Binance Resumes Bitcoin Withdrawals As Transaction Fees Skyrocket
Binance responded to a significant backlog of pending transactions on the Bitcoin blockchain by increasing its BTC withdrawal fees. The exchange suspended bitcoin withdrawals for about an hour on Sunday morning and then again throughout the day.
A spokesperson for Binance confirmed that the exchange increased its bitcoin withdrawal fees from 00002 BTC ($5.59) to 0.001 BTC ($27.94) per withdrawal. This increase was necessary due to an increase in the overall network fee on the Bitcoin network, resulting in a higher operational cost for maintaining withdrawals for BTC.
The spokesperson said that the withdrawal fee charged on the Binance platform for the Bitcoin network needed to be increased to ensure users’ transactions were picked up by mining pools.
Pending bitcoin transactions are those submitted by users but yet to be added to the blockchain by the network’s miners and sit in the blockchain’s “mempool.” On Monday morning, the mempool recorded its highest ever count in its 14-year history at 444,000.
Due to the competitive demand for Bitcoin blockspace, miners will prioritize transactions with higher fees attached, which can result in longer withdrawal times. Binance did not anticipate this increased demand, leading to delays in withdrawals.
The average transaction fee has surged almost five times since March and has reached its highest point in two years, currently at $19.21, a 789% increase compared to the same time last year, according to data from YCharts. The surge has been attributed to an influx of Ordinals inscriptions and BRC-20 mints.
Binance plans to enable bitcoin withdrawals on the Lightning Network, a layer-2 network designed to make transactions faster and cheaper, to address similar scenarios in the future.
Binance will provide another update once all pending transactions have been processed.
Meanwhile, the price of Bitcoin has decreased by 3% in the last five days to around $28,000, but it is still up by 70% year to date.
This information was updated on May 8, 2023, at 6:19 am ET, confirming Binance’s new bitcoin withdrawal fees.
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