How not to Bitcoin: User pays 1,000x fee to send 4 BTC

What could have inspired a Bitcoin user to overpay by 1,000 times the asking price to move roughly $63,000 in Bitcoin?

Fat fingers? A Bitcoin (BTC) user spent over $200 to make a transaction, paying astronomically above the average fee. 

In a transaction that entered Bitcoin block 760,077, a user paid 1,136,000 satoshis, (0.0136 BTC or $220.52) to move 3.8 BTC ($63,000). This extraordinarily high fee is a whopping 1,000 times the usual Bitcoin transaction fee, as at block height 760,077, the average transaction fee was roughly $0.20.

Twitter user Bitcoin QnA first spotted the out-of-the-ordinary transaction, asking, “Y tho?” The Bitcoin educator told Cointelegraph that “Ultimately, we’ll never know [why they paid high], but there are a few possible answers.” QnA listed the following:

“1. Using a wallet with terrible fee estimations 2. A user making a typo when manually entering their fee rate 3. An exchange processing an urgent payout. They often overpay but never normally by this much!”

Finally, QnA told Cointelegraph that it could be that the user hasn’t done their homework, and the error could be explained by “a user not understanding how miner fees work (unlikely given the amounts seen in the tx in question).”

Transaction fees on the Bitcoin base chain vary from pennies to hundreds of dollars, depending on congestion levels in the Bitcoin memory pool, or “mem pool,” as well as transaction sizes. Transaction fees are priced in satoshis per unit of data, abbreviated to sats/vByte.

The sats/vByte rate is multiplied by the size of the transaction made to get the total fee you’ll pay. Generally speaking, the more money (or data) sent, the higher the transaction fee — although several other factors are at play.

If a user is in a hurry, they can choose to pay a higher sats/vByte fee to almost guarantee that miners will include their transaction in the next confirmed block. The cost of this luxury is a higher fee rate. The lowest fee is 1 sats/vByte; higher fees are generally considered as anything over 7 sats/vByte. For this fat-fingered Bitcoiner in question, they paid a whopping 8,042 sat/Byte, or 1,136,000 sats.

That’s more than 1,000 times the typical fee. The median transaction fee for block 760,077 was ~8 sat/vB or $0.22.

Related: Average Bitcoin transaction fee drops under $1 as network difficulty recovers

Upon further investigation, the same wallet was involved in another Bitcoin transaction 40 minutes prior that also paid an exorbitant fee. The wallet transferred 4.28 BTC ($83,000) for 564,096 sats or (0.056 BTC or $109). Miners received a rate of 4,022 sat/vB for the pleasure, adding the payment into block 760,073.

Due to the Bitcoin blockchain’s pseudonymity, it is unclear why the user paid such a high transaction fee. Nor is it clear why they repeated the same action four blocks later. As a final suggestion, QnA joked that it could be “a rich Bitcoiner doing it to flex (unlikely).”