Cryptocurrency mining: rewards and motivations

The motivations for cryptocurrency mining are primarily financial.

Mining is a necessary activity to maintain the security of the network and miners are rewarded for their efforts.

These rewards take two main forms:

Block rewards

When a miner successfully adds a new block to the block chain (i.e. solves the mining problem and authenticates transactions), he or she receives newly created cryptocurrency units as a reward.

For example, in the case of Bitcoin, the block reward started in 2009 at 50 bitcoins, which is halved every four years.

In 2021, this reward was only 6.25 bitcoins.

Transaction fees

The senders of transactions (transfers) usually offer a small fee to encourage miners to include their transaction in the next block.

As the block rewards mentioned in the first point decrease, transaction fees become increasingly important to miners.

However, cryptocurrency mining is not just about rewards.

It requires large investments in hardware, software and electricity, especially for cryptocurrencies like Bitcoin, where the proof-of-work mining algorithm requires significant computing power.

In addition, miners also face volatility, as the value of cryptocurrencies can fluctuate widely, affecting the real value of mining rewards.

Finally, the motivation for mining also includes contributing to decentralised networks and supporting cryptographic innovation.

Many miners believe in cryptocurrencies as a means to material prosperity and financial self-determination, and cryptocurrency mining is a way of actively supporting these ideals.