ZCash: What It Is, Why It Was Created, How to Mine It

Zcash (ZEC) is a proof-of-work cryptocurrency built on a codebase derived from Bitcoin, with one major addition: users can send shielded transactions in which the sender, recipient and amount are encrypted on the blockchain yet still verified by the network. It was created by academic cryptographers who saw that Bitcoin’s public ledger lets anyone trace payments between addresses. It is mined with the Equihash algorithm, and today that work is done mainly on dedicated ASIC machines connected to mining pools.

What Is Zcash?

Zcash launched in October 2016 as a digital currency with Bitcoin’s familiar economics: a fixed maximum supply of 21 million coins, issuance through mining, and block rewards that halve roughly every four years. What sets it apart is a type of zero-knowledge proof called a zk-SNARK (zero-knowledge succinct non-interactive argument of knowledge). It lets a transaction prove that it follows the rules, with no double-spending and no coins created from nothing, without revealing the details being checked.

Privacy in Zcash is optional. The network supports two kinds of addresses: transparent ones that behave much like Bitcoin addresses, and shielded ones that hide transaction data. Users choose which to use, and funds can move between the two pools.

Why Zcash Was Created: A Short History

Bitcoin addresses are pseudonymous rather than anonymous. Every transaction, with its amount and the addresses involved, is permanently public. Anyone who links an address to a person, for example through an exchange withdrawal, can follow that person’s payment history. A group of researchers regarded this traceability as a security and privacy flaw in Bitcoin’s design.

The earlier work was Zerocoin, a protocol proposed by cryptographers at Johns Hopkins University that added anonymity to Bitcoin-style coins. In 2014, Eli Ben-Sasson, Alessandro Chiesa, Christina Garman, Matthew Green, Ian Miers, Eran Tromer and Madars Virza published the Zerocash whitepaper. It described a far more efficient design based on zk-SNARKs that could hide amounts as well as the link between sender and recipient.

To turn the research into a working network, computer security specialist Zooko Wilcox-O’Hearn formed a company in 2015, later known as the Electric Coin Company (ECC). The project was renamed Zcash and the mainnet went live on October 28, 2016. Early mining used a “slow start” that kept the first coins scarce while trading had already begun.

Several network upgrades followed:

• Sapling (2018) made shielded transactions much faster to create and practical on mobile wallets.
• Blossom (2019) cut the target block time from 150 seconds to 75 seconds.
• NU5 (2022) introduced the Orchard shielded pool and the Halo 2 proving system, which removed the need for a “trusted setup.”

The trusted setup issue explains why the last upgrade mattered. The original zk-SNARK parameters were generated in a multi-party ceremony in 2016. If every participant had kept their secret inputs, someone could in theory have created counterfeit coins inside the shielded pool without detection. Halo 2 does away with that dependency for the newest shielded pool.

How Shielded Transactions Work

A zero-knowledge proof lets one party convince another that a statement is true without revealing why it is true. In Zcash, the statement is roughly: “I own unspent coins worth at least this much, I am authorized to spend them, and the outputs balance the inputs.” Network nodes check the proof, which is small and quick to verify, and accept the transaction without learning who paid whom or how much.

The blockchain itself remains public. Shielded transactions appear on it, but their contents are encrypted, so an outside observer sees that a transaction happened without seeing its details.

Zcash has used several address formats:

Shielded users can also share a viewing key, which lets a chosen party such as an auditor, an accountant or a tax authority see their transactions without being able to spend the funds. This selective disclosure is how the project’s developers framed privacy as compatible with regulatory compliance.

How Zcash Differs From Bitcoin

Zcash shares Bitcoin’s supply cap and halving schedule, and it also uses proof of work. The practical differences are:

• Privacy model. Bitcoin transactions are always public. Zcash offers encrypted shielded transactions alongside transparent ones.
• Mining algorithm. Bitcoin uses SHA-256. Zcash uses Equihash, a memory-hard algorithm designed by Alex Biryukov and Dmitry Khovratovich. Bitcoin mining hardware cannot mine ZEC.
• Block time. Bitcoin targets about 10 minutes per block. Zcash targets 75 seconds, so confirmations arrive faster.
• Development funding. Bitcoin’s block reward goes entirely to miners. Zcash has set aside part of its block rewards to fund development, first through the Founders’ Reward in its first four years and then through community-approved development funding arrangements.

