Zcash Miner Fortitude Buys 9.4% Stake in Merger Target HeartSciences Ahead of Shareholder Vote

Fortitude Mining, Digital Currency Group's Zcash-focused mining company, has purchased a 9.4% stake in Nasdaq-listed HeartSciences for approximately $1 million, providing its proposed merger partner with cash for operating expenses while shareholder approval of the combination remains pending. Zcash is a privacy-focused cryptocurrency that uses zero-knowledge proofs to let users shield sender, recipient and amount details, with miners such as Fortitude earning block rewards for securing the network.

The private placement, executed on Aug. 12, covered 411,522 HeartSciences common shares at $2.43 per share. A beneficial ownership filing put Fortitude's exact cash outlay at $999,998.46 and its post-purchase stake at approximately 9.4%. U.S. rules require such filings once an investor crosses 5% of a public company's shares, putting the exact outlay and stake on the public record. HeartSciences said the purchase price represented a 22% premium to its closing share price on the purchase date.

HeartSciences stated it would use the net proceeds for operating expenses before the proposed combination closes, making the transaction a cash equity placement rather than a loan. Private placements sell shares directly to a small group of investors outside a registered public offering, with pricing negotiated rather than set by the open market. According to an SEC-filed company release, the investment does not change the exchange ratio, and Fortitude's equity holders will not receive additional closing shares in return for the $1 million injection.

The purchase of ordinary shares gives the Zcash miner a direct stake in HeartSciences before shareholders decide on the corporate combination. Because the placement sits outside the exchange-ratio formula, the cash buys target-company equity without increasing the merger consideration payable to Fortitude's existing owners.

Under the proposed structure, DCG — the crypto conglomerate whose holdings have included digital-asset manager Grayscale and mining-pool operator Foundry — would hold about 95% of the combined company's voting interests, according to HeartSciences' preliminary proxy. Existing HeartSciences equityholders would retain about 5% of its voting and economic interests, subject to the final capitalization and exchange-ratio mechanics. Deal structures in which a private operating business combines with an already-listed company, leaving prior holders a small minority, are a long-established route to public markets without an initial public offering.

As of Aug. 20, the preliminary proxy still contained blank fields for the special meeting and record dates, and later placement materials continued to list shareholder approval as outstanding. The companies expect the transaction to close in the second half of 2026, though that remains a target window.

The proxy also warns that if the merger fails, HeartSciences may have limited ability to continue operating and could need to pursue another strategic transaction. If no viable alternative is available, the company may liquidate, with no assurance that cash would remain for shareholders.

On the financial side, Fortitude reported $8.5 million in adjusted EBITDA, a non-GAAP measure, while its GAAP results showed a $9.5 million net loss that included a $10.3 million mining-equipment impairment. Adjusted EBITDA excludes selected expenses that remain reflected in the accounting loss. The report comes as Zcash issuance has tightened: the network's first halving, in November 2024, cut the block reward from 3.125 ZEC to 1.5625 ZEC, halving the new coins issued to miners per block.

For HeartSciences shareholders, the next state-changing disclosure is a definitive proxy that sets the vote date. Until then, Fortitude's equity injection supports the target's operations but does not remove the deal's approval or execution risk.

Related coverage: This public company now controls 18% of Zcash mining power after $33 million Winklevoss-linked deal.

Source: CryptoNewsNet