9 June 2025
Bitcoin Transaction Fees Explained & How to Pay Less in BTC Fees
The Important Bits
Bitcoin transaction fees, paid to miners, vary based on network congestion and transaction size, and are crucial for incentivizing the decentralized operation of the blockchain.
Users can manage fees by adjusting transaction speed, timing transactions during off-peak hours, or using Layer-2 solutions like the Lightning Network for cheaper, faster transfers.
While fees have historically fluctuated widely, from pennies to over $100, tools and strategies exist to help users minimize costs and make informed choices about when and how to transact.
Intro to Bitcoin fees
A Bitcoin transaction fee, paid to Bitcoin miners, is the cost of sending BTC to another wallet on the blockchain. Each time a user conducts a transaction, their wallet will charge a miner fee in addition to any associated exchange fees when using an exchange wallet.
As a crypto user, it’s very important to understand how transaction fees work on the Bitcoin network and any other networks you may be using.
What are Bitcoin transaction fees?
A Bitcoin transaction fee is a cost associated with sending BTC across the network. The fee is paid in Bitcoin itself, and the amount can vary depending on the network's current activity.
For the Bitcoin protocol to function in a decentralized manner, miners must be incentivized. To this end, miners receive a block subsidy that contains two components:
Newly minted BTC
Transaction fees paid by users
In this way, transaction fees ensure that miners are continuously incentivized to support and maintain the Bitcoin network, even as the block reward (the number of new bitcoins given to miners) decreases over time.
How Bitcoin transaction fees work
Bitcoin transaction fees are an essential part of the network's operation, as they help prioritize which transactions are processed first.
Miners validate Bitcoin transactions by adding them to blocks on the blockchain. They choose which transactions to include based on the fees offered, with higher-fee transactions being processed faster.
Fees are typically based on the size of the transaction (measured in bytes) and how congested the network is. When the network is busy, fees rise because users compete to get their transactions processed quickly.
Each block in the Bitcoin blockchain has limited space, meaning only a certain number of transactions can fit in one block. When demand for block space is high, fees increase as users continually bid up prices by competing for their transactions to be included as soon as possible.
Factors influencing Bitcoin transaction fees
Several factors can affect how much you pay in Bitcoin transaction fees. Some of the most important ones include:
Using centralized vs. decentralized exchanges
Centralized exchanges derive their profits from the fees they charge users. These fees can include withdrawal and the necessary blockchain transaction fees. Decentralized exchanges, however, have no intermediaries and do not take a cut of every transaction, which can result in lower fees overall.
Network congestion and demand
When many people use the Bitcoin network at once, fees rise due to higher competition for block space. The busier the network, the higher fees tend to be.
Priority fees vs. standard fees
If you want your transaction confirmed quickly, your wallet may offer the option to pay a priority fee, which will be higher than the standard fee. Standard fees are lower but result in longer wait times for confirmation.
UTXOs
Unspent transaction outputs (UTXOs) can lead to higher transaction fees, depending on how many transactions a user has sent to a particular wallet over time. The increased fees occur because transactions that use more data (measured in bytes) typically require higher fees to process, as fees are measured in satoshis (the smallest unit of BTC) per virtual bite (vB) of data.
Current state of Bitcoin transaction fees
According to Bitinfocharts.com, transaction fees in 2025 thus far have cost an average of $1.63 (USD).
A dollar price below $2.00 per transaction is very low compared to prices in recent years. Prices have often ranged from $3.00 to $30.00 during much of 2023 and 2024. At times, transaction fees can spike dramatically higher for a time, such as during the 2024 halving event in April, which saw a record-high average BTC network fee of $127.97. The extreme price increase was due to users vying for block space in the halving block.
For much of Bitcoin’s early history from 2009 to 2017, transaction fees were under $1 and often measured in pennies because the price of Bitcoin itself was so low. As Bitcoin experienced rapid price appreciation throughout 2017, bitcoin fees went from $0.40 in January to over $50 in December, a record high then.
Since that unique period in Bitcoin’s history, fees have often been a few dollars or less, with much of 2024 being an exception. Fees averaged over $5 for almost the entire first half of the year, often spiking into the double digits.
How to minimize Bitcoin transaction fees
Minimizing Bitcoin transaction fees can be difficult depending on network congestion, but users can take some steps to help avoid paying excess fees.
