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The Origins of Bitcoin Mining
Understanding block templates is key to understanding how bitcoin mining works, and how we keep it decentralized. Bitcoin mining started as a simple process. In the early days, individual miners used their personal computers to secure the network. The goal of mining is to validate transactions and add them to the blockchain, ensuring that Bitcoin remains secure and decentralized. This process relies on proof-of-work (PoW), where miners compete to find a cryptographic hash. The first miner to win the race and find the answer is allowed to create a new block and is rewarded with newly minted Bitcoin and transaction fees.
At the core of this process is the block template—a blueprint that determines what transactions will be included in the next block. While this may seem like a minor technical detail, who controls the creation of block templates has major implications for the decentralization and security of Bitcoin.
What Is a Bitcoin Block Template?
A block template is a proposed structure for a new Bitcoin block.
Miners don’t just create blocks out of thin air. They use the block template as the foundation for their mining work. The template organizes the transactions, determines the block’s structure, and ensures everything follows Bitcoin’s consensus rules.
Why Do Block Templates Matter?
The entity that controls the block template creation effectively decides which transactions get confirmed and in what order. This can impact:
- Transaction Censorship: A miner could choose to exclude certain transactions.
- Fee Prioritization: The entity creating the template decides which transactions pay enough in fees to be included.
- Decentralization: If only a few parties control block templates, Bitcoin mining becomes more centralized.
The Rise of Mining Pools and the Shift in Block Template Control
Source (January 30th 2025): Mempool.space
As Bitcoin grew, mining became more competitive. Miners soon realized they could improve their odds of earning rewards by joining mining pools. These pools group together multiple miners and share the rewards, making payouts more consistent.
However, as pools became dominant, the process of creating block templates shifted. Instead of individual miners creating their own templates, pools took over this responsibility. This means:
- Miners contribute their computational power but don’t decide what transactions go into the block.
- Pools have more control over transaction selection and can influence network behavior.
This shift introduced a centralizing force in Bitcoin mining. Instead of thousands of independent miners making decisions, a handful of large pools now control much of Bitcoin’s transaction ordering.
The Block Template Controversy: Are Pools Just Copying Antpool?
Recently, a major concern surfaced when it was discovered that many mining pools were not creating their own block templates. Instead, they were outsourcing this task to Antpool, a pool operated by Bitmain, the largest manufacturer of Bitcoin mining hardware.
Why is this a problem?
- Increased Centralization: If multiple pools rely on Antpool for block templates, then Antpool effectively decides how Bitcoin transactions are processed, even beyond its own mining operations.
- Censorship Risk: If Antpool (or Bitmain) wanted to exclude certain transactions—whether due to government pressure, financial incentives, or other reasons—it could influence a large portion of Bitcoin mining activity.
- Lack of Transparency: Many miners assumed their pools were independently selecting transactions, but in reality, they were just using Antpool’s block templates, concentrating decision-making power in one entity’s hands.
This revelation has raised alarms within the Bitcoin community, pushing developers and miners to seek more decentralized solutions.
Decentralizing Block Templates: Ocean, Datum, and the Path Forward
To counteract this trend, new tools such as Ocean and Datum emerged, giving individual miners more control over block templates.
Ocean: A Decentralized Mining Pool
Ocean is a Bitcoin mining pool that challenges the traditional model. Unlike other pools, Ocean allows individual miners to:
- Create their own block templates
- Run their own Bitcoin nodes
- Decide which transactions to include in blocks
This shifts power back to the miners and reduces the risk of centralized control over transaction selection.
Datum is software that allows for this decentralization. It enables miners to connect their mining hardware to their own Bitcoin nodes, rather than relying on a pool’s infrastructure. This means:
- Miners can generate their own block templates instead of using templates from the pool they are using.
- They can ensure that all valid transactions are included, reducing the risk of censorship.
- The Bitcoin network becomes more resilient against centralization threats.
Together, Ocean and Datum represent a major step forward in decentralizing Bitcoin mining, empowering miners to take back control from large pools and third-party template providers.
Conclusion: Taking Back Bitcoin’s Decentralization
Bitcoin’s strength comes from its decentralization. The ability for anyone to participate in mining and transaction validation is what makes Bitcoin different from traditional financial systems. However, as mining pools consolidated power, the control over block templates also became centralized.
The discovery that many pools were outsourcing block templates to Antpool exposed a significant risk to Bitcoin’s neutrality. However, innovations like Ocean and Datum are now offering miners a way to create their own block templates and reclaim control over transaction selection.
For Bitcoin to remain trustless and censorship-resistant, miners must take back this control. The development of new tools and decentralized mining infrastructure ensures that Bitcoin continues to live up to its promise as the world’s most open and permissionless financial network.
By understanding block templates and supporting decentralized solutions, miners and users alike can help keep Bitcoin free from centralized influence—just as it was originally intended. You can play a role in this effort by mining yourself. Book a call now to get started.
Disclaimer: The information provided in this blog is for informational and educational purposes only and should not be construed as financial advice. Please consult with a financial advisor or conduct your own research before making any financial decisions.
