Grayscale touts Zcash mining as 2-4X more profitable than struggling BTC mining

Block-reward miners are pivoting from Bitcoin to Zcash, where the top mining rig now earns around four times more per megawatt-hour than the best Bitcoin machine, after ZEC’s rally pushed the privacy coin into the top 10 by market value.

For miners who have seen their returns in mining dwindle over the past years, especially since the last halving event, among other factors, the potential returns from mining Zcash make it easy to make a decision on where to point electricity. 

Why is the Z15 Pro suddenly out-earning Bitcoin’s best ASIC?

The math has flipped in favor of the privacy coin. According to data from The Energy Mag, a Bitmain Z15 Pro mining Zcash generated about $727.30 per megawatt-hour (MWh) of electricity by August. As of June 30, that price was $585.61.

A state-of-the-art Bitmain S23 Pro mining Bitcoin returned just $179 over the same measure, and the older S21 Pro managed only $113.45. Only AI cloud workloads, which are generating close to $941 per MWh, beat the Zcash rig.

As of early September, Z15 Pro’s take is around $708 per MWh, which is about 3% below the August peak as more machines joined the network. The returns track ZEC’s price, which was pegged to the record $890 that it hit in August.

The ETF cash that lit the fuse

The rig economics rest on a token rally that Grayscale helped set off. The firm converted its Zcash Trust into an exchange-traded fund and listed ZCSH on NYSE Arca on August 25, making it the first US product offering spot exposure to a privacy coin.

The fund’s assets under management exceeded $500 million within two weeks, according to Grayscale. This also includes roughly $100 million from DCG International Investments, an affiliate of Grayscale’s parent, Digital Currency Group, which handed over 85,705.32563297 ZEC for shares.

ZEC has climbed with the flows. The token crossed $1,000 for the first time on September 4, and CoinMarketCap now lists it near $1,180, with a market cap of around $20 billion. On September 3, Grayscale credited “the hard money thesis and growing awareness around digital privacy” for the run.

A land grab for Zcash hashrate

The profits have drawn a crowd, and the crowd is thinning the margins. 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 fleet, running about 4.2 GSol/s, or roughly 18% of the network. The company holds nearly 2% of the ZEC supply and wants 5%.

It has company. Foundry USA launched an “institutional-grade” Zcash pool in March and reached close to 30% of mining share within a month. Fortitude Mining Holdings, another DCG subsidiary, bought a 12.5-megawatt Nebraska site to expand. 

As the network’s solrate climbs faster than the price, each participant’s slice of the roughly 43,800 ZEC in monthly rewards shrinks.

Bitcoin miners are leaving anyway

The move to Zcash lands as Bitcoin mining loses its shine. BTC’s rally stalled after topping $82,000 on September 3. It is now trading around $77,000, and network difficulty is reportedly set to rise again on September 19. 

Canaan reported second-quarter mining revenue of $17.7 million and a net loss of $97.6 million, with third-quarter revenue guided to as little as $11 million.

Many miners are skipping crypto entirely for artificial intelligence. It was reported on August 25 that Riot Platforms signed a $9 billion, 20-year compute deal with Anthropic, and Bitdeer struck a 16-year deal.

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