The network’s high hash rate and ZEC low price affected Zcash mining profitability. The previous all-time low was 25% above what it registered last week.
BitInfoCharts notes that the daily mining profitability of ZEC, Zcash native cryptocurrency, is US $0.08 per kilosol per second (KSol/s). This means that an AntMiner Z11 device could produce about US $10 per day in gross income, without considering the cost of on electricity consumption, the Internet service, and the fees charged by the mining pool and mining software used.
Although the figures for Zcash mining profitability are still positive, they reflect its worst time since its origins. These values were not so low even during the market’s collapse in 2018. The lowest figures previously reported in this category for Zcash were US $0.102 per 1 KSol/s per day (25% above current profitability) in early May 2019.
Waves that Sink Mining Profitability of Zcash
After falling in mid-June, Zcash mining profitability has failed to recover to the date. There are two main reasons for this: the increase in Zcash hash rate and the fall in ZEC prices in the cryptocurrency market.
The more mining power added to a network, the greater a cryptocurrency’s mining difficulty. The adjustment of the mining difficulty aims to balance the speed of block production; thus, the higher the hash rate, the greater the difficulty.
Since April 2019, Zcash hash rate and mining difficulty have been growing steadily toward their all-time highs. On August 20th, Zcash hash rate reached 4.7 GSol/s while its mining difficulty was 88.2 million. These values have shown similar ranges in the last three months and do not seem to be declining.
The increase in Zcash hash rate adds a fall in ZEC price, thus aggravating its mining profitability. As explained above, a higher hash rate in the network causes greater difficulty, which reduces the rewards earned by miners. If such rewards in ZEC decrease their price, miners’ profits are doubly affected.
Between April and June 2019, while Zcash hash rate increased, ZEC price in the cryptocurrency market experienced a rebound to US $118.9. However, after that annual record, the value of Zcash native cryptocurrency in the stock market has continued moving downward. This week, ZEC has averaged US $50 per unit, a drop of over 50% in two months.
Mining Profitability in Perspective
Bitcoin mining shows a daily profitability of US $0.23 TH/s, that is, an AntMiner S17 Pro could generate about US $14 per day. The lowest point in Bitcoin mining profitability this year was US $0.13 per 1 TH/s. Regarding Ethereum, its profitability has also remained afloat above its minimum this year (US $0.010 per 1 MH/s) and currently averages US $0.015 for 1 MH/s.
What favors the mining of other cryptocurrencies over Zcash is, mainly, market valuation. Unlike BTC and ETH, ZEC failed to reverse the general fall of July, but it has kept its downward trend. However, it has not yet returned to US $46.23, its lowest price this year.
Zooko Wilcox, founder and CEO of Electric Coin Company, proposed on July 31st that a portion of ZEC mining rewards continues to be used to support the developers’ fund. If not, Zcash risks suffering stagnation at the development level and a potential deterioration of its efficiency.
Undoubtedly, uncertainty about a possible change in a project’s roadmap usually brings market reactions. Regarding Zcash, the dilemma of mining rewards and the developers’ fund is not necessarily the cause of the fall in ZEC price.
By Willmen Blanco