Proof-of-work miners pay for electricity to win the right to produce a block. In July 2020, Xan Ditkoff of Blockstack described a system where miners pay in Bitcoin instead. The mechanism, called Proof of Transfer, was the consensus design for the Stacks 2.0 network upgrade, and Ditkoff walked the Mining Disrupt audience through how it moves value between two groups of participants.
Ditkoff, who introduced himself as Blockstack's production and growth partner for the previous three years, gave the twelve-minute talk at Mining Disrupt Covid Online 2020, held July 22–23, 2020. Bitcoin traded at $9,530 on the first day of the conference. He opened with a disclaimer that Blockstack's public filing was no longer live, that the talk was not a sale of anything, and that it included forward-looking statements.
From Stacks 1.0 to a network anchored to Bitcoin
Ditkoff described Blockstack as software for a user-owned internet. The Stacks 1.0 network had been live since 2017, and by the end of the previous year more than 400 independent projects had been built on it. He said the purpose of that first network was to prove the design thesis and show the technology could handle apps at scale.
Stacks 2.0, in his summary, was Web 3 anchored to Bitcoin. Ownership of digital assets and the execution of smart contracts would be recorded on the Stacks chain, while the security would be extended from the Bitcoin network. On the technical side, the upgrade added the new consensus algorithm, Clarity smart contracts and support for light clients.
Bitcoin as the cost of mining
Ditkoff called Proof of Transfer a novel category of consensus mechanism, set beside the categories most of the audience already knew.
proof of transfer is uh essentially a consensus mechanism that transfers a base cryptocurrency to mint units of a new cryptocurrency
Xan Ditkoff · 3:24
In Blockstack's implementation, that base asset is Bitcoin. His simple model had two kinds of participants. Stacks miners send Bitcoin to compete to earn Stacks tokens. Stackers lock up their Stacks tokens and earn the Bitcoin that miners pay to compete. He said the model helped keep the direction of each asset flow clear as the details became more complex.
He compared Stacks mining directly with proof-of-work mining. In both, a miner pays something of known value for the chance to mint something new.
it's very similar to proof-of-work mining in that you are paying something of known value uh in the case of bitcoin that's electricity in the case of us it's bitcoin
Xan Ditkoff · 5:06
Because the input is Bitcoin rather than computing work, he said, no specialised equipment is involved.
does not require any special hardware or big cpu capacity anyone can mine stacks all they need is some amount of bitcoin
Xan Ditkoff · 5:40
How a Stacks miner wins a block
A miner can commit as much or as little Bitcoin as it likes, submitted together with its proposed block. Every miner's payment becomes an input to the leader election, which the protocol runs through a verifiable random function. Ditkoff said the more Bitcoin a miner commits, the higher the chance of winning a block, though there is always some randomness in the result.
Stacking runs on a seven-day cycle
Ditkoff called the stacking side the more complex half of the mechanism. Each cycle lasts about seven days (he corrected the eleven days printed on his slide) and has two parts: preparation, then rewards.
In the first part, a would-be stacker locks up Stacks holdings and broadcasts a signed message to the network. The message supports a Stacks chain tip and names a Bitcoin address for rewards. There is also a minimum holding.
the last requirement is to hold at least 0.02 percent of the circulating supply of stacks
Xan Ditkoff · 7:12
He then qualified that minimum. The protocol supports pooling and delegation natively, so a holder can combine tokens with other holders to meet it without changing custody of the tokens. The threshold exists, he said, to limit the maximum number of addresses the protocol has to pay out in one reward phase.
Once the prepare phase closes, the protocol puts every eligible stacker's Bitcoin address into a reward set. Payouts go to five of those addresses per block across the following week, until the whole set has received its share.
they are paid with the bitcoin that miners are spending to compete to mine each block
Xan Ditkoff · 8:02
The protocol forwards the Bitcoin that miners commit on to the eligible stackers. In this design, the miners' spend becomes the stackers' reward.
Services built around mining and stacking
Ditkoff said both sides of the mechanism create an economic flywheel for the people taking part in consensus, and that this was a largely untapped design space for products built for Web 3 on top of Bitcoin. Blockstack PBC, he said, was focused on the core protocol and would soon rebrand and shift to developer tools, rather than building the services that make consensus participation easier.
He pointed to the four to five thousand Stacks token holders from Blockstack's Reg A offering, who would need services such as pooling and delegation to take part. He expected Stacks mining and stacking to appear as features inside other apps and wallets over time.
Testnet status in July 2020
At the time of the talk, the Stacks 2.0 testnet was live and near the end of its second phase. Participants had stood up nodes, written Clarity smart contracts and mined testnet Stacks, and a recent hackathon had produced a number of contracts. Over the following weeks, the team planned to add stacking and the full Proof of Transfer mechanism to the testnet, along with bounties for building tools and resources and for finding bugs.
He directed people who wanted to join to testnet.blockstack.org and the project's Discord, and said he was most active on Twitter for anyone who wanted to follow up on the details.
When this session was recorded, Bitcoin traded at $9,530; on October 12, 2026 it was $83,426.