A mining fee occurs every time there is a transaction on the blockchain.

Users pay a mining fee every time they send crypto to another wallet outside Bitso, i.e. a cryptocurrency withdrawal. As a cost-saving measure, we group all Bitcoin (BTC), Litecoin (LTC) and Bitcoin Cash (BCH) withdrawals within a 1-minute window as a single trade to reduce the mining fee. Then, the mining fee is divided among all the users in that specific group. 

This does NOT apply to Ripple (XRP), Ether (ETH), Decentraland (MANA), Basic Attention Token (BAT), or Golem (GNT) cryptocurrency withdrawals.

What are Mining Fees?

Mining fees pay for the computing power it takes for a transaction to be verified on a cryptocurrency network. Mining fees are given to the miner, or computer, that performs the work to verify the next block of transactions added to the blockchain.

The cost of a mining fee varies depending on two conditions:

  1. How many transactions need to be verified.

  2. How much network capacity is available.

Each cryptocurrency that uses its own blockchain network has a different mining fee rate. For instance, Bitcoin, Litecoin, XRP & Bitcoin Cash each have different rates for mining fees. Mining fee rates for these coins are measured and paid in their respective currency.

The Ethereum network uses “Gas” as a way to measure the amount of resources i.e. computational power, it needs to execute smart contracts on its network. These two values, gas and ether, each abide by their own supply and demand.

Gas is measured in Gwei. Gwei is a unit of measurement that reflects current demand (how many smart contracts need to be executed) verus current supply (how much network capacity is available). If the network is congested, some transactions will increase their gas prices to be processed faster.

Vitalik Buterin founder of Etherem describes how gas works here.

All ERC20 tokens like Basic Attention Token (BAT), Decentraland (MANA), Golem (GNT) and Dai (DAI) all use Ethereum’s blockchain and network to process their transactions. Depending on the ERC20 token, different amounts of gas are needed to fulfil the smart contract and make the transaction. 

Network Capacity:

  • Bitcoin can process around 7 transactions per second

  • Ethereum can handle around 15-20 transactions per second

  • Litecoin can handle up to 56 transactions per second

  • Bitcoin Cash can handle up to 116 transactions per second

  • XRP can handle up to 1500 transactions per second

What is Mining?

Mining is the action that computers perform to verify every transaction on blockchains that uses the Proof of Work (PoW) consensus algorithm. 

Miners are computers with a lot of computational power that solve very complex math problems called hash puzzles. The goal of a miner is to solve the puzzle the fastest on the network. Whichever miner solves the problem the quickest, verifies the next block of transactions added to the blockchain. Miners do this job to prove that the transactions on the blockchain are valid. If a transaction is not valid, it is rejected. Once all the transactions are verified and added to the blockchain, the miner is rewarded with cryptocurrency. For example, if a miner solves the puzzle on the Bitcoin network, it will be rewarded with bitcoin. If a miner solves the puzzle on the Ethereum network, it will be rewarded with ether. This verification and reward system is called proof-of-work (PoW).

Fee Calculator & Charts:

Bitcoin Fee Calculator:https://txstreet.com/v/btc

Ethereum Gas Calculator:  https://txstreet.com/v/eth

Litecoin Average Transaction Fee Chart: https://bitinfocharts.com/comparison/litecoin-transactionfees.html

Bitcoin Cash Average Transaction Fee Chart: https://txstreet.com/v/bch 

XRP Average Transaction Fee Chart: https://bitinfocharts.com/comparison/xrp-transactionfees.html