Mining Rewards

Understanding Mining Rewards

Mining rewards, also referred to as block rewards, are the cryptocurrency received for successfully mining a block of a specific currency. For example, when a block is mined and added to the blockchain, the miner can earn 6.25 Bitcoin as a reward. In the case of Bitcoin, the reward amount is halved every 210,000 blocks, which occurs approximately every four years. It is expected that the reward will eventually reach zero by the year 2140.

To better understand this concept, let’s focus on Bitcoin, the largest and most popular cryptocurrency in the world. Each Bitcoin block has a size of 1 MB and is used to store transaction information.

For instance, when Ted sends money to Anya, this transaction is recorded on a block.

Miners use devices to discover new blocks that will include the mentioned transaction. In exchange for their efforts, miners receive a reward called the mining reward. This reward system is also present in other cryptocurrencies, where miners are rewarded with blocks of the respective blockchain. Typically, the winning miner claims the block reward by adding it as the first transaction on the block itself.

Initially, each Bitcoin block had a mining reward of 50 BTC. However, after every 210,000 blocks, the reward is halved. As of February 2019, one block reward was worth 12.5 BTC. Currently, it is valued at 6.25 BTC, and this value will continue to change as more blocks are mined.