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ZCash (ZEC) has made a major announcement, and miners are not impressed at all. They have announced that Bitmain has released an ASIC miner that can be used to mine ZCash.  Across multiple forums, miners seem to be up in arms against this. The reason cited by most is that, this will concentrate mining power in a few large corporations. With such a move, ZCash could end up like bitcoin where mining power is concentrated in the hands of a few mining companies. The only difference is that bitcoin already has very high volumes, making it harder for any entity to manipulate its price. For a low cap crypto like ZCash, price manipulation would be very easy with centralized mining.

So what are the likely implications of this development to ZCash? The first one is that we are likely to see a mass exodus of miners from ZCash. That’s because unless you are a big player, ASIC mining is not very profitable, and it might take a long time to recoup your investments. As such, mining power will end up being concentrated in the hands of Bitmain and a few other large miners.

From an investor perspective, there may be some negative effects too. That’s because once people get the impression that the market is open to manipulation, they will move on to other cryptos. This will likely affect the long-term value of ZCash (ZEC), since a decline in trading volumes would slowly eat the life out of it.  The risk of a major price decline is compounded by the fact that there are many other cryptos that are in the same market as ZCash, and are ASIC resistant. Monero is one example of such a crypto.

Like ZCash, Monero (XMR) is focused on the privacy aspect of the crypto market. However, it has one edge to it that ZCash is about to lose, and that’s decentralization. A few months ago, Monero changed its code to become ASIC resistant, meaning that mining power is fully in the hands of GPU miners. This and other ASIC resistant privacy coins could see an upsurge in volumes in coming days, if people get the impression that ZCash is open to manipulation from large miners.

However, if you are a ZCash holder, don’t despair as yet. That’s because ASIC mining has the capacity to make the mining process more efficient, which is good for its future growth. It can lead to a wider adoption of this crypto by a wider audience, which is good to its long-term value. But this is an advantage that might be dwarfed by a decline in trading volumes, if investors abandon ZCash.

As such, one needs to invest in ZCash with caution at this point. Many things could happen in the near future that might affect its value. Already there is a poll running seeking to fork ZCash in a bid to prevent ASIC mining. If this fork is successful, it could take a significant portion off the value of ZCash.


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This information should not be interpreted as an endorsement of cryptocurrencies or a recommendation to invest. Historic performance is no guarantee of future returns. As an investment class, cryptocurrencies are speculative investments and investing in cryptocurrencies involves significant risks – they are highly volatile, vulnerable to hacking and capital loss and sensitive to secondary activity. Before investing you should obtain advice and decide whether the potential return outweighs the risks.
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