In this episode, Alejandro De La Torre, CEO of @DMND_Sv2, joins me to discuss the mining of Bitcoin block 955,318 — the first known Stratum V2 block on mainnet.

We break down what happened, the benefits of Stratum V2, how it improves efficiency and we talk about SV2 adoption more broadly.

A great episode for anyone who wants to understand where Bitcoin mining is heading.

Timestamps:

00:00 The First Stratum V2 Block: What Happened?

01:08 How Does Miner Transaction Selection Change Bitcoin Mining?

01:58 Can SV2 Mining Pools Still Reject Blocks Though?

03:19 Can Miners Easily Switch Pools with Stratum V2?

04:45 Major Mining Pools Joining the Stratum V2 Working Group

05:40 Hardware & Firmware Support for Stratum V2

07:43 Is Miner Interest in Stratum V2 Growing?

09:00 The Biggest Benefits of Stratum V2 for Miners

10:21 How Does DMND’s SLICE Payout System Compare to FPPS?

11:50 What Needs to Happen for Stratum V2 to Become the Standard?

13:21 Should Miners Start Building Their Own Block Templates?

Links: 

• Alejandro’s announcement post: https://x.com/bitentrepreneur/status/2070131040992035235
• DMND Pool: https://www.dmnd.work
• Alejandro on X: https://x.com/bitentrepreneur

Stephan Livera links:

• Follow me on X: @stephanlivera
• Subscribe to the podcast
• Subscribe to Substack

Transcript:

Stephan (00:00.593)
Hi everyone, welcome back to Stephan Livera Podcast. Rejoining me on the show today is Alejandro DiLatore. He is the CEO and founder of DMND Pool, spelled DMND. And the big news today, or recently, is block 955,318 is the first known Stratum V2 block on mainnet. And you you were the pool who mined it, so give us the background there.

Alejandro De La Torre (00:24.024)
Yeah, so the first Stratum v2 block built by DMND, it what it means is that the pool no longer has the power to mine, to to it’s not only the pool that has the power to build a block, but the miner themselves. And with our with our pool, the miner goal mining actually built this block using Stratum v2 mining protocol, which is a an efficient and more advanced protocol for Bitcoin mining than Stratum V one, like the legacy pools have.

but they also included their own transactions into this block with their payment system, which opens up a whole entire new use case for miners if they want to make even extra more money.

Stephan (01:08.559)
I see. and so what does this mean if pools are not the only one selecting the transactions now? How does this change Bitcoin mining?

Alejandro De La Torre (01:17.526)
It changes it because right now Bitcoin mining is extremely centralized with just a handful of pools building the blocks, which is a against Bitcoin. I mean we were Bitcoin has a decentralized payment system and how can it how can the pools be the ones only ones building the blocks? There’s only a handful of pools. You can fit in a s small room, the operators. That is a big issue for centralization and and and and for for Bitcoin.

And we give this power to the miners. So let’s say we have a thousand miners. It’s optional of course. They can they they can choose not to, but if they choose to build their own block, then that means a thousand extra block producers are are are in the on the ecosystem.

Stephan (02:00.101)
I see. And so now I’ve heard different arguments back and forth on this because some people have made this argument that the pool can still reject shares or refuse the blocks, or if a you know a state actor were to come to you or, you know, some of the pools. but I know there’s diff kind of different arguments back and forth there. So can you clarify from your perspective how you see that?

Alejandro De La Torre (02:20.472)
Yeah, sure. That’s a that’s a great that’s a great question. So the man does not let’s say we do we are agnostic, a hundred percent. whatever you we again, we’re pa we we’re firm believers of Bitcoin and its philosophy. That’s what we joined many years ago. Me and the co-founder and the team are very old school Bitcoiners and we all believe in in Bitcoin and and the freedom to use this freedom money. what does that mean? That means that

We allow any block to be made. Of course, it has to be within the limits of Bitcoin, so it doesn’t hurt Bitcoin. but if you don’t want to if you want to let’s say not mine order notes, you can. If you want to add transactions because you have a payment system, we’ve already shown we do that. So it’s up to you. now the state actors is always an issue. I mean, this is a an improvement to to what we have now. I wouldn’t say it’s it fixes all the issues.

But an improvement is what we can do and we intend to make it even better.

Stephan (03:21.223)
Yeah, I think that’s fair. now I guess the other aspect of it is it theoretically I mean I’m curious to hear your view. Do you believe that if the ecosystem were to adopt SV2, more and more pools, let’s say miners, maybe even the hardware and the firmware, like just kind of more broadly, would it also lower the switching cost? So let’s say you are a miner and you try to get your transaction, you know, you select a certain transaction to and it goes to the pool and they reject it. Could you more easily switch?

