On Friday, blockchain infrastructure firm Paxos recovered an erroneously inflated Bitcoin transaction fee of $510,000, nearly 480,000 times the average network fee of $2.176. The excess fee was returned by F2Pool, the miner who initially received the overpayment.
The error occurred on September 10, 2023, when Paxos attempted to transfer a mere 0.074 BTC, valued at less than $2,000. However, due to a software bug, the resulting transaction fee was an astounding 19 BTC, equivalent to about $510,000. This discrepancy resulted in the highest transaction fee ever recorded on the Bitcoin network.
Jameson Lopp, co-founder of CasaHODL, speculated that the error might have originated from an exchange or payment processor address software issue. Lopp noted that the address in question had handled more than 60,000 transactions and likely miscalculated the change output leading to the inflated transaction fee.
Paxos took responsibility for the error and confirmed that only the company's corporate operations were affected. The firm reassured its customers that their funds were safe and stated it was working on recovering the fee through a Bitcoin miner.
Chun Wang, co-founder of F2Pool, stated that users could claim overpaid fees within a three-day window. If unclaimed, these funds would be redistributed among miners - a decision aiming to address potential unclaimed fees equitably.
Despite early speculations suggesting PayPal (NASDAQ:PYPL)'s involvement due to similar digital wallet transaction behaviors, a Paxos spokesperson declined to confirm or deny any relation to PayPal.
On September 13, Paxos announced that it was their server that made the transfer and admitted that the error was its own. A day later, the Bitcoin miner who received the funds expressed frustrations after agreeing to refund Paxos. However, blockchain data shared by Bitcoin explorer Mempool confirmed that the funds were indeed returned on Friday.
In 2019, an Ethereum user lost almost $400,000 in Ether (ETH) after making the mistake of pasting values in the wrong fields. The Ethereum mining pool Sparkpool helped the user recover half of the funds lost.
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