Coinbase is losing up to ’15 BTC per hour’, reports have revealed while also adding that the wallet provider is “hemorrhaging money” by paying double transaction fees due to a software problem.
BitGo engineer Jameson Lopp originally raised the alarm stating that Coinbase was sending BTC transactions by paying 100x the current fee rate. Other carried out investigation of their own to agree with Lopp. The BitGo engineer subsequently announced his suspicions were “confirmed firsthand” and that the party contributing huge batches of double-rate fee transactions was Coinbase. Responding to the news, CEO Brian Armstrong told Lopp the company was “taking a look” into the situation.
This is not the first time that issues have cropped up at Coinbase as both in May and June, the wallet provider suffered from technical issues elsewhere on its service, with sporadic problems continuing into this month.
A high influx of new users contributed to an overly-strained backend, with Bitcoin’s recent price peaks and troughs accompanied by website outages, failed or ‘lost’ trades and lack of response from customer support channels.
Users often recounted their woes on social media platforms such as Reddit in the hope of getting attention, with support staff sporadically replying to more serious issues such as hundreds of thousands of dollars going missing.
Also detecting something was amiss in recent days meanwhile was entrepreneur turned commentator Tuur Demeester, who put the amount spent unnecessarily by Coinbase in 24 hours at $240,000.
Demeester has become increasingly revered for his cryptocurrency insights on Twitter, this week nonetheless contributing to a particularly controversial part of Bitcoin: its future fees.
In an exchange with fellow entrepreneur and investor Ari Paul, who said he was “looking forward” to paying $100 Bitcoin transaction fees by 2025, Demeester upped the odds tenfold.
The concept of anything other than rock-bottom fees has angered average users in the past, who see being able to send large amounts of value for a few US cent as a key benefit of Bitcoin over traditional fiat money transfers.
When in June Blockstream CEO Adam Back said users would happily pay $100 fees, the Twitter backlash was considerable, despite the fact that at the time, Bitcoin fees were themselves already extremely high.