Cypherpunk Technologies has launched a United States-based Zcash mining operation that accounts for about 18% of the network’s total hashrate after completing a $33.33m equity transaction with Winklevoss Capital.
The Nasdaq-listed privacy technology company said its new fleet is already operating with computing power of approximately 4.2 GSol/s. Hashrate refers to the processing power miners contribute to securing a blockchain.
Cypherpunk said the operation, run through its new subsidiary Cypherpunk Mining, is now the world’s largest active Zcash (ZEC) mining fleet. It acquired Z15 Pro mining machines along with the related hosting agreements.
The deal was not funded through a cash payment. Instead, Cypherpunk issued a pre-funded warrant to Winklevoss Treasury Investments, giving the buyer the right to purchase 43.29 million Cypherpunk shares for $0.001 each. The transaction was based on a stated Cypherpunk share price of 77 cents.
Mining will give the company another route to acquiring ZEC, the native cryptocurrency of Zcash. Specialised computers process transactions and help maintain the security of the network, with miners receiving newly issued coins in return.
Cypherpunk said about 43,800 ZEC are distributed to miners each month. It expects the output from its operation to help it move towards a target of holding 5% of ZEC’s total supply, potentially at a lower cost than purchasing the cryptocurrency directly on the market.
The company already holds 323,394.38 ZEC, equivalent to about 1.92% of the cryptocurrency’s circulating supply, according to figures it provided. That position means Cypherpunk’s financial performance is increasingly exposed to changes in Zcash’s market price, network security and adoption.
The company said expanding its mining capacity could also strengthen the Zcash network by adding further computing power. However, a corporate operator controlling a reported 18% of the hashrate also underlines the influence that one business can exert over a comparatively small proof-of-work network.
Cypherpunk described the mining operation as complementary to its investment in ZODL, a Zcash wallet, and its wider strategy of developing privacy-focused technology businesses. Zcash uses cryptographic tools that allow users to shield transaction details when they choose.
The company has appointed Kevin Zhang as head of mining. Zhang previously worked at Foundry and has experience developing Bitcoin (BTC) and ZEC mining operations in North America.
“Approximately 1,440 ZEC is awarded to miners each day, making zcash mining highly profitable. Even if the Zcash network hashrate increases significantly, zcash mining still out-earns AI colocation and bitcoin mining at today’s ZEC prices,” Zhang remarked on Tuesday.
The operation will now be assessed on whether the machines can maintain their reported uptime, how much ZEC they generate and whether the cost of mining remains below the value of the coins produced.
ZEC has risen 7% over the past seven days and is more than 1,200% higher against the US dollar than it was 12 months ago.
Investors will also examine Cypherpunk’s future securities filings for information about operating performance, the dilution created by the warrant, and any further purchases of ZEC or mining equipment. Movements in the price of ZEC could have a rapid effect on both the new mining business and the company’s existing digital asset treasury (DAT) strategies.
Separately, Kraken has launched commission-free trading in US stocks for eligible customers across the European Economic Area. The service combines access to traditional equities with the platform’s existing offering.