Alejandro De La Torre (03:50.115)
Yes, that’s that’s the power of Astratomy Two. That’s why that’s why Stratomy Two open source team was y people need to understand Stratomy Two has been built for a long time. Why? Because it’s been built with the thought of it being used by the whole network, by the whole entire industry. And what does that actually mean? That means that if one pool decides to, you know, not accept your block for whatever reason

The Stratom V2 is built in a way where every single pool that is using Stratom V2 can then accept that block. And that’s the key. That’s the key. Any other protocol on the network, it it might not work in conjunction with other pools. But Stratomy 2 was built from the ground up. So it’s always compliant with all other pools that are using Stratom V2. So that gives miners the ability to quickly switch if a pool does not accept the block.

Stephan (04:48.261)
Yeah. And I know so I know you’re with DMND, obviously this is maybe a little more to the SRI Stratum reference implementation, but I believe they put out an announcement recently that approximately seventy-five percent of Bitcoin’s hash rate, represented by the pools, has joined this Stratum V2 working group. So I can see on the list Foundry, Antpool, F2 pool, Spider Pool, Mara Pool, Block Inc., and obviously yourselves, DMND. So can you comment a little bit on that?

Alejandro De La Torre (05:15.192)
Sure. So yeah, we’re working in conjunction with these other pools to try to make it you know, make it easier for them to switch over to Stratom V two. remember, our our core goal here is to decentralize Bitcoin mining, nothing else. And if there’s more pools building on Stratum v2, allowing miners to build their own blocks, then we take it as a win. So we’re helping any any way we can and this working group is a strong and a pivotal step forward for that.

Stephan (05:43.847)
And then as I understand, even at the hardware and firmware level, we’re seeing moves there also. I believe Block and Proto, so that’s Jack Dorsey’s one. And then I actually recently had an interview with NG Zhang from KN. They I believe they are the third largest in terms of Bitcoin mining machines. And they’ve also mentioned that they are interested in SV2. there are some others. I think Bidax, Oradine, and I believe BrainsOS brought it at a firmware level. so any comments on those at the hardware and firmware level?

Alejandro De La Torre (06:13.662)
yeah. so Aerodine actually if you have aerodyne machines, you can mine directly to from the machine to our pool. You don’t require a proxy anymore with Aerodyne machines, which is industry first. So they’re the first basically mining manufacturer to actually allow for Stratum v2 from the hardware into a Stratum v2 pool like ours. So we worked very closely with Aridine on that and we’re very happy to see how that

developed. Proto, of course, has always been very forward thinking and we hope to keep working with them. as for for the firmware level, I there’s a lot of work being done, let’s say from let’s more third party firmware, not not necessarily OEMs, so like the ones that like Bitmain, the Bitmain firmware, whatever. but it’s more like other other firmwares that are also

very much we’re very much in connection with them or connecting and speaking with them. And I think the increase of firmware and soft and and hardware SV2 usage will work sort of in tandem with more miners getting an SV2 pool. So as soon as we start going up the the the ladder on the mining pool stats, I think a lot of mining hardware manufacturers and firmware will start

more, you know, being more serious about integrating S V two.

Stephan (07:46.162)
Great. And in terms of I guess hash rate that’s interested in S V two now, are you seeing growth there or w what’s the interest been like?

Alejandro De La Torre (07:57.785)
There’s a lot of interest. A lot of interest. and we we had there was a lot of questions before the first block came in. you know, a lot of a lot of miners had this thought it was too technical, you know, too unproven, but we’ve proven it. it works perfectly n fine. the block is built. The block was built with J D with which means that the miner built it themselves. we’ve proven it.

And a lot of the our task as a pool is to take Stratov2, which is a highly, let’s say, highly advanced technical protocol and make it as simple as possible for the miner to use. And that’s what we’ve been doing. So for the miner who’s joins our pool, you don’t need to worry about, you know, end-to-end encryption, binary, all that stuff. You th leave that to us. You just have to come up, come to our website, make an account, and you can just point your rigs at us.

If you wanna build your own block, set up the proxy, it it’s simple. We’ve made it as simple as possible, just a couple of clicks and you’re good to go.

Stephan (09:03.452)
Yeah. And then in terms of the main benefits, as I understand, there’s a few things. So it’s this as you mentioned, the end-to-end the encryption and using the binary protocol, so it’s more efficient y because it’s the binary protocol, and then it’s you’re getting protection from hash rate hijacking because of the encryption, and of course the broader kind of transaction control idea or job declaration concept. So are they the are they the kind of the main benefits or what would you spell out as the benefits of using SV2 if you’re a miner?

