Mining fees are the cost your wallet pays for the computing power which confirms transactions on the Bitcoin and Ethereum blockchains. On average, miners are paid around $10-$12k per block by cryptocurrency exchanges.
However, over the past few months, Coinbase has been paying significantly higher fees – sometimes as high as $30-$40 per block. This has led to speculation as to why Coinbase is paying such high fees, and whether or not this is sustainable in the long-term.
One possible explanation is that Coinbase is trying to incentivize miners to include their transactions in the next block. This is because each transaction requires a certain amount of “gas” to be processed, and if there isn’t enough gas available, the transaction will be delayed.
By offering higher fees, Coinbase is essentially increasing the chances that their transactions will be included in the next block.
Another possibility is that Coinbase is simply passing on the higher fees they are being charged by miners. These days, it costs more to mine Bitcoin and Ethereum due to the increased difficulty of the networks.
As a result, miners are charging higher fees to make a profit. Coinbase may be simply passing on these increased costs to their users.
Whatever the reason, it’s clear that Coinbase’s high mining fees are having an impact on users. Some have even decided to switch to other wallets which charge lower fees.
It remains to be seen whether or not Coinbase will continue to pay such high fees, or if they will find a way to reduce them in the future.