Bitcoin User Mistakenly Pays Highest Ever $3.1M Fee for Transaction

A Bitcoin user made a costly mistake by paying a $3.1 million fee on a simple transfer to another wallet, making the largest Bitcoin transaction fee in the cryptocurrency’s 14-year history. However, based on past incidents, there is a chance that the miner who collected the fee might return it to the user.

On November 23, the wallet sent 139.42 BTC to another wallet. Mempool records reveal that during this transaction, the user inadvertently paid a fee of around 83.66 BTC, leaving only 55.77 which arrived with the recipient. The transaction was recorded in block 818087.

Source: mempool.space

Interestingly, other transactions in the same block paid median fees of $7.40. Currently, the average fee for BTC transfers is about $14, with the highest average fee recorded in 2021 at approximately $61.

The excessive fee potentially resulted from the user utilizing the Replace-by-fee (RBF) feature. It allows for the replacement of an unconfirmed transaction with a different version that carries a higher transaction fee. The option is primarily used when an initial transaction gets stuck in the mempool due to low fees, and a user wants to bump up the fee to incentivize miners to process the transaction. 

Importantly, a user can send multiple RBF transactions, but one doesn’t cancel the other; rather, they add up. So what might have happened, is that the user initially set a high fee on the transaction, and then tried to cancel the transaction with RBF, but instead unknowingly bumped up the fees. The RBF history indicates that the last transaction update increased the fee by an extra 20%, thereby adding 12.54824636 BTC to the total fees.

While many think the transaction must have been made by accident, some express skepticism and say that the transaction uses advanced features and could have been made deliberately: 

What’s interesting is that because it’s using these more advanced features, it’s likely whoever did this did it on purpose. Unless it was a horrible bug in their software and they didn’t spot it before broadcasting. It seems unlikely with such high amounts.

However, it is difficult to find a plausible reason why someone would intentionally execute this transaction. Using it for laundering fees through mining seems unlikely, as there is no certainty about which miner would actually mine the transaction.

This is not the first instance of a user overpaying transaction fees on the Bitcoin network. In September, F2Pool returned a 19.8 B TC fee that was mistakenly sent by Paxos. 

At the time of writing, AntPool, the mining pool that mined the $3.1 million fee transaction, has not issued any announcements.