Digital asset “mining” is the activity of processing transactions on the blockchain to obtain digital assets as a reward. In addition to getting a fee for each processed transaction, miners will also get Block Rewards for each successfully processed hash block.
So, Block Rewards are a number of digital assets that are obtained by miners who successfully process blockchain transactions. For bitcoin itself, the reward for each block in the first 210,000 blocks is 50 BTC. After every 210,000 blocks (approximately 4 years), a Halving event will occur, in which the number of bitcoin prizes or the number of bitcoins that can be mined from each block, will be halved.
Block Bitcoin Vs Rewards. Ethereum
Ethereum, bitcoin’s main competitor as a crypto asset, also relies on block rewards to incentivize miners. With Ethereum, the reward is a digital token called “ether”, which is awarded every time a miner manages to provide a mathematical proof of a new block. Like bitcoin, miners are also given a transaction fee, known as a “gas” fee.
The Future of Bitcoin Block Rewards
To limit inflation, bitcoin creator Satoshi Nakamoto designed bitcoin to hold only 21 million bitcoins. This is why bitcoin’s Block Reward size is halved after the creation of every 210,000 blocks, which takes about four years.
At bitcoin’s inception in 2009, each block reward was worth 50 BTC. In May 2020, it was halved for the third time to 6.25 BTC. And by May 2021, there were already 18.7 million bitcoins, or nearly 90% of the total planned supply.
Ultimately, Block Rewards is slated to hit zero around May 2140, but mining will likely no longer be profitable long before that date is reached. As of April 2039, approximately 99.6% of bitcoins have been issued, and that’s only 0.19531250 bitcoin.1 During this time, transaction fees are expected to be the main incentive for bitcoin miners.