Mining Fees, Block Data, Block Headers, and Proof-of-Work

Now that we have some background on what the mining process does for Bitcoin, let's cover the specifics. This chapter covers the technical process, including mining fees, block data, block headers, and Proof-of-Work.

The Coinbase Transaction

The first transaction in any block is a special transaction, called a coinbase transaction. This transaction is constructed by Jing's node and contains his reward for the mining effort.

Note: Bitcoin wallets contain keys, not coins. Each user has a wallet containing keys. Wallets are really keychains containing pairs of private/public keys (see [private_public_keys]). Users sign transactions with the keys, thereby proving they own the transaction outputs (their coins). The coins are stored on the blockchain in the form of transaction outputs (often noted as vout or txout). 

Jing's node creates the coinbase transaction as a payment to his own wallet: "Pay Jing's address 25.09094928 bitcoin." The total amount of reward that Jing collects for mining a block is the sum of the coinbase reward (25 new bitcoin) and the transaction fees (0.09094928) from all the transactions included in the block as shown in Coinbase transaction.

Example 4. Coinbase transaction

$ bitcoin-cli getrawtransaction d5ada064c6417ca25c4308bd158c34b77e1c0eca2a73cda16c737e7424afba2f 1

 

{
    "hex" : "010000000100000000000000000000000000000000000000000
    00000000000000000000000ffffffff0f03443b0403858402062f5032534
    82fffffffff0110c08d9500000000232102aa970c592640d19de03ff6f32
    9d6fd2eecb023263b9ba5d1b81c29b523da8b21ac00000000",
    "txid" : "d5ada064c6417ca25c4308bd158c34b77e1c0eca2a73cda16c737e7424afba2f",
    "version" : 1,
    "locktime" : 0,
    "vin" : [
        {
            "coinbase" : "03443b0403858402062f503253482f",
            "sequence" : 4294967295
        }
    ],
    "vout" : [
        {
            "value" : 25.09094928,
            "n" : 0,
            "scriptPubKey" : {
                "asm" : "02aa970c592640d19de03ff6f329d6fd2eecb023263b9ba5d1b81c29b523da8b21OP_CHECKSIG",
                "hex" : "2102aa970c592640d19de03ff6f329d6fd2eecb023263b9ba5d1b81c29b523da8b21ac",
                "reqSigs" : 1,
                "type" : "pubkey",
                "addresses" : [
                    "1MxTkeEP2PmHSMze5tUZ1hAV3YTKu2Gh1N"
                ]
            }
        }
    ]
}

 

Unlike regular transactions, the coinbase transaction does not consume (spend) UTXO as inputs. Instead, it has only one input, called the coinbase, which creates bitcoin from nothing. The coinbase transaction has one output, payable to the miner's own bitcoin address. The output of the coinbase transaction sends the value of 25.09094928 bitcoin to the miner's bitcoin address; in this case it is 1MxTkeEP2PmHSMze5tUZ1hAV3YTKu2Gh1N.

Source: Andreas M. Antonopoulos, https://github.com/bitcoinbook/bitcoinbook/blob/develop/ch10.asciidoc
Creative Commons License This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 License.