How to Mine Zcash In 2021
Zcash mining is the process through which participants on the Zcash network add new coins to the blockchain. It uses proof-of-work (PoW) to verify the eligibility of new coins and keep the blockchain secure.
This cryptocurrency also uses the Equihash algorithm, which is a plus for new miners. It’s not fully compatible with application-specific integrated circuits (ASICs), which are costly to operate when competing with others to create new blocks, meaning average users have an equal mining chance. Here we detail how to mine Zcash.
Breaking Down Zcash Mining
This section contains the essential details you need to mine Zcash successfully.
After reading it, you’ll understand why miners are essential in creating new coins and ensuring the security of the blockchain. Moreover, you’ll find out the best way to mine Zcash profitably today.
What is Zcash Mining?
Zcash uses a form of mining protocol that offers the same consensus mechanism as that of Bitcoin, which is proof-of-work (PoW). However, Zcash uses the Equihash algorithm - a slightly tweaked PoW algorithm that’s more suited to GPU mining than the ASIC-dominated SHA-256 algorithm used by Bitcoin.
Just like other PoW coins, Zcash requires miners to compete to solve complex puzzles. The first miner to get the correct answer is rewarded with Zcash coins. This way, the decentralized monetary system gives every participant an equal chance to update the public ledger, secure it, and create new coins.
Mining Zcash is much easier since participants can use CPU or GPU hardware, which are cost-effective and easy to manage. Your machine should be powerful enough to give you a higher chance of solving the puzzles ahead of the rest. In other words, successful Zcash miners select the correct hardware that meets high RAM requirements.
How much do miners earn for securing the blockchain? ZEC uses the exact reward structure of Bitcoin. For the first four years, 80% of newly created coins went to miners. After every four years, the rate is halved. Currently, it’s 6.25. The reward per solution is intended to drop to 3.12 ZEC in 2024.
Why are Zcash Miners Important?
Zcash miners play a crucial role in the network since they validate all transactions. This ensures that the data added to the blockchain is accurate. Without miners, bad actors can duplicate transactions and cause the ‘double-spending’ problem, which hindered digital money creation before the emergence of Bitcoin.
Bitcoin invented the concept of timestamping transactions before introducing them to nodes. Since blocks are related to each other and contain the relevant timestamps, no one can duplicate transactions.
The hashrate determines how many coins one is likely to mine. Individuals that have a higher hash rate have an advantage over their competitors. However, if the entire Zcash network has a high hash rate, it means lots of machines are participating in mining. Since the number of coins is limited, individuals find it harder to mine the coins in these circumstances. A higher overall hash rate also secures the network, as bad actors need more computational resources to compromise the blockchain.
Miners deserve to get monetary rewards since they are an integral part of the Zcash network.
Zcash Mining Limitations
Since Zcash is a Bitcoin fork, it has a limited supply of 21 million coins. This means there cannot be an oversupply. However, from a miner’s perspective, the limitation increases the mining difficulty. Irrespective of effort and the power of an individual’s machines, ZEC remains a scarce resource, which is essential for ensuring relative stability and increasing its value over time.
Governments have tried to apply the same concept over the years to limit inflation. Central banks set the fiat currency supply limits for this purpose. If they ignore the limits and oversupply, the economy experiences inflation.
Another limitation is that the Equihash algorithm is not fully compatible with ASICs. Many experienced miners prefer the ASIC method since it uses a microchip to compute transactions faster. These dedicated mining machines are 100,000 times faster than CPUs.
However, this is a positive for beginners. ASICS are custom-built, meaning you’ve to purchase a new one for each coin you mine. These machines are also costly and can cost thousands of dollars, and they also consume a lot of electricity and need proper cooling and ventilation. This means they are prohibitive for new miners.
Another limitation is that the network’s hash rate has been rising since its launch in 2016. This means the mining difficulty is increasing. Meanwhile, the network has been halving the miners’ reward after every four years. In short, the mining difficulty is rising as the rewards are declining.
Tip to Mine Zcash Efficiently for Greater Profits“ From our many years of experience, we have established that you only have two ways to mine Zcash efficiently for greater profits. If you are a pro with adequate inside knowledge, you can invest in mining software and join a Zcash mining pool. This is an excellent option if the pool offers steady rewards and uses cheap electricity. If you have limited time and knowledge on the subject, you can participate in a cloud mining service. Ensure you research and find a reliable and competent service provider. Additionally, consider their reward share, terms and conditions, and other fine print before signing a mining agreement. ”- Benson Toti
Technical Aspects of Mining Zcash Explained
Since technical aspects of Zcash mining scare many beginners, we’ve designed this section to explain them in simple terms. This part will dissect hash rate and processing power. We will also explore how a higher hashrate benefits the Zcash network and how much one needs to spend to mine the crypto and make huge profits.
