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Definition: crypto block reward


New digital coins are generated automatically by the blockchain algorithm. As a reward, the coins are credited to the account of the miner that wins the right to add its block of transactions to the blockchain. For example, with a single bitcoin at $40,000, $36 million worth of new bitcoins are generated every day until 2024 when the amount changes (see Bitcoin halving). The block reward also includes the fees paid by the initiators of the transactions. See Bitcoin mining and digital gold.

Bitcoin Is Deflationary
The Bitcoin block subsidy began with 50 bitcoins (BTC) per block and cuts in half every 210,000 blocks, roughly every four years. Designed to end in 2140, it becomes more difficult to reap monetary benefit from the reward as time passes unless the price of one bitcoin rises in concert. After 2140, a miner's reward will be derived only from transaction fees. Because of this cap, Bitcoin is considered a deflationary currency. See Bitcoin.

Ethereum Is Inflationary
In contrast, Ethereum has no cap. At the time of launch, 72 million ether (ETH) were created, and 60 million were awarded to its founders. Because of its inflationary nature, the block reward was reduced periodically from its original 5 ETH to 2 as of 2022. Also, unlike Bitcoin, whereby only one miner receives a reward for each block, Ethereum miners are partially rewarded if they solve the proof-of-work puzzle at the same time. Miners with so-called "uncle blocks" receive a reduced amount starting with 87.5% of the reward. If there is more than one uncle block, each miner receives a continuously smaller percentage.

Ethereum is undergoing a major protocol change in 2022, switching from proof-of-work (PoW) to proof-of-stake (PoS), and the reward system is likely to change as well. See Ethereum and Ethereum 2.0.