Block Reward Definition

A block reward is the cryptocurrency paid by a blockchain to the participant who successfully adds a new block to the chain. On proof-of-work networks this participant is a miner; on proof-of-stake networks it is a validator. The reward exists to motivate honest participation and to keep blocks coming at a steady pace.

What the reward is made of

Most networks treat the block reward as two parts working together: a block subsidy and the transaction fees included in that block. The subsidy is newly created coins defined by the protocol, while the fees come from users whose transactions are included.

How it works across consensus systems

In proof-of-work, miners race to solve a difficult puzzle. The miner that finds a valid solution assembles the block and claims the reward. In proof-of-stake, validators are selected by the protocol to propose or attest to blocks; the chosen validator receives the reward for that round. In both cases, the protocol sets the rules for how and when rewards are paid.

Supply schedule and Bitcoin halving

Some blockchains, such as Bitcoin, reduce the subsidy on a fixed schedule to control new coin issuance. Bitcoin started with a 50 BTC subsidy per block and cuts that subsidy in half every 210,000 blocks, roughly every four years. These cuts happened in 2012, 2016, 2020, and 2024, with the current subsidy now 3.125 BTC. Bitcoin also has a fixed maximum supply of 21 million coins, so the subsidy eventually trends toward zero.

Coinbase transaction

The subsidy is created inside a special transaction called the coinbase transaction. It is usually the first transaction in a block and is how the protocol mints and assigns newly created coins to the miner or validator. 

Why block rewards matter to network health

Rewards encourage more miners or validators to take part, which helps distribute power and makes coordinated attacks harder. As scheduled subsidy cuts take effect, the fee component can become more meaningful, and protocols may adjust incentives to keep participation attractive.

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