Crypto Terms: Letter M

What is Mining Reward?

Mining Reward MEANING:
Mining Reward - the benefits received for finding and validating a new block.
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Let's find out Mining Reward meaning, definition in crypto, what is Mining Reward, and all other detailed facts.

A mining reward, or a block reward, is the cryptocurrency that a miner receives for successfully finding and validating a block that contains transaction data, thus adding it to the blockchain.

When Bitcoin (BTC), the first cryptocurrency in the world, was launched in 2009, the mining rewards were 50 BTC per block. Bitcoin rewards are programmed to be halved every 210,000 blocks, or every four years. Currently, a Bitcoin miner receives 6.25 BTC per block. The next halving is expected to occur in 2024.

While the Bitcoin mining reward has been decreased, the value of the cryptocurrency itself has increased exponentially since its launch. Therefore, miners that receive less cryptocurrency in 2022 are actually earning significantly more than they did in 2012.

The overall supply of Bitcoin is limited. As it progressively dwindles, the transaction fees are expected to become another source of income for crypto miners as the fees are included in the mining rewards. The rewards incentivize the miners to maintain network security.

Roughly 90% of the Bitcoin has been mined and is already in circulation. It is expected that the max cap of Bitcoin will be reached around 2140.

One Bitcoin block can contain 1 MB of transaction data. Transaction information such as the wallet addresses involved, the amount of cryptocurrency transferred, and the date the transfer occurred is stored in a block which is then added to the chain.

Miners that find new blocks containing information on unconfirmed transactions and solve the cryptographic hash receive a block reward. The reward system may vary between different cryptocurrencies. In many cases, the winning miner that claims the block reward is the first one to add a transaction to a new block.

The Proof-of-Work (PoW) consensus mechanism employed by Bitcoin and other cryptocurrencies requires intensive power resources and is not efficient in the long run. Some new cryptocurrencies are developed using alternative consensus algorithms, such as Proof-of-Stake (PoS), to receive block rewards.

The PoS consensus algorithm allows block validators to pool the money together and lock a certain amount of cryptocurrency in the blockchain network. The total value of the investment is used to determine the mining power.

In some cases, validators may be chosen at random to receive rewards. They are typically rewarded for their efforts in transaction fees.