Why are my mining fees sometimes higher than usual?

Bitcoin transaction fees are primarily determined by the two main factors. The amount of congestion and traffic on the bitcoin network, and by the size of the transaction in bytes of data.

 

The bitcoin network has a limited number of transactions it can process per minute. As the demand for transaction space increases, the required fees to get a transaction processed quickly increase along with it. Bitcoin nodes give an estimate fee to get a transaction confirmed within an estimated period of time. This fee is expressed as an amount of bitcoin per byte of data. The fees are NOT dependent on the amount of bitcoin you are sending. None of these fees go to Airbitz but rather to the public bitcoin network as payment for securing and validating transactions.

 

As a normal user, you do not see how large your transaction is in bytes of data but only in amount of bitcoin sent. The typical transaction size is approximately 230 bytes of data which at the time of this writing would cost about $0.35 USD (Mar 2017). However, this is greatly affected by the number of “inputs” required to spend your funds. “Inputs” are previous transactions that went into your wallet. The more “inputs” needed to fulfill your spend, the larger your transaction will be in bytes of data.

 

For example, if you received 20 $1 deposits into your wallet and then went to spend $15, it would require 15 inputs of $1 each. Each input increases the data requirements of your transaction and therefore the fees required to spend the funds. If you received 2 $10 deposits into your wallet instead, it would only require 2 inputs to spend your funds and would therefore be much cheaper.
Note that due to the rising costs of bitcoin mining fees, it may cost more to include an input than the value of the input itself. For example, if you received a $0.10 deposit into your wallet, but it costs $0.25 to include that deposit in an outgoing spend, then the $0.10 deposit becomes un-spendable since it costs too much to include in an outgoing transaction.
Users experiencing large fees have usually received many small deposits into their wallet of usually less than a few US dollars worth. This is common with some mining pool payouts. We suggesting switching to a service that aggregates transactions into a single large transaction that encompasses a longer period of time.

Posted in: Airbitz Wallet (User)