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Mempool Congestion, Coinbase Eyes UAE, Bittrex US Chapter 11 - Week 36

Mempool Congestion, Coinbase Eyes UAE, Bittrex US Chapter 11 - Week 36

May 10, 2023

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News

Mempool and Ordinals

Bitcoin's mempool, which hosts the list of unconfirmed transactions waiting to be processed on the Bitcoin network, has been experiencing significant congestion.

The congestion is mainly due to the minting of BRC-20 tokens. These tokens are text-based ordinal transactions being pushed into the mempool, causing a backlog and driving up fees. The median fee rate for transactions has reached as high as $20, and the fee rate hit 106%, surpassing the block reward of 6.25 BTC. The congestion is causing frustration for some users experiencing long wait times , while others opt to pay high fees to prioritize their transactions.

To combat this congestion, users can use RBF (replace by fee) to prioritize their transactions and ensure they are processed quickly. This feature allows users to update the fee on an unconfirmed transaction in real-time, effectively replacing the original transaction with a new one with a higher fee.

However, it also raises questions about the scalability and efficiency of the Bitcoin network in accommodating these new use cases.

Some people suggest that the Bitcoin network may need significant upgrades to support the growing demand and ensure the continued growth and adoption of the Bitcoin ecosystem.

Lightning is another such solution to scalability. Since Bitcoin’s base layer was never meant for transaction throughput, only transaction finality, Lightning offers a place for users to go who want to send small frequent transactions. Although you still need to open a channel on the base layer to use the lightning network, this increase in wait times in the mempool will likely drive more people to open channels in low-fee environments.

Once a channel is open, you can perform thousands of transactions, like opening a tab and waiting to close it once you have finished.

Coinbase Eyeing the UAE

Coinbase, the popular US-based cryptocurrency exchange, is reportedly considering the United Arab Emirates (UAE) as a potential international hub.

According to Coinbase CEO Brian Armstrong, the UAE is a bridge between Asia and Europe, making it an attractive location for expanding Coinbase's international presence. Despite ongoing regulatory scrutiny from the Securities and Exchange Commission (SEC) in the US, Coinbase has no plans to leave the country.

However, the company wants to expand globally and sees the UAE as a potential location for future growth. The report comes amid increasing interest in the cryptocurrency space in the Middle East, with several countries exploring the potential of Bitcoin.

This comes one day before former Coinbase manager Rohit Wahi was sentenced to two years in prison for insider trading related to the company's Bitcoin Cash (BCH) listing.

Wahi pleaded guilty to conspiracy to commit wire fraud, marking the first prosecution involving claims of cryptocurrency insider trading.

Bittrex Files Chapter 11 in the US

Bittrex has filed for Chapter 11 bankruptcy in Delaware due to unclear regulatory requirements and after being sued by the SEC for operating an unregistered exchange, broker, and clearing agency.

The company has over 100,000 creditors, assets, and liabilities, estimated to be between $500 million and $1 billion. The OFAC is the largest creditor, to whom the company agreed to pay $25 million for violating anti-money laundering rules and U.S. sanction programs.

The filing will impact Bittrex's U.S. customers, but Bittrex Global will continue to operate as usual for customers outside the U.S.

Price

Bitcoin continues its sideways journey, hardly flinching from the recent bank failures and high fee environment. Although there is much noise in the space saying Bitcoin has failed as a payments system, miner’s revenue has doubled in the last few days, taking money from users who look to exploit others through meme-coins (BRC-20) and funding the miners that are securing the network.

Here is a graph of overall fees and block subsidies. Miners have been raking in the fees and doubling their revenue overnight, yet there hasn’t been a projected increase in difficulty. All miners plugged may be energized, and any more miners aren’t waiting on the sidelines. A sign of the bottom of the bear market consolidation of miners.