Bitcoin’s Stratum V2 adoption and mining decentralization explained

The end of pool template control

The recent migration of 18% of Braiins’ pool hashrate and the debut of Ocean Mining’s decentralized template broadcast signal a shift in how Bitcoin mining functions. For years, mining pool operators controlled which transactions entered blocks, which created a centralization risk. Because four pools alone produced 70% of all Bitcoin blocks in early 2026, this concentration meant that a small number of entities decided the contents of most blocks. If a regulator pressured these pools, they could censor transactions without miners ever knowing. Stratum V2 changes this by using the Job Negotiation protocol to give miners transaction selection authority, shifting power from a handful of powerful entities back to thousands of individual miners.

DEMAND, which launched the first V2-native pool in November 2025, focuses on solo miners to help decentralize the ecosystem. This pool allows users to create their own block templates and facilitates hash power resale on a marketplace. DEMAND also plans to reduce fees for miners who create block templates to encourage more full node participation. Alejandro de la Torre, the co-founder and CEO of DEMAND, says the goal is to make home mining more attractive.

Security and efficiency gains

The technical improvements in the protocol reduce the overhead that previously hampered mining efficiency. Stratum V1 used plaintext JSON messages, which allowed attackers to intercept communication and redirect hashrate. Because Stratum V2 uses the Noise Protocol Framework to encrypt all traffic between miners and pools, this encryption prevents an ISP from spying on mining data or a malicious actor from hijacking hashrate. The protocol also moves from text-based data to a binary format. The switch from text-based messages to a binary data format reduces bandwidth usage by 70% for miners and 60% for pools, which helps bandwidth-constrained miners run more reliably.

The protocol relies on three sub-protocols to manage communication. The core sub-protocol handles share submission, difficulty adjustment, and channel management. The Template Distribution Protocol (TDP) replaces the legacy getblocktemplate RPC with a push-based mechanism for distributing block templates and transaction data from Bitcoin Core to mining infrastructure. Instead of waiting for a pool to send a new job, the TDP pushes updates as soon as the mempool changes or a new block arrives. Finally, the Job Negotiation Protocol allows a miner running a full node to construct a block template locally, propose it to the pool, and receive authorization to mine against that template. The protocol uses secp256k1 for key exchange and ChaChaPoly for authenticated encryption. These choices minimize the new cryptographic surface area for auditors. Because V2 is wire-incompatible with V1, miners can use a translation proxy to bridge legacy hardware to new pools.

Maximizing mining profitability

Miners face direct financial losses when they use outdated protocols. Stale shares, which occur when a miner works on an outdated block, represent wasted energy and lost revenue. A miner operating on a 10% profit margin could see a net profit increase of up to 2% simply by reducing the waste caused by stale shares when they switch to Stratum V2 with Job Declaration. Stratum V1 miners lose between 0.1% and 0.2% of their hashing power on shares that do not result in payouts. Using Stratum V2 with Job Declaration reduces this inefficiency to 0.08%.

Block change latency also wastes time. Stratum V1 miners lose 323.58 milliseconds per block, whereas Stratum V2 with Job Declaration reduces that delay to 1.42 milliseconds. This makes the new protocol 228 times faster in terms of block change latency. Job latency also sees a reduction. In Stratum V1, job latency sits at 228 ms, but Stratum V2 with Job Declaration reduces this to 2.44 ms, making it 93 times faster. I find the fee revenue timing advantage even more striking for those seeking to optimize their operations. Miners using Stratum V2 with Job Declaration can capture a timing advantage worth approximately 0.00141 BTC per block by grabbing transaction fees before competitors who continue to use less efficient protocols like Stratum V1. This advantage represents about 74 BTC per year for early adopters at a Bitcoin price of $110,000. The fee gain alone provides a 0.4% net profit boost for miners with a 10% margin.

The DATUM alternative

Ocean Mining provides an alternative through DATUM, which works on the existing Stratum V1 protocol. This method allows miners to build their own templates without requiring new firmware or the Stratum V2 protocol. Miners run a full node and a DATUM gateway to manage their work. This approach gives miners the power to choose transactions while maintaining compatibility with standard hardware. Ocean also uses a TIDES payout system to ensure transparent, non-custodial rewards. This system tracks work in a rolling window equivalent to the last 8 blocks.

Ocean charges a 2% fee, but it drops to 1% for miners using DATUM to build templates. Jack Dorsey helped back the launch of the pool in 2023. This pool pays rewards directly to the miner’s wallet from the coinbase transaction. No account or KYC is required to start. Payouts for balances above 0.00065536 BTC occur automatically when the threshold is met. Can the industry reach full consensus on a single standard?