Cypherpunk Technologies Inc. (CYPH) has launched what it describes as the largest active Zcash mining fleet after completing a $33.33 million equity transaction tied to Winklevoss Capital. The Nasdaq-listed company said Tuesday that Cypherpunk Mining is now online with approximately 4.2 GSol/s of Equihash computing power deployed across hosting facilities in the United States, representing roughly 18% of the total Zcash network hashrate.
The fleet was acquired from Moria Mining and Winklevoss Treasury Investments using a pre-funded warrant issued to Winklevoss Treasury Investments. The warrant covers 43,290,042 common shares with a $0.001 exercise price per share, translating to an underlying common share purchase price of $0.77. Cypherpunk said the acquired latest-generation Z15 Pro mining machines and related hosting agreements became operational immediately after closing. Shares of CYPH rose 2.79% to $0.7250 in pre-market trading, extending gains from Monday.
Cypherpunk’s mining expansion complements its existing Zcash treasury strategy. The company currently holds 323,394.38 ZEC, about 1.92% of circulating supply, and aims to eventually control 5% of total supply. Zcash distributes approximately 43,800 ZEC to miners each month through network block rewards, and Cypherpunk expects production costs from its mining fleet to remain below current spot acquisition costs. The company also pointed to a Zcash mining market it estimates is worth more than $250 million annually at current ZEC prices.
Kevin Zhang has joined Cypherpunk as Head of Mining. Zhang brings more than a decade of Bitcoin and Zcash mining experience and previously helped develop large North American mining facilities and managed major mining infrastructure at Foundry. Will McEvoy, chief investment officer of Cypherpunk, said Zcash flow from Cypherpunk Mining "provides financial and operational flexibility to fund future growth, the acquisition of additional ZEC, and new privacy-preserving technology investments."
The announcement follows a difficult period for Zcash earlier this year, when Shielded Labs researcher Taylor Hornby discovered a vulnerability in the Orchard pool involving a flaw in its zero-knowledge circuit. The issue theoretically could have allowed an attacker to create counterfeit ZEC without detection. ZEC fell more than 50% at the time and Cypherpunk’s stock dropped around 40%. Developers issued an emergency patch in early June and deployed the Ironwood upgrade in July to further strengthen the network. Cypherpunk framed the new mining capacity as a way to improve Zcash network security and decentralization while increasing its own treasury exposure.
