How Bitcoin miners are paid: block rewards and pools
Bitcoin miners are paid newly issued bitcoin plus transaction fees for each block they confirm. Most join a pool that pays by shares and thresholds.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
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Mining pay is not a fixed salary. You earn bitcoin only when a block is confirmed, and the amount changes with network conditions and transaction fees.
How are Bitcoin miners paid?
Each confirmed block pays newly issued bitcoin plus transaction fees. The subsidy started with the network in 2009 and is cut in half at halvings.
What you need before you start
You set up the tools that let a pool pay you. Pools do not withhold electricity and hardware costs; you pay them yourself.
Step by step: getting pool payouts
Most miners join a mining pool. The pool combines miners' computing power, splits rewards, and pays you based on the shares you submit.
- 1Get a wallet addressCreate or open a Bitcoin wallet and copy a receiving address. Check that the address is for Bitcoin.
- 2Choose a pool and schemeCompare payout schemes and minimum thresholds. Pay per share pays for each valid share; proportional pays when the pool finds a block.
- 3Configure software and start miningEnter the pool's server address, your worker name, and your payout address. Save it, then start mining. Your hardware submits shares to the pool.
- 4Reach the minimum thresholdThe pool holds your balance until it reaches the minimum payout amount. Then it sends bitcoin to your wallet address.
After payout: records and taxes
The IRS treats mining rewards as ordinary income when you receive them. Record the fair market value and date of each payout.
- Save each pool payout statement.
- Note the date and value.
- Track your cost basis.
Frequently asked questions
Yes, but the wait can be long. Pools smooth pay by sharing rewards.
It depends on the pool's scheme and minimum threshold. Some pay daily or weekly; others wait for a set balance.
The block subsidy is cut in half, so the new bitcoin drops. Fees become a larger share.
Yes, when network demand is high, fees can be most of a block's reward. At other times the subsidy is larger.
