What is block reward?

The new coins a blockchain pays to whoever adds the next block, plus the transaction fees inside it.

On Bitcoin the reward halves every 210,000 blocks, and on proof-of-stake chains it goes to validators rather than miners. The reward is how new supply enters circulation.

The term gets used loosely to mean only the new coins, which is the block subsidy. Keeping the two separate matters, because as the subsidy shrinks the fee share grows, and pages that quote one for the other misstate what producers actually earn.

How it works

A block reward has two components with different sources. The subsidy is created by the protocol and did not exist before. The fees are paid by users whose transactions are included, and they existed already.

On Bitcoin, both are paid to the miner through a special coinbase transaction, the first transaction in every block, which has no inputs. Bitcoin Core's consensus code sets the subsidy at 50 coins halving every 210,000 blocks (source: Bitcoin Core, GetBlockSubsidy in validation.cpp). Coinbase outputs cannot be spent for at least 100 blocks (source: Bitcoin developer documentation), which prevents spending rewards from a block that a reorganization later removes.

On Ethereum after the Merge, issuance goes to validators as attestation and proposal rewards rather than to a single miner, and the fee side changed too. Under EIP-1559 the base fee is burned rather than paid to anyone, so the block producer receives only the priority fee tips plus, in practice, any builder payment (source: EIP-1559).

The reward is the network's security budget. It is what makes attacking the chain more expensive than participating honestly, which is why the long-run transition from subsidy to fees is a live design question rather than a detail.

Example

Illustrative: a Bitcoin block at a 3.125 BTC subsidy also contains 2,400 transactions paying an average of 4,000 satoshis each. Fees total 9,600,000 satoshis, or 0.096 BTC. The block reward is 3.125 plus 0.096, which is 3.221 BTC, of which fees are about 3%. At a 0.39 BTC subsidy several halvings later, the same fee total would be about 20% of the reward. Figures are illustrative.

Why it matters when you buy

The reward sets the rate at which new supply reaches the market, which is one input into supply and demand, and it sets how much security your transactions are buying. It also explains fee behavior: on chains where fees are a large share of producer income, block space is priced aggressively. Compare what withdrawals actually cost across venues at the fee comparison.

Related terms

• block subsidy — the newly created portion
• coinbase transaction — how Bitcoin pays it out
• bitcoin halving — the scheduled cut to the subsidy
• mining — the work the reward pays for
• validator — who receives it on proof-of-stake chains
• priority fee — the fee portion a proposer keeps on Ethereum

Questions

Does the block reward come out of my transaction fee?

Part of it does. Your fee is paid to the producer on most chains, and on Ethereum the base fee portion is burned instead while the tip goes to the proposer. The subsidy is separate and newly created.

Do all blockchains have block rewards?

Most do in some form, but the split between issuance and fees varies widely, and some chains burn a portion of fees rather than paying it out.

What happens when there is no subsidy left?

Producers are paid entirely from fees. Whether fee income alone is sufficient to secure a chain at that point is an open question that Bitcoin will face over the next century.