Block Subsidy
1 min read
The block subsidy is the amount of new bitcoin minted in each block. Each block that is produced and added to the blockchain allows the creator of the block to mint a certain amount of new bitcoin.
This amount is strictly determined by an algorithm in Bitcoin’s source code: the subsidy started at 50 BTC per block, and is cut in half every 210,000 blocks or roughly 4 years. The block subsidy is how new bitcoin enters into circulation, but it also incentivizes miners to remain honest and submit valid blocks. The block subsidy is paid out in the coinbase transaction of each block. This special transaction is the first transaction in every block, and it has no inputs. The output of a coinbase transaction cannot be spent for 100 blocks, so miners can only spend their block subsidy after a 100 block cooldown.
Each block contains many transactions, each with fees attached to incentivize their confirmation. The sum of the block subsidy and cumulative transaction fees in a block yield the block reward. Because the block subsidy falls by half every four years, transaction fees will slowly begin to make up most and then all of the block reward.