As the memory pool is cleared, Bitcoin transfer fees have dropped sharply recently

The Bitcoin network’s memory pool has shrunk to its smallest size since mid-October this week, following a rebound in the Bitcoin network’s computing power (hash rate).

An empty mempool means that the most recent block contains thousands of stuck transactions waiting to be confirmed that have already been sent, leaving only a few small transactions that remain unconfirmed.

The return of hash power is mainly due to the gradual restart of Chinese miners who relocated from Sichuan after the end of the rainy season in China. In two days on November 9 and 10, Bitcoin's total network hash rate briefly increased by 40%.

A smaller mempool is good news for regular Bitcoin users because it reduces competition among new transactions, allowing them to be included in future blocks more quickly. Reduced competition in the mempool helps lower Bitcoin transaction fees because fewer miners will hoard all transactions in the mempool, regardless of the amount of their transfer fees.

Average Bitcoin transaction fees peaked at $13.16 per transaction on October 30, when more than 140,000 transactions were waiting to be processed in the memory pool. An influx of new hashing power over the weekend, due to the network’s relatively low mining difficulty, allowed Bitcoin blocks to be found faster than the baseline rate of 10 minutes per block. This allowed miners to reduce the number of unconfirmed transactions to zero on November 9.

At the time of writing, there are about 6,000 transactions in Bitcoin’s mempool, with a median fee of 3 satoshis per byte, or about $0.11. Some users have reported that transaction fees have been as low as 1 sat/byte for transactions confirmed within a few hours.

The mining difficulty is expected to increase at the next adjustment to account for the increased hashrate, which means the current respite from high fees may be short-lived. However, the hash rate is currently extremely volatile, having dropped by 37 EH/s in the past day.

Bitcoin transaction fees have remained relatively low through the second half of 2020. In the last week of October, BTC’s price consolidated above the $13,000 mark for the first time since December 2017 — at the same time as a significant increase in transactions sent to the mempool, leading to a significant increase in the backlog of unconfirmed transactions.