A coinbase transaction is the special first transaction included in a newly mined block on proof-of-work blockchains such as Bitcoin. It is the mechanism that mints new coins into circulation and assigns the block reward, made up of the block subsidy plus any transaction fees from that block, to the miner (or mining pool) that produced the block.
How it works inside a block
Unlike regular transactions, a coinbase transaction does not spend existing outputs. It has no conventional inputs because the coins it creates are new at the protocol level. Instead, it contains a “coinbase” field that miners can fill with arbitrary data. Historically this field has been used for miner identification, pool tags, or short messages, and it can also contribute to the data used in building the block header.
The outputs of the coinbase transaction pay an address controlled by the miner or pool. In practice, most individual miners contribute hash power to pools, so the coinbase output is often directed to a pool’s address, and the pool later distributes proceeds to participants according to its payout scheme.
Rewards, rules, and real-world context
The coinbase transaction is central to Bitcoin’s issuance schedule because the subsidy portion follows consensus rules and changes over time according to the protocol. Networks also enforce maturity rules: newly created outputs typically cannot be spent immediately and must wait a set number of confirmations, which helps reduce incentives to reorganize the chain after receiving a reward.