We have already discussed in our article "What is mining?" that new Bitcoin - contrary to what the mainstream media often proclaim - is not really "mined", but rather distributed as a reward for searching for and finding new blocks.
Today I would like to explain how this reward is related to the block subsidy and the so-called Coinbase transaction.
The term block reward refers to the amount of Bitcoin/cryptocurrencies that a miner receives when they successfully attach a valid block to the end of the existing blockchain. This reward consists of two components, namely the block subsidy and transaction fees.
The block subsidy is - as the name suggests - a subsidy for the work that has been done and currently amounts to 6.25BTC per block. In addition to this expense allowance, the successful miner also receives the fees of all transactions in this block, which are paid by users when they send a transaction to the network.
The new coins generated as block subsidies are created through a special type of transaction known as a Coinbasetransaction. However, this has nothing to do with the well-known crypto exchange "Coinbase", but represents the base for new coins. Coinbase is therefore not the same as Coinbase;-)!
As a rule, the Coinbase transactionis the first transaction that is added to a new block and it basically creates the coins out of nothing, as these originate from a single empty input and are transferred to the miner's account.
The so-called "halvings" are also important in this context. As mentioned above, the block subsidy currently consists of 6.25 BTC, which the miner is allowed to pay out to himself. However, this was not always the case. When the Bitcoin network was launched in 2009, a full 50 BTC was paid for the work involved. However, the inventor, Satoshi Nakamoto, programmed in a mechanism that ensures that the block subsidy is halved approximately every 4 years (every 210,000 blocks to be precise). In the past 12 years since the Genesis block, it has been halved from 50 BTC to 25 BTC in November 2012, then to 12.5 BTC in July 2016 and now to 6.25 BTC in May of this year. The next halving is expected in spring 2024.
Especially during the last halving , we kept hearing and reading that the "block reward" would soon be halved. Even designated crypto magazines and supposed experts spoke of a halving of the block reward, although - as you have just learned - this is actually wrong. What is being halved is the block subsidy and not the reward, as the transaction fees will of course remain in full. However, if you hear or read statements and reports of this kind again in just under four years' time, thanks to this article you will already be well informed and will be able to classify the terminology correctly and correct people if necessary :-) .
