Cypherpunk Secures Largest Zcash Mining Operation in $33 Million Deal

Cypherpunk Technologies has acquired a Zcash mining fleet with a capacity of 4.2 GSol/s for $33.33 million, which gives the Nasdaq-listed firm around 18% of the total computing power on the network.

On Aug. 18, Cypherpunk Technologies announced the launch of Cypherpunk Mining following the acquisition of the equipment and associated hosting agreements from Winklevoss Capital affiliates.

The fleet is made up of Bitmain Z15 Pro systems that are already operational in various hosting facilities in the United States. With a combined Equihash computing capability of around 4.2 GSol/s, the company claims this operation to be the largest active Zcash mining fleet globally.

The company states that approximately 43,800 ZEC are distributed to miners across the network every month. Given Cypherpunk’s 18% share of the current hashrate, its estimated monthly production is about 7,800 ZEC, though actual figures may fluctuate based on network difficulty and competing computing power.

According to Will McEvoy, Cypherpunk’s chief investment officer, the business is already generating positive cash flow as of an Aug. 18 post on X. He noted that the company commenced this operation without incurring debt and plans to gradually develop its own data center and power assets.

Payment structure involves a warrant linked to 43.29 million shares

An SEC filing from Aug. 18 identified Moria Mining LLC as the seller and Cypherpunk Mining LLC, a subsidiary of Cypherpunk Technologies, as the buyer. The asset purchase agreement was also signed by Winklevoss Treasury Investments LLC, affiliated with Moria Mining.

The agreement allowed Cypherpunk to acquire the mining machines, associated hosting contracts, and additional rights related to the operation. The buyer has also taken on liabilities associated with the purchased assets from the closing date of Aug. 17, apart from certain liabilities retained by the seller.

Instead of cash, Cypherpunk issued a pre-funded warrant to Winklevoss Treasury Investments for the purchase of 43,290,042 common shares. The warrant comes with an exercise price of $0.001 per share, with the transaction valuing Cypherpunk’s stock at $0.77 per share.

The exercise of the warrant is subject to a ceiling of 19.99% beneficial ownership. Winklevoss Treasury Investments may revise this limit after notifying the company, but it cannot exceed 19.99%, as indicated in the filing.

Moreover, Cypherpunk must seek shareholder approval at the next annual meeting before issuing more than 5,377,442 shares through the warrant. This threshold represents about 4.99% of the common stock that was outstanding before the agreement was executed, fulfilling Nasdaq listing rules.

If the shareholders reject the proposal at the initial meeting, the filing mandates Cypherpunk to continue seeking approval at subsequent annual meetings. Winklevoss Treasury Investments is required to vote its eligible Cypherpunk securities in favor of the proposal.

“Until now, investors have had few options for exposure to Zcash mining,” stated Cameron and Tyler Winklevoss in the company announcement.

Zcash mining bolsters Cypherpunk’s treasury

Engaging in mining provides Cypherpunk with an additional means of increasing its ZEC holdings without relying solely on market purchases. Currently, the company owns 323,394.38 ZEC, equating to about 1.92% of the circulating supply, and aims to reach a target of 5%.

Cypherpunk began building this position after the former biotechnology firm Leap Therapeutics rebranded and altered its business strategy in 2025. As previously reported by crypto.news, the company initially utilized $50 million from a private placement led by Winklevoss Capital to acquire 203,775 ZEC.

A subsequent acquisition raised its total holdings to 314,185 ZEC by May 2026. Concurrently, Cypherpunk invested $5 million into Zcash Open Development Labs, which focuses on the Zcash protocol and Zodl wallet, alongside other backers like Coinbase Ventures, a16z crypto, and Paradigm.

The newly acquired mining fleet enhances the company’s exposure to both the price of ZEC and the economics of its production. Cypherpunk indicated that this operation could generate tokens for its treasury, finance investments in privacy technology, and provide funds for further expansion.

According to McEvoy’s post, each megawatt of current-generation Zcash mining equipment generates about $450 in revenue per megawatt-hour under prevailing market conditions. He noted this figure contrasts with around $223 for AI data center colocation and $133 for Bitcoin mining.

McEvoy also estimated the cost of equipment for one megawatt of Zcash mining capacity at roughly $2.4 million, while AI infrastructure is around $10 million to $12 million. These figures are based on company estimates and can vary according to changes in ZEC’s price, mining difficulty, equipment performance, hosting fees, and electricity costs.

Cypherpunk’s announcement indicated the addressable annual Zcash mining market exceeds $250 million at current token prices. The company mentioned that its current production costs remain below ZEC’s spot price; however, its SEC filings classified future hashrate, mining income, profitability, and comparative economics as forward-looking statements.

U.S. investors gain access to Zcash production through public listings

Since Cypherpunk trades on the Nasdaq Capital Market under the ticker CYPH, American investors can achieve indirect exposure to Zcash mining through its publicly listed stock. However, the company’s share price is still influenced by operating expenses, warrant dilution, ZEC price fluctuations, and risks associated with the underlying network.

Directly regulated exposure to Zcash in the U.S. may also expand via Grayscale. In May, the asset manager filed for a conversion of its existing Zcash Trust into a spot exchange-traded fund on NYSE Arca under the ticker ZCSH.

The proposed fund held 391,103.89 ZEC, valued at around $99.4 million as of March 31, according to the filing. Unlike shielded Zcash users, the trust would maintain its tokens in transparent custody with Coinbase Custody, while BNY Mellon would act as the administrator.

Both Zcash and associated companies face network-specific risks. For instance, a critical flaw in the Orchard shielded pool was disclosed in June, leading to a drop of as much as 45% in ZEC and a 37% decline in Cypherpunk shares. A subsequent security report revealed the vulnerability could have resulted in undetectable counterfeit ZEC prior to developers implementing an emergency fix.

Shielded Labs mentioned they found no proof that anyone exploited the flaw on the main network. However, Zcash’s privacy design limited researchers’ ability to demonstrate that exploitation had never occurred. Developers later rectified Orchard with updated code through a network upgrade.

Cypherpunk has appointed Kevin Zhang as head of mining to oversee the new operation. Zhang has been mining Bitcoin since 2014 and Zcash since 2016, and has built mining facilities in North America while assisting Foundry in developing its Bitcoin mining pool and crypto mining activities.