Supply and Issuance

ZEC’s maximum supply is 21,000,000 coins, the same cap as Bitcoin. New ZEC enters circulation only as block rewards. Each halving cuts the per-block subsidy in half, so issuance slows over time and the remaining coins will be mined over many decades.

Because a share of block rewards has gone to development funding rather than to miners, the number of coins a miner receives per block is smaller than the full block subsidy. The split has changed over time through community governance decisions, so miners should check the current schedule before estimating returns.

Is Zcash Proof of Work? How to Mine Zcash

Yes. Zcash uses proof of work: miners compete to find a valid solution to the Equihash puzzle, and the first to find one adds the next block and collects the block reward plus transaction fees. Equihash was chosen to resist specialized hardware by demanding a lot of memory, and for its first years GPUs dominated ZEC mining. Equihash ASICs reached the market in 2018, and Zcash’s mining guidance now states that network difficulty is too high for profitable mining on a PC CPU or GPU.

Zcash node software runs on Debian/Ubuntu and other Linux distributions, on macOS and through Docker, so anyone can run a node. Profitable mining is a separate matter. The practical steps are:

1. Get Equihash ASIC hardware. Check that the model mines Zcash’s Equihash parameters. Some Equihash variants used by other coins are not compatible.
2. Set up a ZEC wallet to receive payouts. Confirm which address types your pool supports.
3. Join a mining pool. A solo miner with a small share of the network hash rate may wait a very long time to find a block. A pool combines members’ hash power and pays each one in proportion to the work contributed, minus a pool fee.
4. Configure the miner with the pool’s server address, your worker name and your payout address.
5. Track costs. Electricity, hardware price, cooling and pool fees decide whether mining makes money.

You can estimate expected output with a simple formula:

Expected ZEC per day = (your hash rate ÷ network hash rate) × blocks per day × miner reward per block

At a 75-second target, Zcash produces about 1,152 blocks per day (86,400 seconds ÷ 75). Hypothetical example: if your machines supplied 0.001% of the network’s hash rate and the miner’s share of each block were 1 ZEC, you could expect about 0.0115 ZEC per day before pool fees (0.00001 × 1,152 × 1). Hash rate share, the miner reward and difficulty all change, so take real values from your pool or a network explorer, then subtract power costs to see whether the result is positive.

Who Founded Zcash, and Who Runs It Now?

Zcash was founded by Zooko Wilcox-O’Hearn together with the scientists behind the Zerocash paper. The Electric Coin Company built and maintained the main software for years.

Governance has shifted several times:

• 2019: ECC transferred the Zcash trademark to the nonprofit Zcash Foundation under a bilateral agreement covering its use.
• April 2024: ECC announced its intent to terminate that agreement and leave governance decisions to the Foundation.
• January 2026: the entire ECC team left, citing a governance dispute with the Foundation, and launched the Zcash Open Development Lab (ZODL), an independent organization working on Zcash adoption.

The network kept running through these changes. The code is open source, nodes and miners operate independently, and no single company owns or controls the protocol.

Disadvantages and Risks

• Regulatory pressure. Anti-money-laundering authorities scrutinize privacy coins and anonymizing services. Some exchanges in some jurisdictions have restricted or delisted privacy coins, which can limit where ZEC can be bought, sold or withdrawn.
• Optional privacy. Since shielding is not mandatory, transparent activity remains traceable. Moving funds between transparent and shielded pools can also reveal patterns, so privacy depends on how a wallet is used.
• Mining concentration. Mining now depends on ASICs and pools, which concentrates hash power among fewer operators than the original GPU-era design intended.
• Governance uncertainty. Disputes between development organizations, most recently the 2026 split, can slow upgrades or decisions about development funding.
• Competition. Zcash competes with other privacy-focused coins and with general-purpose networks for users and developers.
• Price volatility. ZEC’s price can move sharply, and its all-time high was set in its first days of trading.