Hahrate Simplified for Zcash
- What does hash rate mean?
The term “hashrate” refers to the number of guesses a Zcash mining machine can make within a given duration. It helps miners understand the computing power of different participants within the Zcash network.
Hashrate also helps to determine the overall mining difficulty of the network. When the number of miners increases, the overall network hashrate increases as well.
- Why is a higher hashrate important?
If there are few miners, individuals have a high share. So, they have higher chances of solving puzzles and generating new coins.
The opposite is true if the number of participants on the entire Zcash network is high. In this case. The network has a higher hash rate, making it much harder to mine Zcash. However, due to the increased number of individuals validating and verifying transactions, the Zcash network becomes more secure.
Moreover, a higher hash rate helps to minimize the impact of 51% attack. If a few actors choose to interfere with normal operations, they are unlikely to succeed. It’s very expensive to buy enough mining hardware to own 51% of the total hash rate.
- How is Hashrate Measured?
Hashrate is measured in hashes per second (h/s). Zcash’s network is huge and can compute hash rate in quintillions per second. Here are other units for measuring hashrate:
- Kilohash (KH/s) -1,000 hashes
- Megahash (MH/s) - 1,000 kilohashes
- Terahash (TH/s)-1,000 megahashes
- Petahash (PH/s)-1,000 terahashes
The mining power of Zcash fluctuates every day. It’s important to note that the wide fluctuations don’t mean that thousands of mining machines are either being added or removed from the network each day.
The calculation of Zcash hashrate is not precise, given that millions of machines are running across the world at different times. Analysts evaluate the recent market activity and make educated approximations of the prevailing hashrate.
As of the time of writing this article, the estimated Zcash hashrate is 8.131 Ghash/s. This represents a reduction of 2.93% in the last 24 hours. This is an educated estimate that analysts have arrived at after evaluating recent market data.
Individual miners can use specialized calculators to determine their hashrates. They can also input the following information to estimate their earnings:
- The mining equipment
- Power the equipment uses
- Electricity cost
- Mining fees
- Other relevant information
Processing Power: CPU & GPU
Before you start mining Zcash, you need the proper mining hardware to run the mining software. You should understand the right amount of processing power that you require.
In the beginning, many people were using central processing units (CPUs), capable of about 5 MH/S, to mine Zcash. However, due to the increasing difficulty, successful miners replaced them with graphics cards (GPUs), which can produce at least 68 MH/s. Since Zcash’s algorithm is not compatible with ASICs, some have opted for FPGAs (field-programmable gate arrays) to operate at 800 MH/s.
To understand which mining machine suits you, let’s explore the difference between CPU mining, ASIC, GPU mining, and FPGA mining.
CPU mining uses the CPU power to mine Zcash. It was popular in the early days of Bitcoin. As the mining difficulty increased, miners shifted to GPU mining around 2010 (Before the launch of Zcash in 2016).
GPU mining remains the most popular for mining Zcash. It uses computer graphic cards and is fully compatible with Equihash.
ASIC mining method uses a microchip designed to compute algorithms 100,000 times faster than CPU. Considering their efficiency, miners need proper cooling and ventilation for the machine. Besides, one might be forced to relocate to a place with less costly energy.
FPGA mining uses new-generation chips that deliver a high hash rate power without consuming a lot of energy. They utilize three times less power than GPU, however may have limited compatibility with Zcash mining software.
Due to this lack of compatibility, GPUs remain the most efficient option for Zcash miners. Nonetheless, some miners are using ASICs.
Hashrate needed to mine Zcash profitably
You need a hash rate of 140,000 H/s to be able to mine Zcash profitably. The blockchain is growing fast, and the mining difficulty is increasing and decreasing based on the computing power generating hashes on the block.
Let’s look at the chart below to see how the hashrate needed to mine Zcash profitably has fluctuated over the years.
Zcash hashrate chart. Source: Bitinfocharts.com
Pros and Cons of Mining Zcash
DIY Zcash Mining - How to Get Started
In this section, you’ll learn the specific things you need to do to get started with Zcash mining. Since the type of mining software determines profitability, this section has been created to help you choose the best one. Moreover, it covers the typical cost of acquiring the software and everything you need to set up your mining system.
Best Mining Hardware for Zcash
Solo Zcash mining isn’t profitable today due to too much competition. However, if you have high-performing mining hardware, you can still undertake this activity and make a lot of money. Many people put a lot of money into ZEC mining but end up making huge losses since they don’t know where to find the hardware or are unwilling to spend on it.
