A lucky Bitcoin miner just enjoyed another splash of profits thanks to an abnormally high fee paid by one of the network’s users.
Blockchain data shows that an unknown user paid 4 BTC ($172,000) in a transaction fee on Tuesday, dwarfing the amount actually needed to process the transfer.
A Costly Blockchain Mistake
According to mempool.space, the transaction itself only sent 2.9 BTC to the intended recipient, meaning the attached fee was over 133% the size of the transaction itself.
By the site’s metrics, the transaction was overpaid by a factor of 29,992x. Specifically, the user paid 1,800,890 satoshis per vByte (sat/vB) – a metric for calculating demand for Bitcoin block space at a given time. For that block, the standard transaction only paid roughly 60 sat/vB.
“When you’re consolidating UTXOs make sure to actually consolidate them instead of turning one into a fee,” said Tomer Strolight, editor-in-chief for Swan Bitcoin, regarding the transaction in a post to X.
UTXO stands for Unspent Transaction Output, meaning an individual BTC transfer sitting separately within a user’s Bitcoin wallet. These transfers can be thought of as chunks of bitcoin that the user controls: some chunks are larger than others (comprising more BTC) and all of the chunks put together make up the user’s wallet balance.
Generally speaking, its best to avoid dividing one’s BTC into several small UTXOs – especially for economic reasons. When sending large amounts of BTC later, the user must pay a fee on every single UTXO that moves, meaning the more there are, the more expensive the transaction will be.
On-chain data suggests that the high-paying user was attempting to consolidate his UTXOs to avoid this problem – a technique for merging several smaller outputs into a larger one. Days earlier, the same user had received two Bitcoin transactions worth 2.9 BTC and 4.03 BTC each – the same values as his Tuesday transfer and fee respectively.
Will The User Get His Bitcoin Back?
Though Bitcoin transactions and fees are technically irreversible, overpaid transfers have often been paid back by the miners who receive them.
For example, in September, Bitcoin mining pool F2Pool returned funds to Paxos after the latter accidentally paid $500,000 for a Bitcoin transaction.
Months later, mining pool giant Antpool reimbursed an anonymous user’s record-shattering $3.1 million fee to miners.