Bitcoin Trader Mistakenly Burns Nearly $60K in Fees Due to Wallet Error

Bitcoin Fees Trading

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Hassan Shittu

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Hassan Shittu

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Hassan, a Cryptonews.com journalist with 6+ years of experience in Web3 journalism, brings deep knowledge across Crypto, Web3 Gaming, NFTs, and Play-to-Earn sectors. His work has appeared in...

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Last updated:

April 9, 2025 11:08 EDT

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A seemingly panicked Bitcoin trader has mistakenly burned nearly $60,000 in transaction fees after a botched replace-by-fee (RBF) attempt.

The incident occurred shortly after midnight UTC on April 8, when a Bitcoin user tried to replace a transaction using RBF. This feature allows users to resend a transaction with a higher fee to incentivize miners to confirm it faster.

The original transaction was sent with a standard fee and was meant to transfer 0.48 BTC (around $37,770 at the time) with about 0.2 BTC (roughly $16,357) in change. However, the subsequent RBF transaction went terribly wrong.

Instead of simply raising the fee slightly to accelerate confirmation, the user’s second RBF attempt introduced a new input UTXO (unspent transaction output) holding 0.75 BTC, likely an effort to raise the fee.

However, due to what appears to be a failure to correctly specify a new change address or a misinterpretation of the fee structure, the entire 0.75 BTC was consumed as a fee.

As a result, the miner pocketed almost three-quarters of a Bitcoin, worth approximately $60,000.

Replace-by-Fee: The ‘Double-Edged Sword’

This case reopens debates about the safety and utility of Bitcoin’s RBF feature, which remains controversial to this day.

RBF allows users to edit an unconfirmed transaction by submitting another with a higher fee. This theoretically replaces the earlier version in the mempool and increases the odds of quicker confirmation.

However, this flexibility has made RBF a double-edged sword. On the one hand, it can be a vital tool for speeding up transactions during periods of high congestion.

On the other hand, it’s prone to misuse or confusion, especially by less experienced users or those using buggy automated systems.

Bitcoin developers designed RBF assuming that miners would always prefer transactions with higher fees and that the network’s decentralization makes it difficult to enforce a first-come, first-served order for unconfirmed transactions.

History shows that even experienced users and institutions can fall prey to mistakes with RBF.

A History of Costly Errors

This isn’t the first time a massive fee has been mistakenly paid on the Bitcoin network.

In November 2023, a Bitcoin user paid over $3.1 million in transaction fees to move 139.42 BTC.

Only 55.77 BTC of the total amount reached the recipient, and the remaining 83 BTC was lost as a fee.

Again, the incident was blamed on human error and possibly an incorrect RBF configuration.

In a slightly happier turn of events, financial infrastructure firm Paxos was involved in a now-infamous case in September 2023. It paid a $510,000 transaction fee to transfer just $2,000 worth of BTC.

The user, believed to be a very experienced Bitcoin handler with over 120,000 transactions in history, reportedly encountered a bug on a single transfer.

F2Pool, the miner who received the transaction reward, initially held the funds while awaiting a claim.

Paxos confirmed the error and successfully recovered the fee three days later.

Another dramatic example occurred around the same time in 2023 when a transaction fee of $500,000 was paid on a transfer of just $200.

While some speculated it might be linked to illicit financial activity or even a laundering operation, most concluded it was another software bug, potentially in an automated payment system.

As Bitcoin fees are typically between $1 and $2, this error resulted in a fee payment approximately 481,299 times higher than expected.

In all these incidents, the role of mining pools becomes crucial. Whether a fee gets refunded often depends on the miner’s goodwill and the perceived legitimacy of the request.

For now, the unlucky user has little recourse unless the miner who received the fee chooses to return it out of goodwill.

Unfortunately, given that the recipient miner has yet to comment, the costly mistake is likely to remain just that.