What is Block Reward? | CryptoWallet.com

What is Block Reward?

A block reward is a financial sum won by crypto miners when adding a block of transactions to the blockchain network. Adding a new block is usually achieved by solving a complex math puzzle using computer hardware.

The complex math puzzle associated with creating each block requires a lot of computational power, dedicated hardware, and high electricity investment.

Deflationary Supply

The block reward for Bitcoin mining used to be 50 BTC per block in 2009 at its inception; however, this value is reduced by half every 4 years or 210,000 blocks. This is a measure put in place in its protocol to control the supply, create a deflationary effect on price, and slow down the digital currency from reaching its 21 million max supply which is expected to be in the year 2140.

However, various interviews with industry experts have suggested that Bitcoin mining is expected to be unprofitable long before the year 2140. The only incentive for Bitcoin miners would be in transaction fees. Also, only huge Bitcoin mining ventures are expected to be profitable, and individual miners may become unprofitable as early as 2039.