Glossary / Mining & consensus
Block reward
- Definition
- The block reward is everything a miner is paid for a block: the newly issued subsidy plus every transaction fee inside it, claimed in the block's first transaction.
Two revenue lines arrive as one payment. The subsidy is created by the protocol and shrinks on a fixed schedule, while the fees come from users bidding for space and swing wildly from block to block. A miner sees only the total, which is why a fee spike can matter more to their week than a halving does.
How it works
The block reward is collected through the coinbase transaction, the single transaction in each block that has no inputs.
Because it spends nothing, its outputs are limited by a consensus rule instead: the total may not exceed the current subsidy plus the fees of every other transaction in the block. Claim a satoshi more and every node discards the block, along with the work that produced it. Claim less, and the difference is simply never created; there is no pot it falls into. A miner then has to wait, because coins from a coinbase transaction cannot be spent until 100 further blocks have been built on top.
Where the money goes after that is a business arrangement rather than a protocol rule. Solo miners keep the whole reward on the rare occasions they find a block. Pool members are paid out of it under one of two common schemes: pay-per-share, where the pool buys each unit of work at a fixed rate and absorbs the luck, or a shares based scheme, where members split whatever the pool actually earns. Neither is written into bitcoin, which is why pool payout terms differ so much and are worth reading before you point hardware anywhere.
The mix between the two revenue lines has shifted over time. For most of bitcoin's history fees have been a small percentage of the reward, with the subsidy carrying almost the whole cost of security. As the subsidy halves toward nothing, that ratio has to invert for mining to remain worth doing, which is the open economic question behind a lot of protocol debate.
Why this matters when you buy bitcoin
Half of the block reward is paid by people exactly like you, at the moment they move coins.
Every fee you attach to a withdrawal ends up in some miner's coinbase transaction. That makes fee awareness the cheapest habit in bitcoin: the same transfer can cost well under a dollar on a quiet weekend and many times that during a rush, for identical security. If you buy regularly, look at whether your platform lets you accumulate and withdraw in one larger transaction rather than paying a fee every week, since one payment of a given size costs roughly the same regardless of the amount it carries.
Fee spikes are also a reason to control the timing of self-custody transfers rather than leaving them to a default. Services that push coins to your own wallet automatically, such as Relai, are excellent for the discipline of getting coins off a platform, and they still leave you the choice of when a manual withdrawal goes out.
The last point is defensive. Mining revenue is public, per block, forever, so any offer promising a predictable share of block rewards is making a claim you can check. Cloud mining contracts and "mining pool" investment apps almost always quote a fixed daily return, which the block reward has never provided to anyone. Treat a guaranteed number as the tell.
Block 840,000, the day fees beat the subsidy
Block 840,000, mined by ViaBTC on April 20, 2024, paid out about 40.7 BTC, and only 3.125 of that was new money.
The rest, roughly 37.6 BTC, was transaction fees, worth around 2.4 million dollars at the time and a record for a single block. The cause was the launch of the Runes token protocol, which activated at that exact height, combined with collectors bidding for rare satoshis in the halving block. Ordinary blocks around that period were earning something in the range of 40,000 to 60,000 dollars in fees.
It was a one day event, not a new normal, and it is still the clearest demonstration of what the block reward is: a variable auction payment attached to a fixed and shrinking grant.
Block reward vs block subsidy
The block reward is the total; the block subsidy is only the newly created part of it. Journalists and even exchange help pages use the two interchangeably, which is harmless until you try to reason about miner revenue, where the whole question is what share comes from fees. A cleaner habit: subsidy is what the protocol pays, fees are what users pay, and the block reward is the sum a miner actually receives.
Block reward vs transaction fee
A transaction fee is one user's contribution; the block reward is the pile that all of those contributions land in, plus the subsidy. You never pay a block reward and you cannot choose a miner. You set a fee rate in satoshis per virtual byte, your transaction competes for space on that basis, and if it is selected your fee becomes a line inside somebody's coinbase output.