Bitcoin MEV revealed! Miners pick winners from the mempool, beware of transactions being front-run.

Bitcoin MEV is a hidden transaction ordering mechanism where miners and mining pools determine which transactions are prioritized for inclusion through fee signals, mempool strategies, and block templates. Bitcoin Core v28 defaults to fully replacing (RBF) strategies and a 1-parent 1-child relay mechanism, combined with off-chain payment channels, allowing miners to influence transaction order without front-running.

The fundamental difference between Bitcoin MEV and Ethereum MEV

In the cryptocurrency space, MEV usually refers to bots and searchers on blockchains like Ethereum, which reorder, insert, or scrutinize transactions on DEXs and liquidation events to extract value through worse prices, failed transactions, and higher costs. However, Bitcoin also has similar MEV mechanisms at the mempool and strategy level—like a hidden version of MEV—without DeFi-style front-running bots.

The key feature of Bitcoin MEV is its subtlety. DEX trades or liquidation auctions do not involve front-running. Instead, miners and pools adjust transaction order through fee-based incentives, bundle selection, and occasional off-chain payments. This difference makes Bitcoin MEV more discreet for everyday users.

In the Bitcoin network, miners and pools are the actual decision-makers. They ultimately decide which transactions, based on their pool configurations and strategies, are included in blocks. When assembling block templates, transactions are generally selected in this order: validated and consensus-valid transactions or data packages, bundles with the highest actual fees for ancestors and descendants, replacement transactions with higher BIP125 payment amounts than conflicting transactions, and any off-chain transactions or pool-level strategy filters that exceed normal fee ranges.

Compared to Ethereum and DeFi MEV, where searchers run arbitrage, sandwich, and liquidation bots to extract value from smart contract interactions, Bitcoin’s “soft MEV” remains calm. Essentially, miners quietly decide which transactions “win” the next block.

How mempool strategies and fee mechanisms operate

(Source: Nobsbitcoin)

Bitcoin Core v28 defaults to fully replacing mempool strategies (mempoolfullrbf=1) and introduces a limited 1-parent 1-child relay mechanism. Miners and pools running Core or compatible software inherit these defaults but can choose other strategies. However, the public mempool is only part of the auction that determines which transactions are included in the next block, as off-chain routing and wallet-level fee controls also play roles.

Recent fee and mempool data show that small advantages in ordering are crucial. According to YCharts data, the average on-chain fee is $0.68, lower than the same period last year. The hourly window in October shows spikes and near-empty gaps in mempool.space’s fee rate view, causing transactions with tiny absolute fee differences to jump to the top of the template at times. Hedge With Crypto reports that in June 2025, fees will drop to about 0.96% of the block reward, the lowest since January 2022.

Since Bitcoin Core introduced ancestor fee rate mining (PR #7600), block templates consider combined fee rates of ancestor and descendant blocks. This is why CPFP (Child-Pays-For-Parent), which pays for low-fee parent transactions with high-fee child transactions, can produce combined fee rates better than individual high-fee transactions. When a bundle exceeds the miner’s threshold, the child-to-parent fee mechanism often pulls stuck parent transactions into a block.

According to No Bullshit Bitcoin’s v28 review, the default full RBF means any unconfirmed transaction can be replaced by a higher-fee version that pays more than all conflicting transactions and BIP125 bandwidth increments. The same version also introduces opportunistic 1-parent, 1-child relay, with TRUC (version 3) transactions and P2A outputs as standard.

Hidden effects of off-chain payment channels and strategy filters

Off-chain payment channels widen the gap between public mempool order books and actual mining order books. ViaBTC’s accelerator directly submits transactions to pools, which may prioritize lower-fee transactions that are paid off-chain. If this occurs frequently, it can distort template selection and reduce transparency, as on-chain fee rates alone no longer fully explain inclusion.

Miningpool.observer publishes templates and block comparisons highlighting missing or additional transactions and conflicts, publicly demonstrating that inclusion choices often diverge from simple maximum fee rankings. Strategy filters control relay nodes rather than consensus validity—they influence whether transactions reach miners promptly. Standard policies are not consensus rules; even if relay nodes discard valid transactions, miners can still include them.

Recent OP_RETURN changes show how defaults propagate. In v30, developers merged a change removing the long-standing 80-byte OP_RETURN size limit, increasing default data carrier size. Public cases also reflect autonomous filtering at the pool level. OCEAN filters data with inscriptions, while Marathon’s 2021 OFAC-compliant experiments show that when pools pursue policy or PR goals, template choices may diverge from pure fee maximization.

Core mechanisms of Bitcoin MEV

RBF (Replace-By-Fee): Higher-fee replacement transactions can preempt others, skipping block inclusion per BIP125

CPFP (Child-Pays-For-Parent): High-fee child transactions fund stuck parent transactions, increasing the overall package fee

Off-chain channels: Direct access to pool accelerators as emergency channels, bypassing public mempool order

Strategy filters: Pools can filter specific transaction types based on policy goals, affecting template selection

Practical impacts on everyday users and strategies

From a wallet user perspective, small decisions like fee settings or transaction construction can subtly change your ranking in miners’ queues. RBF is common: higher-fee replacements can preempt others. CPFP allows you to fund stuck parent transactions with child fees, boosting the package’s effective fee. When the public mempool is congested, using direct pool accelerators can serve as an emergency shortcut.

Consider two similar transactions: Alice sends a low-fee payment, while Bob uses RBF to raise his fee by a few sats/vB. Even if Alice broadcasts first, Bob’s higher replacement fee can jump ahead into the next block per BIP125. Or imagine a stuck parent transaction rescued by a child; adding a higher-fee child transaction often results in a bundle that gets confirmed faster than a standalone high-fee transaction without dependencies.

Visibility into templates is increasing, narrowing the information gap in soft ordering. Bitcoin Optech notes that cluster mempool heuristics can detect fee rate increases in block templates and include proposals for shared templates, allowing nodes to compare which templates miners plan to include. These ideas aim to make deviations from fee maximization easier to spot.

Future developments depend on fee levels and burst frequency. If average fees stay around $1-2 with low low-end fee shares, most soft MEV activity will stem from moderate RBF growth and pool-based CPFP around anchor points. If high-fee regimes persist, the time-based “time theft” incentives become more relevant.