A Plan to Decentralize Bitcoin Mining Again Is Gaining Ground

Braiins, the company behind one of the largest bitcoin mining pools, recently released a code spec that could be promising for decentralized mining.

The spec, Stratum V2, could significantly change how bitcoin mining functions and would add security and efficiency to mining pools, the entities that organize miners spread across the world.

Although it aims to improve bitcoin mining pools in a number of ways, the primary benefit comes from a component that reduces one of the most pressing problems in bitcoin: mining pool centralization.

Square bitcoin developer Matt Corallo, one of the designers of the protocol, wrote in a recent Reddit AMA: "This is huge for mining centralization. Instead of being focused on the centralization of pools, we can focus on the centralization of actual miners [and] farm owners!".

Last year, Corallo revealed BetterHash, a plan to combat the centralization problem in mining pools.

In time, weighted mining pools emerged as a safer, more profitable way of mining by taking in all of the bitcoin earned by their miners and redistributing them based on mining power contributed.

Info, only three mining pools control over 50% of bitcoin's mining power, thereby centralizing the mining power in a few hands.

When one of the miners in a mining pool wins a block and rakes in the 12.5 bitcoin reward, the mining pool decides which transactions go into that block.

This also means that miners, not mining pools, will be able to vote on protocol upgrades to bitcoin if Stratum V2 is adopted by mining pools.

Luke Dashjr, veteran bitcoin coder, argued on Twitter that there are other aspects of mining centralization that still need to be addressed.