A block reward is the compensation a blockchain network pays to the participant who successfully produces the next block and adds it to the chain. It is designed to incentivize honest participation in securing the network and processing transactions.
How block rewards work
On proof-of-work (PoW) networks, such as Bitcoin, miners compete to solve a cryptographic puzzle. The first miner to find a valid solution earns the right to publish the next block and receive the block reward. On proof-of-stake (PoS) and similar systems, validators are selected based on stake and protocol rules, and they earn rewards for proposing and attesting to blocks. In both cases, the reward is the mechanism that aligns individual profit motives with the network’s need for timely, valid blocks.
What the reward is made of
Block rewards commonly include two components: newly minted coins (also called the block subsidy) and transaction fees paid by users whose transactions are included in the block. In Bitcoin, for example, the subsidy introduces new bitcoin into circulation on a schedule, while fees provide an additional incentive that can grow in importance as the subsidy declines. Many networks also programmatically adjust the subsidy over time, such as through periodic reductions, which shapes long-term issuance and can influence how security is funded.
Practical significance for security and policy
A higher expected block reward generally attracts more mining or validating activity, which can increase the cost of attacking the network. At the same time, block reward design is a core part of a chain’s monetary policy, determining how new units are created and distributed.
Block rewards matter because they are a primary tool blockchains use to pay for security, keep transaction processing reliable, and enforce predictable issuance rules across the crypto ecosystem.