Fee Gaps in Bitcoin Blocks: A New Perspective on Security Budget

A recent study by Fabian Schär, Dario Thürkauf, and David Yermack has shed light on an often-overlooked aspect of Bitcoin's security budget: the impact of varying transaction fees between blocks. Using data from 2017 to 2025, the authors found that larger fee differences between adjacent blocks are associated with more competing blocks at the same height and a longer wait for the next block.

The study highlights the importance of considering not just the overall security budget, but also how fees arrive from block to block. This is particularly relevant as the block subsidy continues to shrink, placing increasing weight on transaction fees as a source of mining revenue. Currently, transaction fees account for less than 1% of miner revenue.

The researchers identified two key findings: first, that larger fee gaps between adjacent blocks are associated with more competing blocks at the same height; and second, that there is a lower probability of the next block appearing in the first seconds after a large fee gap. This suggests that miners may be incentivized to revisit previous blocks when fees are high.

The study also notes that Bitcoin wallet protections can reduce the incentive for miners to revisit previous blocks by excluding transactions from being included in a replacement block. However, these protections are not universally implemented and their effectiveness depends on various factors.