Stratum V2: Empowering Bitcoin Miners

After ten years of waiting, miners regain power thanks to the Stratum V2 update.

More Decentralization

This new open-source protocol is pushed by the payment giant Block (Jack Dorsey), the BitMEX exchange, the Foundry pool, the Galaxy Digital fund, Braiins, Spiral, and Summer of Bitcoin.

Revealed this Tuesday, the Stratum V2 program will be tested by the industry for an official release in November.

One of the highly anticipated advancements is the ability for miners to choose the transactions contained in each block themselves. This privilege had so far been reserved for a few mining pools.

Almost no one mines solo anymore. Doing so with a single S19XP machine means having a one in two million chance to win 6.25 BTC every ten minutes. Therefore, it’s better to go through pools that allow smoothing and distribution of gains proportionally to the computing power contributed by each miner.

Bitcoin miners communicate with pools using the Stratum V1 messaging protocol. Unfortunately, this program has a glaring security flaw: the possibility for pools to censor certain transactions.

Indeed, the architecture of Stratum V1 is such that it is pools that select transactions included in each block. Needless to say, we are light-years away from the Bitcoin ethos, since there is only a handful of pools that control the hashrate.

Energy Savings

Stratum is the third generation of mining protocol. It follows the original Bitcoin client (CPU) as well as Getwork (GPU). Since the end of 2012, miners have been using ASICs (Application-specific integrated circuits) that have multiplied computing power and necessitated a new protocol: Stratum.

Galaxy Digital recalls in this paper that it was “a user of the Bitcoin Talk forum named slush who developed Stratum.” He wrote in early 2012:

“The reason I designed Stratum […] is that the current ‘Getwork’ protocol has many flaws and can hardly be used on a large scale. ASICs are probably arriving at the end of 2012, so we need a protocol capable of handling multiple TH/s for each pool user.”

Visionary since the total hashrate of the Bitcoin network was only 12 TH/s at the time. However, Slush did not imagine that BTC mining would become industrialized and that a single machine could generate 140 TH/s.

The entire machine park now generates nearly 300 million TH/s. That’s 25 million times more than in 2012! Moreover, some facilities include tens of thousands of machines.

And this is where the Stratum V1 protocol starts showing limitations. The reason being that each machine has its own direct connection to the pool. These redundant connections consume unnecessary energy and bandwidth.

Stratum V2 reduces the amount of data circulating between mining machines and pools.

Stratum V2

The first version of Stratum is not suitable for industrial-scale Bitcoin mining due to the tens of thousands of connections to manage. This redundancy unnecessarily wastes significant amounts of energy.

To circumvent this problem, miners use proxy servers that consolidate all connections and establish only one connection with the pool.

Some proxy servers can be downloaded from GitHub, but most miners develop better internal solutions to gain competitiveness. Stratum V2 will level the playing field.

The elimination of unnecessary data will reduce processor activity and bandwidth consumption. Galaxy Digital’s two charts below are very telling:

Source: Galaxy Digital Research

Let’s also note that the amount of data transferred via Stratum V1 was not minimized. Communicating with plain text in JSON format was practical for early miners who could read and understand the protocol.

However, mining has become extremely competitive, and many watts could be saved by using other languages.

Indeed, ASICs do not natively understand JSON. To execute these messages, the ASIC loses time and computing resources to decipher the JSON messages. Moreover, Stratum V1 circulates unnecessary messages.

Stratum V2 solves these issues by employing a binary protocol. Ultimately, SV2 relieves computer processors and bandwidth, maximizing miners’ profits.

Finally, data will be encrypted between miners and pools, preventing certain “man in the middle” attacks.

Here is an interview with the protagonists of SV2:

La Rédaction C.

L'équipe éditoriale de Cointribune unit ses voix pour s’exprimer sur des thématiques propres aux cryptomonnaies, à l'investissement, au métaverse et aux NFT, tout en s’efforçant de répondre au mieux à vos interrogations.