Mempool data shows that the Bitcoin Network is experiencing the longest period of block congestion in history with over 460,000 pending transactions. The network is obviously having difficulty handling the increasing transaction volume, leading to higher transaction fees and transaction confirmations delays.
Mempool works as a temporary record of all Bitcoin transactions, which need to be validated by miners, and then added to the next block on the blockchain. Each node in the Bitcoin network temporarily stores this Mempool. Transactions in Mempool will be periodically deleted each time a new block is added to the blockchain.
At the time of writing, Mempool data records up to 467,275 pending transactions. Pending transactions in Mempool are only processed and confirmed if they meet the minimum transaction fee. Transactions with lower fees need to wait more than one block until they are processed and confirmed.
During times of network congestion, miners tend to prioritize processing high-fee transactions, leading to low-fee transactions being left behind. As a result, users who want to confirm transactions quickly must pay higher fees, causing an increase in transaction fees on the Bitcoin network.
Data from bitinfocharts also shows that the average Bitcoin transaction fee is at $2.94, the highest level since July 2023. With a fee of $1,021 recorded on the same day a year ago, it means that the average Bitcoin transaction fee has increased by about 188% in the past year.
This is not the first time the Bitcoin network has faced block congestion issues. In May 2023, the network also went through a similar experience, causing the average transaction fee to skyrocket to more than $19, peaking at $31.1 on May 8, 2023.
The block congestion is mainly due to Bitcoin Ordinals and BRC-20 tokens, causing the number of inscriptions to increase, then pushing up transaction fees on the Bitcoin blockchain.
Bitcoin Ordinals (also known as Bitcoin NFT) was once considered one of the most notable crypto narratives in the first quarter of 2023. During its heyday, Bitcoin Ordinals trading volume continuously increased and peaked at $452 million in May 2023. However, more than 80% of Inscriptions at that time were mostly memecoins, and when the hype passed, the market quickly turned attention to other trends. So, the current block congestion issue has not had a significant impact on BTC price. At the time of writing, BTC was trading at $26,651.