temporarily halted Bitcoin (BTC) withdrawals on May 8 due to a backlog of pending transactions.
The company cited the recent surge in network gas fees and its fees set not anticipating the rise as reasons for the backlog.
The backlog of transactions caused Binance to close off BTC withdrawals temporarily, lasting for nearly three hours. However, it provided updates during the outage, stating that it was replacing pending Bitcoin withdrawal transactions with higher fees so that they would be picked up by mining pools. Almost three hours after the initial announcement, Binance confirmed that Bitcoin withdrawals had resumed, with pending transactions being processed with higher transaction fees.
The move to temporarily halt withdrawals isn't new to Binance. Earlier on May 7, the exchange had to suspend Bitcoin withdrawals due to an overflow of transactions on the blockchain. However, the exchange reopened withdrawals after about an hour and a half. During this time, the Bitcoin mempool had a backlog of around 400,000 transactions waiting to be processed.
The mempool on the Bitcoin network acts as a temporary storage area for unconfirmed transactions that are waiting to be verified by each blockchain node. It is important to note that the mempool does not serve as a permanent record of transactions. Hence, when the mempool reaches its maximum capacity, the processing of transactions may be delayed or even canceled.
Binance saw a significant negative net outflow of Bitcoin on May 7, with around 175,650 BTC worth around $4.95 billion flowing from the exchange on the day, according to data from CryptoQuant. Additionally, the price of Bitcoin fell around 3.5% from its weekly high of over $29,700 on May 6.
The spokesperson for Binance declined to provide any additional details at the moment. The exchange is working to enable withdrawals via the Lightning Network, which it believes could help mitigate future withdrawal halts caused by backlogs in the mempool.
Overall, the recent surge in network gas fees has caused a backlog in Bitcoin transactions, leading to significant delays in processing transactions. However, exchanges like Binance are working on mitigating the effects of this backlog and finding solutions that can help reduce future delays in processing Bitcoin transactions.
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