As Bitcoin (BTC) transaction costs continue to skyrocket, some cryptocurrency exchanges are adjusting the cost of withdrawing BTC from their platforms in order to ensure withdrawals are processed on-chain in a timely manner. For instance, the United States-based exchange Kraken has increased Bitcoin withdrawal fees to match the current fees on-chain, with customers being charged approximately 0.00035 BTC, or about $10, for a Bitcoin withdrawal, and a minimum amount of 0.0005 BTC, or $13. As an alternative, Kraken also allows users to withdraw BTC from the platform free of charge using Lightning Network (LN).

Compared to Kraken, the minimum BTC withdrawal amount on other exchanges like OKX is significantly higher at 0.001 BTC, or $27, with a fee of between 0.00096 BTC ($26) up to 0.00192 BTC ($53). KuCoin, on the other hand, uses dynamic adjustment for BTC withdrawal fees and minimum withdrawal amounts based on the amount of actual processing fees on the chain.

Exchanges such as Huobi and Binance have similarly increased withdrawal fees to 0.001 BTC ($27). As a result, Binance experienced major issues with withdrawals and was forced to halt withdrawals two times in 12 hours amid 400,000 transactions getting stuck on the BTC mempool. Binance has now seriously started to consider the implementation of LN.

The rapidly increasing costs of Bitcoin transactions are forcing platform operators to get creative with their fee structure and look to LN to save their customers the rising expense. Although most exchange operators have been quick enough to adjust the fees and ensure withdrawals are processed on chain in a timely manner, the Bitcoin mempool size still remains over 20 million bytes and there is a backlog for transactions being processed. As the situation with Bitcoin withdrawals continues to evolve, exchanges may adjust their policies further so as to remain flexible and make it easier for their customers to withdraw their cryptos.



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