it had created a blockchain business unit. At about 11:30 a.m. Eastern, a Net Element share was going for $23.38, up 21% from Wednesday’s $19.39 close, according to Yahoo! Finance.
—With additional reporting by Jim Daly.