Every day around 9 PM Taiwan time, Bitcoin’s on-chain transaction fees spike dramatically, peaking for approximately an hour before returning to normal levels. A Bitcoin developer has identified cryptocurrency derivatives exchange BitMEX as the primary culprit, citing its transaction broadcasting methods as a major factor impacting network congestion and user costs.
BitMEX’s Withdrawal Transactions Clog the Network
On May 4, an anonymous Bitcoin developer known as 0xb10c published a study analyzing how BitMEX’s transaction practices affect the broader Bitcoin network. BitMEX, a derivatives exchange specializing in Bitcoin-settled futures contracts, processes all withdrawal requests at exactly 9:08 PM Taiwan time—unlike other exchanges that allow withdrawals anytime. The exchange claims this centralized processing enhances security, as BitMEX manually reviews each withdrawal request, making multiple daily approvals impractical.
However, 0xb10c discovered that BitMEX’s bulk broadcasting of thousands of transactions at once triggers predictable fee surges. Most Bitcoin wallets rely on built-in fee estimators, which adjust recommended fees based on real-time network activity to ensure timely miner inclusion. When BitMEX floods the network, these estimators react by pushing fees higher, forcing users to overpay—often unknowingly.
Key Insight:
👉 Bitcoin fee spikes: How BitMEX impacts your transactions
"BitMEX broadcasts terabytes of optimized transactions daily at 13:08 GMT (9:08 PM Taiwan time), primarily withdrawals. This inflates fee estimates network-wide, unfairly burdening everyday users."
— 0xb10c
Scaling Solutions Could Mitigate the Problem
This scenario highlights how cryptocurrency exchanges’ infrastructure choices—such as adopting scaling solutions—directly impact blockchain efficiency. For instance, Binance, a major spot market exchange, still doesn’t support Segregated Witness (SegWit), a scaling upgrade that reduces transaction size. Jessica Jung, a Binance spokesperson, acknowledged ongoing plans to integrate SegWit but hasn’t committed to a timeline.
BitMEX, while SegWit-compatible, continues to strain the network due to its transaction volume. 0xb10c urges further optimizations:
"BitMEX’s SegWit adoption is a step forward, but they shouldn’t stop there. Output batching—combining multiple transactions into one—could drastically reduce their footprint."
If BitMEX implemented these changes, users could collectively save ~1.7 BTC daily ($15,000+ at press time), or roughly 7% of total on-chain fees.
Low Fees vs. Network Security: A Delicate Balance
Paradoxically, while high fees frustrate users, they also bolster Bitcoin’s security. As block rewards halve periodically, transaction fees become miners’ primary income. Nic Carter, co-founder of CoinMetrics, noted:
"It’s ironic: exchanges’ inefficiencies sustain fee pressure, which secures the network. Perfect efficiency might undermine this."
FAQ Section
Q: Why does BitMEX process withdrawals at a fixed time?
A: BitMEX claims manual withdrawal reviews enhance security, but this batches transactions, causing fee spikes.
Q: How can users avoid high fees during peak times?
A: Schedule transactions outside 9–10 PM Taiwan time or use wallets with dynamic fee adjustments.
Q: What’s SegWit, and why does it matter?
A: SegWit reduces transaction size by separating signature data, lowering fees and increasing capacity.
Further Reading
👉 BitMEX’s liquidity dominance at risk as rivals gain traction
Risk Disclaimer
Cryptocurrency investments carry high volatility and risk. Capital loss is possible. Assess risks carefully.