Bitcoin mining can be a lucrative endeavor, especially when miners stumble upon unexpected windfalls. Recently, one lucky Bitcoin miner enjoyed another splash of profits thanks to an abnormally high fee paid by one of the network’s users. However, this windfall came at a great cost to the user who mistakenly overpaid for a transaction.
According to blockchain data analyzed by mempool.space, an unknown user paid a staggering 4 BTC ($172,000) in transaction fees on Tuesday. This amount far surpassed what was required to process the transfer, as only 2.9 BTC actually reached the intended recipient. The attached fee was over 133% the size of the transaction itself, representing a costly blockchain mistake.
Driven by curiosity, onlookers dove into the numbers. Site metrics revealed that the user paid 1,800,890 satoshis per vByte (sat/vB), a metric used to calculate the demand for Bitcoin block space. In comparison, the standard transaction for that block paid only about 60 sat/vB. The user overpaid the transaction fee by a factor of 29,992x, highlighting the magnitude of the error.
Experts weighed in on the incident, cautioning users to be mindful of how they handle their Bitcoin transfers. Tomer Strolight, editor-in-chief for Swan Bitcoin, advised, “When you’re consolidating UTXOs, make sure to actually consolidate them instead of turning one into a fee.” UTXO refers to Unspent Transaction Output, which represents individual BTC transfers within a user’s Bitcoin wallet. Consisting of chunks of bitcoin controlled by the user, these transfers form the user’s wallet balance.
Generally, it is advisable to avoid dividing one’s BTC into several small UTXOs, particularly for economic reasons. When sending large amounts of BTC later, the user incurs a fee for each UTXO that moves. Consequently, the more UTXOs there are, the more expensive the transaction becomes.
Examining the on-chain data, it appears that the high-paying user attempted to consolidate their UTXOs to mitigate this problem. UTXO consolidation involves merging several smaller outputs into a larger one. A few days prior, the same user had received two Bitcoin transactions, each worth 2.9 BTC and 4.03 BTC, mirroring the values of their Tuesday transfer and fee, respectively.
The question looms: will the user be able to recover their overpaid Bitcoin? Although Bitcoin transactions and fees are technically irreversible, instances of overpaid transfers being reimbursed by miners have occurred in the past. In September, Bitcoin mining pool F2Pool returned funds to Paxos after the latter accidentally paid \(500,000 for a Bitcoin transaction. Similarly, mining pool giant Antpool reimbursed an anonymous user's record-breaking \)3.1 million fee to miners.
This Bitcoin blunder serves as a stark reminder to users to exercise caution and double-check transactions to avoid costly mistakes. While the lucky miner reaped the benefits of a substantial fee, it came at the expense of an unwitting user’s $170,000 loss. The incident underscores the intricacies of the Bitcoin network and the importance of understanding its nuances to avoid such misfortunes.
This article was originally published on CryptoPotato.