Binance has suspended bitcoin transactions for the second time in a few hours. The network is heavily congested, causing transaction fees to skyrocket.
[Update May 8, 2023, 05:25 UTC] Binance CEO Changpeng Zhao tweeted that the exchange’s fee parameters did not anticipate the recent surge in BTC network gas fees. To clear the backlog of bitcoin transactions, Binance has imposed withdrawal fees and enabled withdrawals on the Lightning Network.
On May 7th, Binance, the world’s largest crypto exchange, suspended bitcoin transactions. It cited a network congestion and said it was working on a fix.
A few hours later, the company reported that transactions had resumed.
However, on May 8, Binance again suspended bitcoin withdrawals “due to the large volume of pending transactions.” About an hour later it said:
“There is still a large volume of Binance withdrawal transactions pending as our set fees failed to anticipate the recent spike in $BTC network gas fees.”
Binance added that the team is working to speed up the confirmation of all pending transactions.
Bitcoin Network Demand Increases, Binance Rebounds
Binance said it will replace pending BTC withdrawal transactions with a higher fee to be picked up by mining pools. The latest update from the company a few minutes ago read:
“BTC withdrawals are now resuming on Binance. Pending transactions are processed by replacing them with higher transaction fees.”
A surge in taproot usage and ordinal inscriptions has put pressure on the Bitcoin network. This has caused transaction fees to skyrocket and the mempool to become clogged.
Additionally, Bitcoin transaction fees surpassed the 6.25 BTC mining subsidy for the first time since 2017. BTC pioneer Jameson Lopp commented on this
“Block 788695 marks a historic moment when transaction fees exceeded the mining subsidy due to high demand for block space. The thermodynamic safety model has been shown to be possible. The only question that remains is whether this demand is sustainable.”
At the time of writing, there were more than 450,000 pending transactions according to Mempool.Space data. In addition, average transaction fees had increased to over $15.
Bitcoin Network Mempool Status | mempool.space
The surge in activity has been attributed to the memecoin craze and ordinal inscriptions. A surge in network activity related to BRC-20 transactions has propelled transaction fees to multi-year highs.
BTC price declines
Bitcoin prices are currently taking the opposite path to transaction fees. BTC is down 2.2% on the day, trading at $28,214 at the time of writing.
Bitcoin BTC/USD price 1D chart | BeInCrypto
Furthermore, the asset failed to break the strong resistance at $30,000 over the weekend. It hit a weekly high of $29,724 before falling back during Monday morning’s Asian trading session.
Disclaimer
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