Explore L2s and Other Networks
When network activity is very high, and a transaction needs to be sent immediately, the best option could be using a layer-2 solution like Lightning or choosing a different blockchain altogether.
Adjust Transaction Speed
Some wallets, like the BitPay Wallet, allow you to adjust the transaction speed. If the transaction doesn’t need to be confirmed with urgency, adjusting your transaction speed can reduce miner fees significantly. Inversely, if you need to confirm a transaction right away, you can choose to speed up the transaction and pay a higher miner fee. Note that users often may not be able to choose their fee when sending a transaction from an exchange wallet like Coinbase, Kraken, or Binance. If using a custodial wallet, consider leveraging a self-custody wallet.
→ Learn how to move your assets from an exchange to a self-custody wallet
Time Your Transactions
Another option is using fee estimation tools like BitcoinFees.net to determine the optimal price at any given time. As a general rule, fees are lowest when there is lower market activity, typically weekends and in the late night/early morning hours (Eastern Standard Time).
The impact of high fees on Bitcoin use
When BTC network fees are high, it often leads to criticism against the network, providing some evidence that the network may not function well as a medium of exchange. High fees may dissuade some users from spending Bitcoin or from using it altogether, potentially hurting future Bitcoin adoption.
Other blockchains, like Solana or Litecoin, offer much faster and cheaper transactions. During times of high BTC transaction fees, some users may opt to exchange their BTC for another cryptocurrency, make a transaction on the new network, and then convert the assets back to BTC. This can be a suitable option, provided the coins can be traded or swapped for a low enough fee.
Future outlook for Bitcoin transaction fees
The future of Bitcoin transaction fees will likely be shaped by scaling solutions designed to improve network efficiency.
The Lightning Network, a Layer-2 solution, allows Bitcoin users to transact off-chain, reducing the need for on-chain transactions and lowering fees. Moving smaller transactions to this faster secondary layer enables the base layer to handle larger transfers more efficiently, keeping fees down. However, Lightning is still in development and has sometimes been criticized for its lack of user-friendliness, slow adoption rate, and potential security flaws.
Recap on BTC fees
Bitcoin transaction fees are essential to the network’s operation, as they incentivize miners to validate transactions and maintain the blockchain. While fees vary based on network congestion and transaction size, tools like fee estimators and Layer 2 solutions like the Lightning Network can help users manage and minimize costs.
As the Bitcoin ecosystem evolves, users should stay informed about fee trends and recent developments. By using intelligent strategies like timing transactions during low-activity periods or opting for platforms with minimal service fees, you can better manage your Bitcoin transaction costs and hold on to more of your BTC.
FAQs about Bitcoin network fees
What are miner fees in Bitcoin?
Miner fees incentivize miners to process transactions and add new blocks to the chain. Every time a Bitcoin transaction is sent, the user must pay a small fee to the miner who processes the transaction—part of what allows the network to function without a centralized intermediary.
How can I avoid high transaction fees?
There are times when high transaction fees can’t be avoided. If the network is experiencing high traffic, everyone will have to pay higher fees than usual. The only way to avoid high transaction fees is to wait until network activity calms down, opt for a slower confirmation time, or use a Layer-2 scaling solution like the Lightning Network.
Are Bitcoin fees the same across all wallets and exchanges?
Bitcoin transaction fees constantly fluctuate. However, the fee paid to miners will be similar for all users at any given time. Most wallets allow users to pay a higher or lower fee depending on how fast they want the transaction processed. If using an exchange or custodial wallet, the wallet provider may also append additional fees to transactions that go towards their operating costs.
What is the Lightning Network and how does it impact fees?
The Lightning Network is a layer 2 scaling solution for Bitcoin. Lightning allows for near-instant transactions that cost next to nothing. Instead of processing transactions on-chain, Lightning transactions rely on off-chain channels opened between users. An agreement is made to send a certain amount of Bitcoin
Note: All information herein is for educational purposes only, and shouldn't be interpreted as legal, tax, financial, investment or other advice. Nothing contained herein shall constitute a solicitation, recommendation, endorsement or offer to invest, buy, or sell any coins, tokens or other crypto assets. BitPay is not liable for any errors, omissions or inaccuracies. For legal, tax, investment or financial guidance, a professional should be consulted.