Miners using the block reward system are switching from Bitcoin to Zcash, where the best mining rig now earns about four times more per megawatt-hour than the best Bitcoin machine, after the rising price of $ZEC propelled this privacy-focused cryptocurrency into the top 10 by market capitalization.
For miners whose mining profits have declined in recent years, especially following the latest halving, among other factors, the potential profit from Zcash mining makes the decision of where to direct electricity an easy one.
Why Did the Z15 Pro Suddenly Start Earning More Than the Best Bitcoin ASIC?
The math has flipped in favor of privacy. According to data from The Energy Mag, mining Zcash on the Bitmain Z15 Pro brought in about $727.30 per megawatt-hour (MWh) of electricity by August. As of June 30, that price was $585.61.
The modern Bitmain S23 Pro Bitcoin mining machine brought in only $179 over the same period, while the older S21 Pro managed a mere $113.45. Only cloud-based AI tasks, bringing in about $941 per MWh, outperformed the Zcash rig.
As of early September, the Z15 Pro's profitability is about $708 per MWh, roughly 3% below the August peak, as more devices have come online. The profit tracks the price of $ZEC, which peaked at a record $890 in August.
Zcash from ETFs That Lit the Fuse
The project's economic viability is based on the rising token price, which Grayscale helped kickstart. The firm converted its Zcash Trust into an exchange-traded fund and listed ZCSH on NYSE Arca on August 25, becoming the first U.S. product to offer spot investing in a privacy-focused cryptocurrency.
The fund's assets under management exceeded $500 million. This amount also includes about $100 million from DCG International Investments, a subsidiary of Grayscale's parent company, Digital Currency Group, which contributed 85,705.32563297 $ZEC for shares.
$ZEC rose along with the capital influx. On September 4, the token surpassed $1,000 for the first time, and CoinMarketCap now values it at approximately $1,180 , with a market capitalization of around $20 billion. On September 3, Grayscale attributed the rise to "an investment-based 'hard money' scenario and growing attention to digital privacy."
Capturing Territory for Zcash Hashrate
Profitability attracted a crowd of investors, and that crowd reduces profitability. Company Cypherpunk Technologies (Nasdaq: CYPH), backed by Cameron and Tyler Winklevoss, paid $33.33 million in August to fund what it calls the world's largest Zcash mining operation, running at about 4.2 Gsol/s, or roughly 18% of the network. The company owns nearly 2% of the $ZEC supply and aims for 5%.
The company has competitors. Foundry USA launched an "institutional-grade" Zcash pool in March and within a month captured nearly 30% of the mining market share. Fortitude Mining Holdings, another DCG subsidiary, purchased a 12.5-megawatt power plant in Nebraska to expand operations.
As the network's hashrate rises faster than the price, each participant's share of the approximately 43,800 $ZEC in monthly rewards shrinks.
Bitcoin Miners Are Leaving Anyway
The shift to Zcash is happening against the backdrop of a stalling Bitcoin rally. The BTC rally stalled after hitting $82,000 on September 3. It is now trading around $77,000, and reports indicate network difficulty is set to increase again on September 19.
Canaan reported Q2 mining revenue of $17.7 million and a net loss of $97.6 million, with projected Q3 revenue potentially as low as $11 million.
Many miners are abandoning cryptocurrency entirely in favor of AI. On August 25, it was reported that Riot Platforms signed a 20-year agreement with Anthropic worth $9 billion for computing capacity, and Bitdeer one for 16 years.
