Zcash miners are generating roughly twice Bitcoin’s rewards per mining rig and about four times more per megawatt hour (MWh), despite Zcash having a much smaller overall mining-reward pool. Total Zcash mining power has increased more than 2.5 times this year as higher ZEC prices have improved mining profitability.

According to Grayscale Research, Zcash miners receive about $2 million in rewards each day, compared with approximately $35 million for Bitcoin. Zach Pandl, Grayscale’s Head of Research, said Zcash mining returns are about twice as high as Bitcoin’s on a per-rig basis and roughly four times higher per MWh. He also noted that Zcash mining activity has risen 2.5 times this year.

Zcash Mining Offers Higher Per-Operation Returns

Zcash and Bitcoin both use proof-of-work mining to secure their blockchains. Specialized computers solve computational challenges, generate hashes, and compare those results with network targets. Grayscale’s research found that Zcash currently provides higher returns for individual mining operations, even though Bitcoin produces a substantially larger aggregate reward.

The research estimates that daily returns per Zcash mining rig are roughly twice Bitcoin’s. Zcash also generates about four times more rewards per MWh. However, the mining machines used by the two networks cannot operate interchangeably.

Grayscale also compared Zcash mining with other uses of computing capacity. Its research found that Zcash currently offers higher returns per MWh than certain artificial intelligence and high-performance computing cloud services.

Zcash Mining Power Increases More Than 2.5 Times

The improvement in mining profitability has coincided with a sharp increase in Zcash mining activity. Grayscale said total Zcash mining power has risen more than 2.5 times this year and linked that increase to the performance of the Zcash token’s price.

Higher token prices increase the value of mining rewards, which can improve profitability for operators. Despite the growth in Zcash activity, Bitcoin continues to generate a much larger total mining reward. Bitcoin miners receive about $35 million daily, compared with roughly $2 million for Zcash miners.

The difference illustrates the distinction between a network’s total reward pool and the returns available to individual mining operations. Zcash has the smaller overall reward pool but provides higher rewards per rig and per MWh.

Zcash Uses a Bitcoin-Like Proof-of-Work Model

Pandl described Zcash as a Bitcoin-like digital currency with additional privacy features. Both networks use proof-of-work, although their mining mechanisms differ in specific ways. On each network, miners compete to solve computational challenges and update the blockchain, while the systems adjust their targets to maintain roughly steady block times.

Grayscale said the higher profitability of Zcash mining has encouraged increased mining activity. The research also connected greater mining participation with stronger network security through the proof-of-work system.