Feerate Calculation (sats/vB)

Miners do not care about the total value of your transaction (e.g., whether you are sending 1 BTC or 1,000 BTC). They care about the density of the fee—how much you are paying for every byte of data you take up in the block.

1. What is Virtual Size (vSize)?

With the SegWit upgrade, Bitcoin introduced "Weight Units" and Virtual Size (vSize).

• Witness data (signatures) is cheaper than non-witness data.

• vSize is the metric used to normalize these weights into a single "size" value for fee calculation.

2. The Feerate Metric

The standard unit for measuring Bitcoin fees is satoshis per virtual byte (sats/vB).

Feerate = Total Fee (sats) / vSize (bytes)

• Low Priority: 1 - 5 sats/vB

• Medium Priority: 10 - 50 sats/vB

• High Priority: 100+ sats/vB (during extreme congestion)

3. The Blockspace Market

Bitcoin's blockspace is a limited resource (roughly 1 vMB every 10 minutes). Miners act as rational economic actors: they sort all transactions in the Mempool by feerate and pick the highest ones first.

4. Why Size Matters

A transaction with many inputs will be much larger in bytes than a transaction with one input.

• Scenario A: 1 Input, 2 Outputs = ~140 vBytes.

• Scenario B: 10 Inputs, 2 Outputs = ~700 vBytes. Even if both transactions pay 10,000 satoshis, Scenario A has a much higher feerate and will be confirmed much faster.

Metric	Calculation
Total Fee	Input Sum - Output Sum
vSize	(Weight / 4) rounded up
Feerate	Fee / vSize

In the next section, we will look at Miner Incentives and the coinbase transaction.