Alejandro De La Torre (09:32.319)
yes. So a lot of a lot of the upgrades in Stratom V two are incremental. So there there may be like a percentage here, two percent there, a half a percent there. But if you add all together, they actually make up a good a good incremental advantage for the miners. And if you if you take those small percentages and you add all together and then you add a lot of hash rate, then it starts to really make sense, you know. our our rejection rates are

The industry lowest, without a doubt. that we’ve been seeing it with all the miners that we have on our pool. and we we intend to show more about that as we move forward. That’s just one of the things of that we see that strand v two improves. And what does that mean for the miner? Less rejection rate means more shares being accepted, meaning more money for you.

Stephan (10:24.634)
Interesting. And so I’m curious if you can share anything in terms of like the payout numbers and things. Like I know people have tried to run comparisons because I know another kind of topic is around going against FPPS and things like this. So you have what’s it called? Sl yeah, right? And what’s is it called? I was just Slice, that’s the one, yes. And so can you comment a bit on the differences there on if somebody is using, you know, a traditional pool versus your pool?

Alejandro De La Torre (10:40.501)
P L N S.

A slice.

Alejandro De La Torre (10:53.836)
yeah. look, FPPS is a payment system that is used widely in the industry because it it pays the miners. You know, the miners are let’s say they can forecast. They know that every single day they’re gonna get paid this much. of course they understand that it’s more expensive, but but ultimately a miner needs to pay the bills, needs to pay their their employees, etcetera.

so the FPPS works you know very well for that for that reason. PPLNS is sort of a maximus a I would c I call it maximizing your tr your sets per terahash. what that means is that you get exactly how much your hash rate costs. You get a hundred percent what your what your hash rate has produced. And that’s the beauty of PPLNS. You get paid more. However, you have to wait until the block is hit by the pool.

Stephan (11:53.289)
I see. And that’s I guess where the whole pull luck conversation comes in, because if let’s say because of the variance that maybe your your your pool hits more blocks than they quote unquote should have based on the proportion of the network or less. And so I guess people just have to kind of do the numbers on that, on whether they can kind of stomach the volatility, let’s say, or stomach that variation. but if they’re doing it for the you know increased, you know, performance or efficiency, then maybe that’s something they’re

and then right, I see, yeah. and then just looking out in terms of Stratum V2 adoption over the next let’s say twelve to eighteen months, what would need to happen for this to become, let’s say, a st more of a standard?

Alejandro De La Torre (12:22.71)
Increased monetary value, I should say. Right.

Alejandro De La Torre (12:39.086)
I think I I think that the growth of our pool will be a strong signal to the rest of the market and and the working group already shows that the large opera large mining pools are are definitely interested. I think I think the next step would be firmware that accepts S V two. I think that’s more of realistic

thing that can happen because hardware is a little bit more difficult and I know because I’ve worked very closely with Ardyne, also with Proto. but yeah, I think the next step would be to see more firmware you know using S V two.

Stephan (13:24.08)
Excellent. And then in terms of because I guess just to be clear, as you mentioned, you can decide whether to do job declaration or declaring your own job as a miner or not. and so I guess wha what what goes into that conversation for the miners? Is it just more like they are ready to do this or not, or maybe they’re coming from like a traditional mindset and they don’t they’re not ready to do this new thing?

Alejandro De La Torre (13:45.763)
That’s exactly it. Yeah, yeah, yeah. So a a lot of the a lot of the miners have been joining our pool. I I usually tell unless they’re let’s say more more like a very large operator or a operat or a miner that comes in like Go mining that already has a like set idea, like look, I want to add my own transactions into the block and get those transaction fees back. I tell I tell the new miners, come to our pool, let us build the block. Just

you know, for a couple of let’s say a month or two, you see how it runs, check it all out. When you’re comfortable, so we can help you set up that proxy, very simple, and then you can start building your own blocks. A lot of a lot of the machinery involved the strength too is complex i in terms of you know the the literature and and and our conversations but the pr in in practical what I mean

Is that when the miners just on our pool, they’ll they’ll just learn they’ll just see that it’s actually not that difficult at all. It’s just a click or a a choice, running a node on their operations. So then they’ll they they they they you know step by step they’ll realize, well, there’s actually I’m I’m able to maximize my hash rate, I’m able to build my own block very simply. I thought it was actually much more technical, but it’s not. So that’s what we tell the miners to do. Start off slow, let us build the block.

You get the feeling how it works, then you can move on to building your own block.

Stephan (15:17.403)
Excellent. Well I think it’s great to see the progress there on Stratum V2. listeners go and check out Alejandro’s work. You can find him and the pool at DMND.work and on X you can find him at BitEntrepreneur. Alejandro, thanks for joining me.

Alejandro De La Torre (15:31.055)
Thank you, Stephan.