Bitcoin transaction costs are exploding: OKX responsible for blockchain overload?

Users of the Bitcoin (BTC) network currently have to dig deep into their pockets to allow transactions to go through.

The fees have temporarily skyrocketed because the Bitcoin blockchain is extremely overloaded. With more than 300,000 transactions in the queue, you have to pay tens of euros to send value over the network.

Remarkably, the international crypto exchange OKX appears to be the culprit for the increase in transaction costs.

BTC costs are skyrocketing

According to Mempool.Space, you currently pay an average of $34.08 for a medium priority BTC transaction. Normally fees are around a few dollars per transaction, which is a huge contrast to the current situation.

Transaction costs are currently many times higher because the network is extremely busy, with more than 300,000 unconfirmed transactions on hold.

BTC transactions are processed by miners, and they can only process a limited number of transactions in one block. When the demand for transactions exceeds capacity, a queue will logically arise. In addition to the block reward, miners also collect all transaction costs paid, so they will naturally process the transactions with the highest transaction costs.

It is not the first time that transaction costs on the Bitcoin network have skyrocketed, to the frustration of many. In the past, however, the cause was often due to tokenization protocols Ordinals or the recently introduced Runes. This time the renowned crypto exchange OKX, which also entered the Dutch market this week, is said to be the cause.

Internal BTC transactions OKX

According to an analysis by CryptoQuant research head Julio Moreno, OKX is causing the current congestion on the Bitcoin network, and therefore the higher transaction costs.

The analyst said on social media platform

The Bitcoin network works based on the UTXO model. Every time a Bitcoin transaction takes place, a certain amount of Bitcoin is sent from one wallet to another. The Bitcoin received is stored as an unspent transaction output (UTXO) in the recipient’s wallet and can then be used as an input for future transactions.

Users pay transaction fees for each individual UTXO in their wallet. Exchanges often have many small transactions coming in and large transactions going out. To consolidate these UTXOs, exchanges conduct transactions that issue all UTXOs at once, merging them into larger UTXOs in the same wallet.

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