Miner subsidy

The miner subsidy is the means by which all Bitcoins on the network are created. The subsidy is paid to compensate early miners for the lack of transaction fees being paid by users of the network.

The first 210,000 blocks each awarded the winning miner with a subsidy of 50 Bitcoins. After each 210,000 blocks, the subsidy drops by half, eventually falling to zero in approximately 2140. Currently the subsidy is just 12.5 Bitcoins per block, and it will fall to 6.25 Bitcoins in early 2020.

The miner subsidy was never intended to be the primary income mechanism for miners, but is instead a means to both bootstrap investment in the network and to issue the currency units in a fair and transparent manner. By awarding new Bitcoins to the miners who discover each new block, the issuance of coins comes as a payment for work that has already been performed rather than as a promise for future work to be done which allows Bitcoins to avoid classification as a security.

Long term, the miner subsidy must be replaced by the transaction fees which are paid by network users to access the ledger.