Block Reward

What Is a Block Reward?

In the context of blockchains, a block reward refers to the incentive given to users who participate in the process of mining and contribute to the creation of new blocks.

Each block in a blockchain contains a record of transactions completed within a specific timeframe and is associated with a cryptographic hashing problem that needs to be solved to validate the block and add it to the blockchain.

How Mining Works (Block Reward)
How Mining Works (Block Reward) | Source: BTCZ Community

Bitcoin Mining and Evolution of Mining Hardware

The act of solving these hashing problems is known as mining.

In the case of Bitcoin and many other blockchains, blocks are typically mined by groups of miners using specialized mining equipment.

Initially, Bitcoin could be mined using CPUs (central processing units).

Still, over time, the mining process has become more efficient using GPUs (graphics processing units) and, eventually, dedicated hardware called ASICs (application-specific integrated circuits).

The block reward is given to the miner as the first transaction recorded within the block.

It serves as an incentive for miners to dedicate computational power and resources to the network.

However, due to the increasing difficulty and resource requirements, Bitcoin mining has become economically viable primarily for large-scale mining operations that utilize expensive hardware in controlled environments with low energy costs.