Miner Fee Definition

A miner fee is a small payment added to a cryptocurrency transaction to ensure the network processes and confirms it. Different blockchains use different names and ways to calculate this fee, but the main idea is to pay those who add your transaction to a block.

Who gets paid

The miner fee is paid to whoever validates and records transactions on the blockchain. On proof-of-work blockchains, this is a miner using computers to build blocks. On other types of blockchains, the fee may go to validators. These fees reward the work of checking transactions and help keep the network secure.

How fees are set and paid

Most wallets let you pick a fee or use one they suggest. The network puts transactions in a temporary queue called the mempool. Miners or validators choose transactions from this queue and usually pick those with higher fees, since these pay more. On blockchains like Ethereum, 'gas' measures how much computing power a transaction needs, and you pay for gas with the network’s main token. After some updates, part of the fee can be destroyed, and part can be given as a tip to speed up your transaction.

Why do fees change over time

Fees go up when lots of people try to move money at the same time, since each block can only hold so many transactions. When this happens, users offer higher fees to get their transactions processed faster. Other things that affect fees are the size of your transaction, the block size or speed of the blockchain, and the rules for how fees are set.

Names and differences across blockchains

Not all blockchains call this cost a miner fee. For example, Ethereum calls it gas and measures it in units like gwei. After updates like EIP-1559, the way gas works changed: the base fee can be destroyed, and a separate tip can make your transaction faster. Some networks charge a small, fixed fee for sending tokens, while others need much more gas for complex smart contract actions.

How exchanges and custodial wallets handle fees

When you send crypto from an exchange to another address, the exchange usually pays the network fee first and then charges you or includes it in the withdrawal cost. Some platforms don’t charge network fees when you move funds between wallets on the same platform, since no transaction is sent to the main network. Each service calculates fees in its own way, so the amount you pay can be different depending on the provider.