What is a block reward in crypto and how it works

A block reward is the amount of cryptocurrency miners (or validators) receive for successfully adding a new block to a blockchain. In Proof of Work (PoW) systems like Bitcoin, miners earn block rewards by solving complex mathematical problems. In Proof of Stake (PoS) systems, validators receive rewards for securing the network by staking their coins.

For example, Bitcoin miners currently receive 6.25 BTC per block (as of the 2020 halving). After the 2024 halving, this will drop to 3.125 BTC per block.

How block rewards work

  • Mining or validation – Miners (PoW) or validators (PoS) verify and confirm transactions.
  • New block added – Once a block is successfully created, it is added to the blockchain.
  • Reward distributed – The miner or validator receives the block reward plus transaction fees from that block.

Why are block rewards important?

  • Incentivizes network security – Miners and validators are rewarded for maintaining and securing the blockchain.
  • Controls coin supply – Many cryptocurrencies, including Bitcoin, use block rewards to introduce new coins into circulation gradually.
  • Supports decentralization – By rewarding participants, blockchains can remain decentralized and resistant to attacks.

Block rewards in different consensus mechanisms

Consensus mechanismBlock reward systemExample cryptos
Proof of Work (PoW)Miners solve cryptographic puzzlesBitcoin, Litecoin
Proof of Stake (PoS)Validators earn rewards by staking coinsEthereum, Cardano
Delegated PoS (DPoS)Selected validators receive rewardsEOS, TRON

In PoW systems, block rewards decrease over time through mechanisms like Bitcoin halving. In PoS systems, rewards vary based on staking amounts and network participation.

FAQs

What is Bitcoin's current block reward?

As of 2024, Bitcoin's block reward is 6.25 BTC per block. After the April 2024 halving, it will drop to 3.125 BTC per block.

Do block rewards include transaction fees?

Yes. In addition to the fixed block reward, miners or validators also earn transaction fees from the transactions included in the block.

When will Bitcoin's block rewards end?

Bitcoin's last block reward is expected around 2140, when all 21 million BTC have been mined. After that, miners will only earn transaction fees.

Other Glossary Terms

DeFi

DeFi, or decentralized finance, refers to blockchain-based apps that offer financial services without banks. It runs on smart contracts, giving users full control over their assets.

Blockchain trilemma

The blockchain trilemma is the challenge of achieving scalability, security, and decentralization at the same time. Learn why it matters — and how projects try to balance the trade-offs.

Crypto Address

A crypto address is a unique identifier used for sending and receiving cryptocurrency on blockchain networks. Linked to a wallet

Public Blockchain

A public blockchain is an open, decentralized network where anyone can participate, validate transactions, and view the ledger. Learn how it works, its benefits, and the challenges it faces in scalability and security.

Circulating Supply

Circulating supply is the number of crypto tokens actively available in the market. It impacts price, market cap, and scarcity, making it a key metric for investors. Bitcoin has ~19.5M BTC circulating, while Ethereum's supply fluctuates.

Block in a blockchain

A block in a blockchain is a digital record that contains a batch of verified transactions, along with metadata such as a timestamp, cryptographic hash, and a reference to the previous block.