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.
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:
Combined, these two added together create the block reward for each block.
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.
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, excpected to happen in April or May 2024, the subsidy will be cut from 6.25 new BTC per block to 3.125 BTC per block.
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.
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