Term

Block Reward

The reward given to a miner for validating a new block on the blockchain.

Type:
mining
distribution
Also known as:
Coinbase
Mining Reward
1
distribution

The block reward is the incentive that motivates miners to add new blocks to the blockchain. This reward is given to the miner who successfully validates a new block, a process known as mining. The reward consists of a pre-determined number of coins, known as the coinbase transaction, which is the first transaction in every block.

The block reward is the primary way that new coins are introduced into the circulation in proof-of-work blockchains. At pre-determined intervals, the number of coins awarded as the block reward is halved, an event known as a "halving" or "halvening." For example, Bitcoin started with a block reward of 50 BTC in 2009, which halved to 25 BTC in 2012, then to 12.5 BTC in 2016, and to 6.25 BTC in 2020. The next Bitcoin halving is expected around 2024.

This predictable creation of new coins at regular intervals ensures that the inflation of the coin supply is known, predictable, and cannot be manipulated. The halving mechanism is designed to create scarcity over time and mimic the extraction rate of precious metals like gold, which is why Bitcoin is sometimes referred to as "digital gold."

Around the year 2140, Bitcoin's block reward will become almost negligible due to the halving schedule. When this happens, miners will have to rely on other sources of income, such as transaction fees, business sponsorships, altruism, investment, idealism, and so on. This transition represents a significant economic shift in the blockchain's sustainable security model.

Bitcoin (BTC)

When a Bitcoin miner successfully mines a block, they currently receive 6.25 BTC as a block reward (as of 2023), plus any transaction fees included in that block. This reward will halve to 3.125 BTC around April 2024 at block height 840,000.

Ethereum (ETH)

Ethereum originally had block rewards of 5 ETH per block. After transitioning to Proof of Stake in September 2022 (known as "The Merge"), miners were replaced by validators, and the reward structure changed significantly, reducing new issuance by approximately 90%.

All terms and definitions may update as the Cryptionary improves.