It is a rare crafting material that can only be mined with an Ancient Nordic Pickaxe, and can be found all over Solstheim.
It is mined in a slightly different manner than other ores are. First of all, there is no Stahlrim Ore. When you mine a Stalhrim Ore Vein you get Stalhrim straight away. Also, it takes a bit longer to mine per piece of "ore" gained, about twice as long in my experience.
When using Stalhrim Weapons and Armor, it is to be noted that Frost Enchantments are 25% more powerful when placed on Stalhrim! Thank you for reminding me Mor!
How do you mine Stalhrim?
This is a basic question with a simple answer. You mine it with an Ancient Nordic Pickaxe, which is very easily obtained.
Here is how you get an Ancient Nordic Pickaxe:
When you first arrive at Solstheim, you come to Raven Rock. In that very place there is a Smithie called Glover Mallory.
If you speak to him he will complain about his Nordic Pickaxe, if you ask him about it he will give you a Quest to return his Ancient Nordic Pickaxe to him from somebody who stole it. It is a very easy quest and doesn't involve any violence. When you return to him he will give you the Ancient Nordic Pickaxe.
Where can you find Stalhrim?
If you want to get a lot of Stalhrim, you will need to go to Skaal Village first.
There, speak to Deor Woodcutter. He will give you a quest to find Baldor Iron-Shaper.
This is also a fairly easy quest and you will only need to kill five Thalmor and travel a bit to complete it.
After you completed it, return to Skaal Village. There, speak to Baldor Iron-Shaper.
He will give you the ability to forge your own Stalhrim Armor and Weapons, as well as tell you where to find the Stalhrim Source, where you can mine a lot of Stalhrim.
He also sells Stalhrim Armor, Weapons, and Stalhrim itself.
What is it used for?
Well it's like I said, once you complete the Skaal Village quest you get to make your own Stalhrim Armor and Weapons.
There is both a Light and a Heavy craftable version of the Stalhrim Armor.
Its stats are about the same as of Ebony Armor and Weapons.
It is important to note that if you unlocked Ebony Smithing in the Smithing Perks, your ability to improve Stalhrim Armor and Weapons, using Stalhrim ofcourse, will double in efficiency.
The Deathbrand Armor
Originally posted by Death By Surds:
Just a note, you need to be at level 38 or above to comence the Death brand quest
It is a Unique Stalhrim Light Armor set, which grows increasingly more powerful the more of it you wear. E.G. if you wear the chestplate it isn't very powerful on its own, but if you wear it together with the helmet the chestplate becomes more powerful. If you wear all four pieces it reached the peak of its power.
It can be improved with Stalhrim after you have completed the Skaal Village Quest.
Its pieces are scattered around Solstheim, located in chests. Each chest has its own set of "guardians". It actually isn't very difficult to find but requires a lot of travel.
Once you find one of the chests, you should loot the bodies of the bandits guarding it to find a Map which will show the locations of each piece of Armor.
The chests are not all of the same difficulty to open. For me, two chests were Master Difficulty and the other two were Adept.
Make sure to bring plenty of lockpicks.
I hope that was helpful, enjoy playing the Dragonborn DLC and using Stalhrim, Dovakhiin! :)