The true story behind ZEC's countertrend celebration: from regulatory arbitrage to miner harvesting

Over the past two months, ZEC has surged nearly 10 times, reintroducing privacy coins into market focus. However, within this rally, some are excited to see regulatory-driven “safe haven premiums” as an opportunity, while others smell danger behind the high ROI for miners.

Increased Regulation Instead Fuels Privacy Demand

At first glance contradictory, but logically clear — it is precisely because regulation is tightening that the desire for privacy is being stimulated.

The EU Anti-Money Laundering Directive has explicitly mandated restrictions on privacy coin transactions by 2027; the US FinCEN is strengthening scrutiny of self-custody wallets; after the approval of Bitcoin and Ethereum spot ETFs, on-chain transactions face unprecedented transparency and traceability. Against this backdrop, Western media have dubbed this rally the “Crypto Anti-Surveillance Wave,” with ZEC and XMR redefined as the “last line of on-chain anonymity.”

The consensus on social media is straightforward: privacy is not just a feature but a fundamental right.

On-chain data confirms this shift. The shielded pool balance of ZEC has soared from less than 2 million coins at the start of the year to about 4.8 million, a 140% increase. More critically, as the exposure of the Bitcoin whale tracking case (involving over 180,000 BTC) came to light, investors began to scrutinize Bitcoin’s true boundaries in the “anti-surveillance” narrative — when BTC itself cannot maintain anonymity, who will be the next privacy symbol? The market’s answer points to ZEC.

Institutional “Endorsement” Brings Supply Constraints

Grayscale’s reactivation of the ZEC Trust in October is a welcome positive — not only waiving management fees but also adding an annualized 4-5% staking feature. This signal’s significance far exceeds the fund size itself.

Over the past decade, Grayscale has been the only compliant channel for traditional institutions to access crypto assets. The approval of Bitcoin and Ethereum spot ETFs, bringing these assets under strict regulation, makes transactions fully traceable. Some institutions and high-net-worth individuals are shifting funds into privacy assets, and Grayscale’s ZEC trust provides exactly this compliant pathway.

Data shows that the assets under management in ZCSH have surged from about $42 million over a month ago to $269 million, accounting for roughly 2.4% of ZEC’s circulating supply. For an asset with daily trading volume in the billions, nearly 2.5% of the tokens are locked long-term in the trust, creating a clear supply-side constraint.

Risk Signal: Short-Term Return Cycles Hint at Market Traps

But when we return to the core, signs of danger begin to emerge.

Take the Bitmain Antminer Z15 Pro as an example: daily net profit exceeds $50, with a static break-even period of only about 105 days and an annualized ROI approaching 350%. This is extremely rare in the entire PoW history — almost abnormal:

• Bitcoin miners typically break even in 12-24 months
• Ethereum PoW era ROI usually takes 300-600 days
• Projects with break-even periods under 120 days (Chia, Kaspa, Ravencoin, etc.) have almost all collapsed within months

Behind this lies the recurring “hardware-price scissors” script in mining history. Miners order equipment at multiples of the current coin price during peaks and FOMO, but when the hardware arrives (usually delayed 3 months), hash rates surge, causing the coin price to halve, and the mining rigs instantly become scrap.

On-Chain Security Has Entered a Fragile Zone

Another overlooked risk is cybersecurity. ZEC’s total network hash rate is about 12.48 GSol/s, which can be dominated by roughly 15,000 Z15 Pro units (40MW power consumption). Based on this, an attacker only needs to invest a few million dollars in hash power to potentially control over 50% of the network and launch a 51% attack.

Compared to this, ZEC’s current hash rate is not only far below mainstream PoW chains like Bitcoin, Litecoin, Kaspa but even below chains that have been successfully attacked 51% before, such as Ethereum Classic, Bitcoin Gold, Vertcoin, and Bitcoin SV. This indicates that ZEC’s network security has entered a structurally fragile zone.

Actual Usage Demand Is Questionable

Finally, a point worth questioning is real-world application. Over the past month, ZEC’s daily transactions average only 15,000–18,000, accounting for just 1-2% of large public chains. As a privacy chain, the vast majority of transactions are still transparent, with shielded privacy transactions making up less than 10%.

BuyUCoin CEO Shivam Thakral warns that ZEC’s rise is more driven by speculation, with limited fundamental growth. The slow growth in shielded transaction volume starkly contrasts with the market narrative of increasing privacy demand.

Current Situation Review

The current ZEC market performance is indeed eye-catching — latest data shows ZEC at $407.67, up +7.99% in 24 hours, with a market cap of $6.72B. But beneath this impressive figure lies a complex situation woven from regulatory arbitrage, institutional allocation, extreme ROI, and network fragility.

Privacy demand is real, but speculative elements should not be ignored.