Where Do the Bitcoins Go After Mining Them? Unpacking the Heart of the Network

When a Bitcoin miner successfully solves the complex cryptographic puzzle required to validate a new block of transactions, they earn the right to add that block to the Bitcoin blockchain. As a reward for this crucial work – which secures the network and verifies transactions – the protocol grants them a set amount of newly created bitcoins, along with all the transaction fees from the transactions included in that block.

These newly generated bitcoins and collected fees don't float in some ethereal space; they are directly sent to a specific Bitcoin address controlled by the miner. This is facilitated through a unique type of transaction known as the "coinbase transaction."

Here's how it works in simple terms:

Once the bitcoins are in the miner's wallet, they become part of the circulating supply. Miners typically incur significant operational costs, primarily for electricity and specialized hardware. To cover these expenses and realize their profits, they often sell a portion or all of their newly mined bitcoins on exchanges or through over-the-counter (OTC) desks. This inflow from miners is a consistent source of new supply entering the broader cryptocurrency market.
From there, these bitcoins can be: