Two paychecks, not one
Every time a miner successfully produces a block, they're paid twice, from two different sources. The first is the subsidy: newly created bitcoin, minted by the protocol itself, the exact figure tracked chapter to chapter in this book — 3.125 BTC per block right now. The second is fees: small payments attached by whoever wants their transaction included in that block, collected entirely from other users, not created by the protocol at all.
Chapter 5's table only shows the first paycheck, because only the first one follows a fixed, predictable schedule anyone can compute in advance. The second paycheck follows a market instead — and understanding why miners keep showing up requires looking at both paychecks together, not just the one that happens to be easy to put in a table.
The subsidy was always meant to hand off
This isn't an emergent problem the network stumbled into — it's the design working as intended. Bitcoin's original whitepaper describes the subsidy explicitly as a bootstrapping mechanism: a way to distribute coins and pay for security in the network's early years, before enough people were transacting on it for fees alone to matter. The expectation, stated from the start, was that fees would gradually take over as the subsidy wound down, not that the subsidy would fund mining forever.
By era 33, the subsidy column in Chapter 5's table reads "rounds to 0" not because something breaks, but because the handoff this chapter describes will have finished. Whether that handoff succeeds smoothly is a separate, genuinely open question — covered honestly further down, not glossed over here.
Fees: an auction for scarce space
A Bitcoin block has a hard ceiling on how much transaction data it can hold — roughly 4 million weight units under the current rules, translating in practice to a few thousand typical transactions per block. That ceiling is what turns fees into an actual market rather than a flat toll: when more people want their transaction in the next block than there's room for, they compete by attaching higher fees, and miners — rationally maximizing their own revenue — assemble each block by picking the highest-fee transactions waiting in the queue first.
This is the same kind of self-correcting mechanism Chapter 4 described for difficulty, applied to a market instead of a mining rule: no central authority sets the fee, it's simply what clears the auction each block.
That auction isn't hypothetical. On May 7, 2023 (block 788,695), fees inside a single block totaled 6.701 BTC — more than the 6.25 BTC subsidy paid at the time, the first block since 2017 where the fee paycheck alone outearned the subsidy paycheck. The trigger was the newly launched Ordinals and BRC-20 protocols: people inscribing and trading tokens directly on-chain flooded the mempool past 500,000 pending transactions and pushed priority fees above 650 sat/vB, with the average transaction fee briefly touching roughly $31. Demand cooled within a week or two and fees fell back to ordinary levels — a real instance of the auction above clearing at a genuinely higher price, not proof that fees alone can sustain a security budget this size indefinitely, but a concrete example that they can, for a stretch, rival it.
The security budget: why the total matters more than the split
Miners don't mine out of loyalty. They mine because the expected revenue — subsidy plus fees, converted to whatever currency pays the electric bill — exceeds the cost of the electricity and hardware it takes to compete for that revenue. Economists studying Bitcoin often call the combined total (subsidy + fees, summed across all miners) the network's security budget: it's the total amount attackers would effectively need to out-earn, in honest mining, to make attacking more profitable than participating.
This is the real reason the split between subsidy and fees matters less than the total. A network secured by a shrinking subsidy and a growing fee market can be just as expensive to attack as one secured by subsidy alone — what matters for security is the total paycheck miners are competing over, not which of the two sources it came from.
The subsidy was never the point. Paying for security was the point — the subsidy was just the first, temporary way to fund it.
Why unprofitable miners don't break anything
Mining is a competitive, low-margin business by design, and individual miners regularly become unprofitable — when electricity prices spike locally, when a mining ban forces relocation, when older hardware simply can't compete with newer, more efficient machines. Chapter 4 already covered one real example: the July 2021 mining exodus from China, which knocked a huge fraction of global hash rate offline almost overnight.
What that episode showed on the economics side, not just the timing side, is that the network doesn't need every miner to stay profitable — it needs the difficulty adjustment to keep doing its job. When unprofitable miners switch off, hash rate drops, and at the next two-week retarget, difficulty falls to match. The miners who remain now face an easier, cheaper competition and become profitable again at the new, lower difficulty — which is exactly what drew hash rate back afterward. Individual miners are disposable to the system; the fee-and-subsidy incentive structure that keeps some miner, somewhere, finding it worthwhile is not.
The honest tension this book won't resolve for you
In the spirit of Chapter 2's both-sides treatment: whether fees alone can eventually fund a security budget as large as today's subsidy-heavy one is a real, actively debated question among people who study Bitcoin's economics, not a settled fact either direction here can responsibly claim. One side of the debate expects transaction volume and per-transaction value to grow enough, over the many decades before era 33, that fee revenue scales up to replace the shrinking subsidy. The other side worries that block space is capped by design, so fee revenue can't simply grow without limit the way subsidy-in-dollars theoretically could if the price rose — and that a security budget built entirely on a capped, competitive auction might end up smaller, and more volatile, than one anchored by a predictable subsidy.
Nothing in this chapter's arithmetic settles that question, because it isn't an arithmetic question — it depends on how much of the world actually ends up transacting on the base chain versus on layers built on top of it (a later chapter covers one such layer). What the arithmetic does settle is the mechanism: two revenue sources, one shrinking on a fixed public schedule, the other set by an open auction for scarce space, both paid for the same underlying job of making the chain expensive to attack.