Block Subsidy
Key Takeaways
- The Bitcoin block reward consists of the block subsidy and transaction fees from users.
- The block subsidy started at 50 BTC in 2009 and halves roughly every four years.
- As the block subsidy reduces over time, transaction fees will make up a larger portion of the block reward.
The Bitcoin block subsidy refers to the part of the Bitcoin block reward that is given by the Bitcoin network, and not by the transaction fees paid by users.
Block Reward
To understand block subsidy, it’s crucial to understand Bitcoin’s block reward. The block reward is the reward miners are given for mining a new block.
The Bitcoin block reward is made of two parts:
- The Bitcoin block subsidy
- The bitcoin transaction fees paid by users
Combined, these two added together create the block reward for each block.
Example
Right now, the Bitcoin block subsidy is 6.25 new bitcoins per block.
Let’s say that in the block mined, there was 1 BTC worth of transaction fees.
This means the miner that mines the block reward would get a 7.25 BTC block reward, made up of 6.25 BTC of block subsidy and 1 BTC worth of transaction fees.
Block Subsidy History
The Block subsidy started at 50 BTC per block when Bitcoin launched in 2009.
In the 2012 Bitcoin halving, the block subsidy was cut in half from 50 BTC per block to 25 BTC per block.
In the 2016 halving, it was cut in half again from 25 BTC to 12.5 BTC. In 2020, it was cut from 12.5 BTC to 6.25 BTC.
In the [2024 halving]https://bitbo.io/halving/), which happened on April 19, 2024, the subsidy was cut from 6.25 new BTC per block to 3.125 BTC per block.
Future of the Subsidy
As Bitcoin’s block subsidy becomes smaller, more of the block reward will need to be made up of transaction fees.
Some are nervous that transaction fees will never be enough to make up for the subsidy. However, the percent of block reward that has been made up of transaction fees has grown throughout Bitcoin’s history.