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Half a Million Dollars in Fees for a Bitcoin Transaction

A mysterious user recently paid nearly 20 Bitcoin in fees to transfer just about $2,000. This costly mistake likely stems from a software bug of an as-yet unidentified company. Fortunately, a mining pool has offered to return the coins.


Mistakes can sometimes come with a hefty price tag. Yesterday, when someone initiated a Bitcoin transaction, they sent 0.074 Bitcoin and paid a staggering 19.821 Bitcoin in transaction fees. This fee alone is three times the block reward of 6.25 Bitcoin.


Such a fee is so astronomically high compared to even the most exorbitant fees that it can only be an oversight. The specifics of this blunder have become the subject of much speculation. Jameson Lopp suspects an exchange or payment service provider with flawed software: "They've received more than 60,000 transactions and sent over 60,000 transactions from the same address (a bad practice) and likely miscalculated the change output."


The entity behind this remains unknown. It's puzzling which company uses bech32 addresses but still receives so many transactions with the same address in 2023. Unless there's a valid reason, this is simply a rookie mistake. The address currently has a balance of 375 Bitcoin – nearly $10 million. Since its first transaction in June 2023, it has received a total of 763,428 Bitcoin, almost $20 billion, typically maintaining a balance between 400 and 500 Bitcoin. The fact that this entity remains unidentified is curious.


According to Bitinfochart's activity pattern of the address, Jameson Lopp further explains that this address "has the characteristics of a company's hot wallet payout address. It seemingly receives deposits from one address to occasionally top up the balance. The spending pattern is a single long peel chain."


Based on Jameson Lopp's spending pattern of the address, it's conceivable that this could be a custodian managing funds for other crypto businesses in the background. Given the address's anonymity and its spending forming a "peel chain" pattern, one might also consider a criminal entity, such as a darknet market or a ransomware hacker. However, it's unlikely that they would use a single address for all transactions.


The fortunate mining pool that included the transaction in a block was F2Pool, one of the oldest pools in existence. Chun from F2Pool stated that they are putting the 20 Bitcoins "on hold" for now. If no one claims them within three days, they will be distributed among the miners. For them, these 20 Bitcoins would be a welcome bonus.


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