In Bitcoin, decentralization is paramount. In mining, two new protocols, DATUM and Stratum V2, aim to return power to individual miners. Solo Satoshi interviewed Braiins’ Kristian Csepcsar and OCEAN’s Bitcoin Mechanic to uncover what makes these protocols unique, their differences, and how Stratum V2 and DATUM could contribute to decentralization.
Their answers were more provocative than expected, but let’s start at the beginning.
It’s no secret that the mining industry is one of Bitcoin’s vulnerabilities due to its tendency toward centralization. Currently, four mining pools control approximately 78% of the market, and these entities build all the blocks they validate. That’s a massive point of failure.
The primary risk is censorship. If just four businesses were to collude, they could exclude certain transactions from blocks, severely compromising the Bitcoin network’s integrity. While individual miners could redirect their hashrate elsewhere if pools acted maliciously, the risk persists. Censorship is a threat, decentralization is critical, and 78% concentration is simply too much.
Both DATUM and Stratum V2 could flip the script, significantly reducing this risk by enabling individual miners to build their own blocks. With this small but impactful adjustment, the system would operate as Satoshi intended: decentralization would increase substantially, and mining pools would lose only a fraction of their power—a win-win scenario.
Decentralization and Privacy
Consider this: mining pools know everything that occurs within their systems. Privacy is nonexistent, and payments are centralized. Shockingly, some pools even require members to complete KYC procedures. The purest form of Bitcoin—newly created coins issued as coinbase rewards—becomes tainted from the start. That’s not decentralization.
Some mining pools are run by Bitcoiners committed to preserving the network’s integrity, but systemic issues remain. DATUM could eliminate these problems:
“Perhaps most importantly, with DATUM, coinbase payouts go directly to miners, instantaneously and without custodial oversight. This ensures that every block found is rewarded in a decentralized, non-custodial manner—something no other pool or protocol offers.”
That’s true decentralization.
DATUM And Stratum V2 Prevent Out-of-Band Payments
Out-of-band payments are another pressing issue these pro-decentralization protocols address. Today, mining pools often receive payments for prioritizing transactions, incentivizing questionable practices. These payments occur off-chain, away from the miners’ view, and frequently bypass compensation to miners.
From a miner’s perspective, out-of-band payments are nearly impossible to detect. Protocols like DATUM and Stratum V2 empower miners to construct their own blocks, stripping mining pools of the ability to engage in these practices covertly. Pools running Stratum V2 or DATUM could guarantee transparency to their clients.
Will miners themselves accept out-of-band payments to prioritize transactions? That remains to be seen—but it’s likely.
Stratum V2 and Decentralization
Today, most mining pools use the first iteration of Stratum. Developed by Bitcoin mining tools company Braiins, Stratum V2 offers several improvements. According to Braiins’ documentation, Stratum V2:
- Increases security,
- Improves data transfer efficiency,
- Reduces mining infrastructure requirements.
It also introduces three new sub-protocols, enabling miners to select transaction sets and enhance decentralization.
Stratum V2 defines five roles for Bitcoin mining entities:
- Mining Devices or Miners
- Pools
- Proxies
- Job Declarators
- Template Providers
One standout feature of Stratum V2 is its backward compatibility: mining pools using SV1 firmware can interact with Stratum V2 via a “Translation Proxy.” Additionally, Stratum V2 supports modular and incremental updates, allowing V1 mining pools to adopt its logic and framework progressively.
By acting as Template Providers or Job Declarators, miners can construct their own blocks:
“When the TP is Miner-side, it enables the extraction of transactions from the local Bitcoin node. In this way, miners are now able to create custom block templates and declare custom mining jobs to the Pool via the Job Declaration Protocol.”
Miners can opt to leave block construction to mining pools or choose configurations offering varying degrees of independence. Even in the latter case, they benefit from all the security and performance features of the Stratum V2 protocol.
Stratum V2: Power to the Miners
A major advantage of Stratum V2 is the ease with which miners can switch between mining pools:
“End-mining devices compatible with the Stratum protocol can switch between pools in minutes. Pools therefore compete for hashrate based on latency, ease of use, payout reliability, and associated networking services, all of which Stratum V2 can significantly improve.”
What does this mean for miners? Mining pools can no longer reject blocks without justification—doing so would cause miners to redirect their hashrate to competitors. If all configured pools reject a miner’s proposal, they can fall back to solo mining. Like BitAxe and Open-Source Mining products, Stratum V2 supports solo mining.
However, Stratum V2 faces hurdles. It requires changes to Bitcoin Core to function fully. Currently, miners must use Braiins’ patched version of Bitcoin Core to access Template Provider features. Despite these challenges, early adopters have embraced the protocol with hopes of launching production-ready SV2 pools by 2025.
Braiins and OCEAN: Competing Visions
Solo Satoshi interviewed both Braiins’ Kristian Csepcsar and OCEAN’s Bitcoin Mechanic to compare Stratum V2 and DATUM. While Braiins positions Stratum V2 as a comprehensive replacement for SV1 with additional features, OCEAN presents DATUM as a lightweight, miner-focused solution.
“DATUM is just an extra layer on top of legacy SV1 to build blocks by miners. It’s not a new mining protocol standard or replacement for anything. It’s just an extra layer on an existing old standard.”
Meanwhile, Stratum V2 “is a complete replacement of SV1 with new features.”
Both protocols have strengths, and competition between them is a net positive for Bitcoin.
Final Thoughts: Decentralization Is Coming
Competition fosters innovation. The emergence of DATUM and Stratum V2 demonstrates Bitcoin’s ability to adapt and decentralize further. While Stratum V2 offers a robust protocol overhaul, DATUM provides an immediate, practical solution.
The Bitcoin ecosystem has identified mining centralization as a threat—and its immune system is responding. Whether through DATUM, Stratum V2, or the Bitcoin home mining revolution, decentralization is inevitable.
Mark our words: Bitcoin mining will be decentralized again. The network is already working on it.
Written by: Eduardo Prospero with The Solo Mining Blog.
