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‘Memepool’ full: Here’s how exchanges adjust Bitcoin withdrawal fees

‘Memepool’ full: Here’s how exchanges adjust Bitcoin withdrawal fees

As Bitcoin (BTC) transaction fees continue to rise, some cryptocurrency exchanges are responding by adjusting the cost of BTC withdrawals from their platforms.

Kraken, a United States-based exchange, increased Bitcoin withdrawal fees to match the current on-chain fees, according to the company’s customer support manager on Reddit on May 10.

“This helps ensure withdrawals are processed on-chain in a timely manner,” the support manager noted.

Based on company data, Kraken charges 0.00035 BTC, approximately $10, for a Bitcoin withdrawal, with a minimum amount of 0.0005 BTC, roughly $13.

Kraken Support on increasing BTC fees. Source: Reddit

The minimum BTC withdrawal amount on the Lightning Network (LN) starts at just 0.00001 BTC, less than $1.

Kraken’s support manager recommended customers consider using the Lightning Network as an alternative. The LN option allows users to withdraw BTC from the platform free of charge and was adopted by Kraken in March 2022.

Bitcoin withdrawal fees and minimum withdrawal amounts on Kraken. Source: Kraken

Kraken’s public withdrawal fees are significantly lower than those of other major exchanges. However, Okex charges between 0.00096 BTC ($26) and 0.00192 BTC ($53) for a BTC withdrawal. Okex did not comment on whether it would increase withdrawal fees due to rising Bitcoin transaction costs, but similarly to Kraken, it has implemented the LN in 2022.

KuCoin, on the other hand, uses dynamic adjustment for BTC withdrawal fees and minimum withdrawal amounts based on the actual processing fees on the chain. Currently, their withdrawal fee is between 0.00002 and 0.001 BTC, with a minimum withdrawal amount of 0.0005 BTC. Huobi and Binance have withdrawal fees that are similar to those implemented on KuCoin.

Moreover, on May 8, Binance had to halt withdrawals twice in 12 hours due to 400,000 transactions stuck in the Bitcoin mempool, despite relatively high BTC withdrawal fees. This event has pushed Binance management to seriously consider implementing the LN.

A number of other exchanges, including Coinbase, Bybit, and Crypto.com, did not respond to requests for comment.