Crypto Blunder: User Accidentally Pays $500,000 in Fees for a $200 Bitcoin Transfer

A Bitcoin (BTC) user paid around $500,000 in transaction fees to send just $200 of BTC last weekend, setting a new record in Bitcoin transaction fees.

The transaction, made on September 10 at 5.10 PM UTC, was sent from a well-experienced Bitcoin user, which many believe must be either an exchange or some sort of Bitcoin payment provider given a history of sending and receiving more than 120,000 transactions.

According to mempool.space, the user paid close to 20 BTC (around $500,000) in transaction fees, overpaying by a whopping 481,299x.

Average transaction fees for Bitcoin typically varies between $1 and $2.

Community speculates on reason

The transaction quickly became a topic of discussion in the Bitcoin community on social media platform X, where many people speculated on the reason why the user would overpay by such a massive amount.

While some suggested it could be part of a money laundering scheme agreed to with certain mining pool operators, others noted that such a theory make little sense because it would be practically impossible for any party to benefit from the fee payment.

An agreement is absolut none sense. How can the miner be sure to mine the specific block? He cannot!

— ₳ndreas (@mrgrauel) September 10, 2023

So far, the most likely explanation appears to have come from Casa chief technology officer and popular Bitcoiner Jameson Lopp, who wrote that the transaction likely comes from an automated payment system “with buggy software.”

“They’ve received 60,000+ txns and sent 60,000+ txns from the same address (bad practice) and likely calculated their change output incorrectly,” Lopp wrote.

He added in a follow-up post that there is a good chance the sender hasn’t even noticed the blunder yet, saying “they still have a ton of funds in the wallet and it’s still sending transactions.”

The address in question that made the fee calculation error has the characteristics of a withdraw-only hot wallet from an enterprise. It looks like it only receives deposits from one address to top up its balance every now and then.

Spending pattern is one long peel chain! pic.twitter.com/V8ApvWvRR3

— Jameson Lopp (@lopp) September 10, 2023

The specific transaction fee was received by the major Bitcoin mining pool F2Pool, which mined the block that included the transaction.

According to F2Pool co-founder Chun Wang, the 20 BTC will be placed on hold for three days.

If they remained unclaimed after that, the fee will be distributed among miners in the pool.