Topic · How blockchains work
What is a block reward?
- Quick fact 1
The first transaction in a bitcoin block, the coinbase transaction, pays the block reward to the miner.
Source: Bitcoin developer guide: Mining
- Quick fact 2
The bitcoin whitepaper describes new coins as an incentive for nodes that support the network.
Source: Bitcoin whitepaper (bitcoin.org)
- Quick fact 3
Ethereum validators earn rewards for proposing and attesting to blocks, and can be penalized.
The short lesson
A blockchain needs people to do the work of adding blocks. The block reward is how it pays them.
In bitcoin
The miner who finds a valid block writes a special first transaction, the coinbase transaction, that pays them two things:
- The subsidy: brand-new bitcoin. It started at 50 per block and is cut in half every 210,000 blocks, roughly every four years. This is the halving.
- The fees: every fee paid by the transactions in that block.
Because the subsidy keeps halving, fees are designed to matter more over time.
In Ethereum
Ethereum switched to proof of stake in 2022. Validators earn rewards for proposing and attesting to blocks, and lose some stake for breaking the rules.
What it means for you
The block reward is not a payment you receive by holding coins. It is pay for running mining or validating. Anyone offering a “guaranteed” share of block rewards for your deposit is describing something else, and the scam checklist applies.
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Related terms
Go deeper in Lesson 4: The shared list everyone can check
More in How blockchains work
Common questions
Who gets the block reward?
The miner (bitcoin) or validators (Ethereum) who do the work of adding blocks.
Does the block reward ever end?
In bitcoin, the new-coin subsidy shrinks toward zero over many decades. Fees continue.
Do I earn block rewards by holding bitcoin?
No. Holding coins does not pay block rewards.
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Written and reviewed by Joshua Baskin, founder. Last reviewed . How we check facts · Report an error
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