Bitcoin miner F2Pool has successfully reversed a recent erroneous bitcoin transaction that resulted in an excessively high transaction fee of $510,000, almost 480,000 times the average network fee of $2.176. The responsible party, Paxos, acknowledged its error and identified it as a bug in a single transfer.
According to on-chain data from Mempool on X, F2Pool has sent the 19.82108632 BTC fee overpayment back to Paxos. This refund comes after extensive discussions within the bitcoin community, with figures like Stake.fish founder Chun Wang expressing regret over agreeing to the refund with Paxos.
F2Pool have sent the 19.82108632 BTC fee overpayment back to Paxos https://t.co/IB32RNq5uO
— mempool (@mempool) September 15, 2023
Miner Returns Overpayment
On September 10, 2023, Paxos attempted to transfer a modest 0.074 BTC, valued at less than $2,000. However, an error occurred, resulting in a transaction fee of 19 BTC, equivalent to approximately $510,000. This anomaly marked the highest transaction fee ever recorded on the bitcoin network.
Jameson Lopp, co-founder of CasaHODL, analyzed the incident and speculated that the mistake may have originated from a software issue within an exchange or payment processor’s address handling system. Lopp pointed out that the address in question, which had processed over 60,000 transactions, likely experienced a miscalculation in the change output, leading to the excessively high transaction fee.
The transaction that paid nearly 20 BTC ($500,000) fee a few hours ago looks like an exchange or payment processor with buggy software.
They’ve received 60,000+ txns and sent 60,000+ txns from the same address (bad practice) and likely calculated their change output incorrectly. pic.twitter.com/s44Yc8S2ia
— Jameson Lopp (@lopp) September 10, 2023
Chun Wang, co-founder of F2Pool, revealed that the user had a three-day window to claim the overpaid fees. In the event of non-claim, the miner would redistribute the funds among miners, a decision aimed at reasonably addressing potential unclaimed fees.
Lopp commended the BTC network for its cooperative nature after the return. He expressed that bitcoin is an adversarial network, but on the flip side, it’s also a cooperative one. Lopp emphasized that miners, being human, understand that mistakes can happen. While keeping excessive transaction fees could yield short-term gains, he considered the decision to return the funds as the humane choice.
Paypal’s Involvement Speculation
Initial speculations pointed towards PayPal’s involvement, as the digital wallet’s transaction behavior resembled a previously associated defunct address. However, a Paxos spokesperson neither confirmed nor denied any connection to PayPal.
There have been instances in the past that saw similar occurrences. In 2019, an Ethereum user lost nearly $400,000 in Ether after mistakenly inputting values in the wrong fields. Fortunately, the Ethereum mining pool Sparkpool stepped in and assisted in recovering half of the lost funds.