Cypherpunk Pays Winkelvoss Backers in Stock for Zcash Mining Fleet

The company had $7.6mn of cash at the end of the second quarter. It paid in stock rather than cash, and its share count has grown roughly 4.4 times over the past year. Asked how much this transaction dilutes existing holders, Cypherpunk told Sandmark the structure was public and pointed to upcoming filings for the share count.

Cypherpunk (CYPH) also received a Nasdaq stock exchange notice on 20 Jul for failing to meet the minimum bid price required to stay listed, with a compliance deadline in January. The company said the mining deal is unrelated to that deadline.

What was bought, and what it controls

The Bitmain Z15 Pro machines are already running across the US, giving the new Cypherpunk Mining unit about 4.2 GSol/s of hashrate, a measure of the computing power devoted to mining. Winklevoss Capital said the hashrate represents roughly 18% of the entire Zcash network. It bought the machines in a pilot in late 2025 and added during the market falls of the first quarter of 2026.  Winklevoss Capital is an investment capital firm owned by Cameron and Tyler Winklevoss, the founders of exchange operator Gemini.

Zcash mining hardware is supply constrained, with Bitmain effectively the only manufacturer and new orders taking months to arrive. Cypherpunk's advantage is that its fleet is already plugged in.

The company says the machines carry no equipment loans or leases and are owned outright, with power costs fixed, a structure it describes as designed to avoid the leverage that has forced miners out of business in past downturns.

Kevin Zhang has joined as head of mining. He began mining Bitcoin in 2014, two years after the original cryptocurrency's first transaction, and Zcash in 2016, and previously built the world's largest Bitcoin mining pool at Foundry Digital, a centralized infrastructure company.

A question about concentration

Cypherpunk is already the largest institutional holder of Zcash, with 323,394 units, close to 2% of supply, bought at an average $341.83. It is targeting 5%, and says mined coins will flow into the same treasury and accelerate that.

Asked whether adding 18% of network hashrate to a concentrated supply position raises governance or security concerns, CEO Doug Onsi said the reverse was true, arguing that more hashrate makes it harder for any single miner or pool to reach 51%.

"That is the level that raises security concerns, and Cypherpunk is an important barrier to protect the Zcash Network from that," Onsi said. The company also argues that Zcash mining has historically been concentrated among a few large miners and manufacturers outside the US, and that its fleet moves hashrate onshore.

Zcash has had a bad year on governance. Its core developers quit in January in a dispute with the project's board, and the token fell 45% in June after an emergency protocol fix drew criticism over how the decision was reached.

The claims that come without numbers

"Not only is Zcash mining highly profitable, it is also superior in terms of return on capital," Zhang said. "Even if network hashrate doubles from here, Zcash mining still out-earns AI colocation and Bitcoin mining at today's prices."

Cypherpunk declined to give an all-in cost per mined ZEC, saying only that it would be below the spot price and that it is not providing projections. Without that figure, the comparison against Bitcoin mining and AI colocation, where most listed miners have taken their power capacity, cannot be checked.

The company says the arrangement produces positive Zcash flow to fund operations, more ZEC purchases, more equipment and investments in privacy technology companies, and notes that most Zcash miners sell every coin as soon as they mine it.

Cypherpunk reported a second-quarter profit on 12 Aug on a $46mn unrealized gain on its Zcash holdings. It retains the legacy Leap Therapeutics cancer drug pipeline, which it is trying to spin out or partner, a process it says is running independently of the mining deal.