Zcash GPU mining can be done using customized mining rigs assembled using Nvidia and AMD graphics cards. Some of the top video cards for ZEC mining include NVIDIA’s GTX 1080.
This card may appear unpopular since it is the worst performing for Ethereum and Monero. However, when it comes to ZEC, it’s an absolute champion.
The GTX 1080’s hashrate ranges from 510 H/s to 620 H/s. Its power efficiency is between 0.29 W/H and 0.41W/H. The power usage is 180W-210 W. The GPU’s price ranges between $620 and $670, and you can find it on Amazon and eBay.
The Nvidia GTX 1070 is also popular due to its cost. It comes in at between $400 and $600 and has a hashrate ranging from 420 H/s to 520 H/s. The power usage varies from 145W to 210W, and the power efficiency is 0.28 W/H to 0.5 W/H. You can find it on eBay and other marketplaces.
Other costs to be Considered
When looking to set up a mining operation for Zcash, the cost of a customized mining rig will take up the biggest chunk of your initial capital. The same will apply when you buy several GPUs to assemble a DIY rig. You also need a motherboard, reliable power supply unit (PSU), a cooling system comprising several fans, and cables.
For example, a Ryzen ATX Gaming Motherboard will cost you around $200, while a Corsair 650W PSU goes for about $184.
Other than these, you need to factor in how much it is going to cost you in terms of electricity once you start mining. Maintenance costs may also come in as you look to stay on top of the game. In short, mining might require that you work around all applicable costs to see how profitable you are likely to be.
It would be best if you had a secure Zcash wallet since this is where you will store your rewards. Next, you require mining software that can create effective communication between the Zcash network and your hardware. It should also be able to communicate with your mining pool if you join one. Mining pools allow you to share rewards with other miners, giving you a more stable inflow over time.
Zcash software, Optimize, and EWBF Cuda are the mining clients that we recommend.
Some of the mining pools you can join are Bitfly, Luxor Mining, CoinMine.pl, F2pool, ZHash, and LuckPool.
Mining pools are often more efficient since they combine all the machines’ hashing power on their network. If you choose, you can partner with a cloud mining service if you don’t want to purchase mining equipment. In this case, you rent mining power from the provider.
Before join a pool, consider how they pay. Some of the best ones pay per share. This option guarantees you earnings and increases your Zcash mining profitability. However, the exact amount depends on your hashing power.
Other pools work with a ‘pay per last N shares’ plan that takes note of a miner’s contribution to the pool’s total (N) hashrate. Choose this if you are willing to take more risks in exchange for potentially better returns. Pool members don’t earn until the block is found. Bear in mind that the rewards exclude transaction fees.
The process of joining a Zcash mining pool is simple. Once you have bought mining hardware and downloaded mining software, you are good to go. Go to the pool’s website, sign up, and begin mining.
As mentioned earlier, you can opt for cloud mining if you find this process tedious. In this case, you rent hashing power and let an expert handle the rest on your behalf.
Hashflare allows you to purchase hash power for Zcash and plenty of other cryptocurrencies. It was created in 2015 and provides a clear breakdown of its data centre on its website. The cloud mining firm serves close to 2.5 million miners. Hashflare doesn’t subject Zcash contracts to high maintenance fees.
Hashnest is a major cloud mining company that is a big name in ASIC mining hardware backs. Bitmain, which is a renowned manufacturer of ASIC hardware, launched it in 2013. The parent company also operates Antpool, which is a juggernaut of mining pools. Hashnest’s association with Bitmain gives it credibility.
The fact that it has verifiable data centres is another plus. When you visit the firm’s official site, you find photos of the mining equipment accompanied by a claim of zero security incidents. Bitmain is located in China, where the cost of electricity is meagre. This makes it one of the most profitable. It’s currently renting hardware for mining Zcash.
Note that if your daily maintenance fee is higher than the payouts for ten consecutive days, the firm will terminate the contract. Moreover, once you sign the contract, you can’t cancel it.
If you ask for the best Zcash mining pool, please note that ‘best’ is a subjective term.
What works for me may not work for you. I may suggest FlyPool since it’s one of the popular among ZEC miners. It charges 1% mining fees and comes with a host of other attractive features. It has detailed and accurate hashrate reporting. They use the Pay Per Last N Shares scheme to pay users.
There are other exceptional options out there. Whichever you choose, you should use the tips we’ve shared to ensure it is credible and protects your investment.
Where to Save my Coins After Mining?
You should save your mined Zcash in a secure wallet. The coins are precious, and you don’t want to lose them after the hard work. We have listed the best wallets below that you can choose from for your reference.