Fee Sniping

💡 The Plain-English Definition

Fee sniping is a theoretical attack where miners deliberately reorganise recent blocks — essentially rewriting the last few blocks of the blockchain — to claim the high transaction fees in those blocks for themselves rather than building honestly on the chain tip.

🤔 But Why Though?

Miners have two options at any moment: build an honest new block on top of the current chain tip and earn whatever fees are in the mempool (Bitcoin’s waiting room for unconfirmed transactions), or secretly mine an alternative chain that reorganises recent blocks and claims the fees already collected in those blocks. Right now, option one is overwhelmingly more rational — the block subsidy (currently 3.125 BTC per block) makes the fees in recent blocks a relatively small prize, and the difficulty of secretly mining enough blocks to overtake the honest chain is enormous. Fee sniping is irrational when the subsidy is large.

The concern grows as the subsidy halves toward zero. If a block contains £500,000 of transaction fees but the subsidy is worth only £10,000, the economics shift. A miner with significant hash rate (total computing power devoted to mining) might rationally attempt to reorganise the last block and claim those fees — particularly if multiple miners started doing this simultaneously in a chaotic scramble for high-fee blocks rather than honest chain building. Bitcoin Core partially mitigates this through locktime — wallets can set transactions to only be valid in the current or future blocks, making them worthless in a reorganised past block. This makes fee sniping less rewarding but doesn’t eliminate the theoretical incentive.

🌍 The Real-World Analogy

Imagine a poker game where players earn tokens from two sources: a fixed hourly stipend from the house, and the pot of chips accumulated during each hand. While the stipend is large relative to typical pots, everyone plays honestly — the stipend is the reliable income. If the stipend shrinks to almost nothing and a single pot becomes worth ten times more than the stipend, some players might start cheating to steal that pot rather than playing the next hand legitimately. Fee sniping is that calculation applied to mining: when the “pot” (transaction fees) vastly exceeds the “stipend” (block subsidy), the incentive to cheat rather than play honestly increases.