What is a block reward?

Who pays the computers that keep a network like Bitcoin running? There’s no payroll department sending out salaries. The network’s rules set the payment a miner, i.e. a participant in mining, can receive when they create a block that the network accepts.

Think of a payment in two parts: a fixed amount and a variable one. In Bitcoin, the first is the block subsidy, i.e. the newly created bitcoin. The second is the fees from the transactions included in that block. These come from users and are not new coins.

A miner can’t pocket whatever amount they like. Nodes check the block and reject any that break the rules, even if its creator burned a lot of electricity producing it. When many miners work together in a mining pool, the income is shared according to the pool’s terms.

Why it matters

The reward provides an economic incentive to secure the network. Miners commit equipment and energy because they expect income, although that doesn’t guarantee they’ll turn a profit.

For bitcoin holders, it also matters because the subsidy sets the pace at which new coins are created. At the halving, it’s the subsidy that is cut in half, not necessarily the entire reward: transaction fees remain a separate, variable part of it.

What to watch out for

You’ll often see the term “block reward” used for the subsidy alone. We keep the distinction: new coins and fees are not the same thing. If you’re reading a figure for the reward, check exactly what it includes.

Also, not all blockchains work like Bitcoin. On Proof of Stake networks, validators are paid under different rules. Simply holding a coin doesn’t mean you’re entitled to rewards from every new block.