Block Subsidy determines how much new bitcoin may be created in a block. It is part of the reward for the miner who finds a valid block accepted by the network. The miner may also collect the fees from transactions in that block. Users pay those fees with existing bitcoin, so fees do not themselves increase the supply. Separating these two parts makes it easier to understand where new bitcoin comes from.
Imagine a block whose rules allow 3.125 BTC to be created. Its transactions contribute an illustrative 0.075 BTC in fees. The miner may allocate at most 3.2 BTC in total, but only 3.125 BTC is new. This allocation is recorded in the first transaction of the block, called the Coinbase Transaction; here the name refers to a type of Bitcoin transaction, not the Coinbase exchange. Every fully validating node checks the total. If the miner claims more, the node rejects the block even with valid Proof of Work. Claiming less is allowed, but unused issuance cannot be saved for a later block. [1]
Bitcoin began with a limit of 50 BTC per block. On the main network, that limit is cut in half every 210,000 blocks, an event called Halving. The sequence therefore continued with 25, 12.5 and 6.25 BTC. From height 840,000 through 1,049,999, the limit is 3.125 BTC. Height means a block’s position in the chain, not a price or date. The roughly four-year interval follows from the target average of ten minutes between blocks; the exact day is not fixed in advance. A higher market price or more expensive electricity does not let miners issue extra bitcoin. [1] [2]
An output from the Coinbase Transaction must first mature. A reward created at height H may be spent in a block no earlier than H+100. For example, a reward from height 900,000 can be spent in block 900,100 if the other conditions are also satisfied. This waiting period gives short-lived competing branches time to resolve. A reward from a block that is ultimately outside the valid active history is unavailable in that history. The first Genesis Block has a special unspendable output; ordinary maturity waiting does not explain its case. [1] [3] [4]
Each halving is calculated in whole satoshis, bitcoin’s smallest units; fractions of a satoshi are not created. From height 6,930,000, the subsidy therefore becomes zero. At the assumed pace of blocks, that is around 2140, not a fixed calendar date programmed into the system. Payments and blocks can continue, as can fees paid by users. The protocol does not guarantee how much those fees will earn or how much computing power will protect the network. For a closer check, distinguish the height-based limit, the amount actually claimed and the fees; Bitcoin Core calculates the limit in GetBlockSubsidy. [1] [2]
For the clearest picture, read this entry together with Halving, 21 Million, Mining, Transaction Fees, Genesis Block, Coinbase transaction. The reverse links also lead from Genesis Block, Proof of Work, Mining, Difficulty Adjustment.