In the past two months, ZEC, which has surged nearly tenfold and followed an independent market trend, has been the focal point of market attention. The discussions surrounding ZEC have gradually evolved from early endorsements by figures like Naval, Arthur Hayes, and Ansem regarding the concept of privacy, to a more nuanced view that considers the actual demand for privacy and a bearish perspective from the angle of mining power and mining returns, marking a stage of confrontation between the two sides.
So, outside of endorsements from well-known figures, what are the detailed arguments for and against ZEC from both the bullish and bearish perspectives?
Bullish
"Safe Haven Premium" Under Regulation
On the surface, tightening regulations should suppress privacy coins, but the reality is quite the opposite; it is precisely due to regulatory pressure that the demand for privacy has been stimulated.
The tightening of policies is accelerating. The EU's Anti-Money Laundering Regulation (AMLR) draft explicitly states that it will completely restrict the trading of privacy coins within the EU by 2027; the U.S. Financial Crimes Enforcement Network (FinCEN) also plans to intensify scrutiny on "high-risk self-custody addresses." With Bitcoin and Ethereum spot ETFs coming under regulatory scrutiny, all on-chain transactions are facing stricter tracking.
As compliant assets become increasingly transparent, privacy assets are becoming scarce. Consequently, media in Europe and the U.S. have even dubbed this market trend the "Crypto Anti-Surveillance Wave." ZEC and XMR are being redefined as "the last line of defense for on-chain anonymity." The consensus on social media is even more direct: "Privacy is not a feature, but a fundamental right."
On-chain data confirms the growth of real demand. The balance of ZEC's shielded pool has increased from about 2 million coins at the beginning of this year to approximately 4.8 million coins now, a growth of 140%; the number of shielded transactions has also increased with the overall activity of the network, reaching about 10% weekly.
Recently, two major "BTC large asset cases," the Chen Zhi case and the Qian Zhiming case, involving over 180,000 BTC, have prompted the market to reassess the realistic boundaries of Bitcoin's narratives around "censorship resistance" and "anonymity." With the launch of BTC ETFs, deep institutional participation, and further regulatory demands for transparency in crypto assets, the early narrative of Bitcoin centered on anonymity and censorship resistance has gradually faded from the mainstream stage.
If BTC struggles to fulfill the role of "censorship-resistant currency," then who will be the next symbol of privacy rights and on-chain asset storage? The market's answer may already be emerging—ZEC, which is currently rising against the trend, is becoming that suitable "version answer."
Return of Institutional Funds
The relaunch of Grayscale's ZEC Trust is the most significant event in October. On October 1, Grayscale announced the reopening of new subscriptions for the ZCSH Trust, offering two major upgrades: the waiver of management fees and the addition of staking features, providing an annualized return of 4-5%. This combination significantly enhances the risk-reward ratio.
Over the past decade, Grayscale has been the only compliant bridge and price barometer for traditional institutions to allocate crypto assets. Its trusts issued in the U.S. have long provided crypto exposure for pensions, family offices, and hedge funds, making it a leading indicator of institutional entry scale and preference changes.
Since launching the first Bitcoin trust in 2013, Grayscale has successively established over a dozen single-asset trusts for ETH, SOL, LTC, BCH, ETC, FIL, XLM, and others, many of which have experienced the typical "Grayscale effect"—capital inflows driving prices up, premiums expanding, and forming consensus narratives. The ZEC Trust (ZCSH) was established in 2017 and saw a phase of skyrocketing premiums during the 2020-2021 bull market, becoming a primary target for institutional allocation in the privacy sector.
However, following regulatory tightening and compliance pressures on privacy coins, ZCSH suspended subscriptions in 2022 and entered a period of dormancy in 2023. This relaunch signifies Grayscale's renewed endorsement of privacy assets, and its signaling significance may even outweigh the capital itself.
Data shows that ZCSH's AUM (Assets Under Management) has increased from about $42 million a month ago to $269 million, accounting for approximately 2.4% of ZEC's circulating supply. For an asset with a daily trading volume of hundreds of millions of dollars, nearly 2.5% of the supply being locked in the trust significantly tightens the supply side.
A deeper logic is the indirect effect of ETFs. The approval of Bitcoin and Ethereum spot ETFs has brought these assets into a strict regulatory framework, where every transaction is traceable. Some institutions and high-net-worth individuals, seeking to avoid this transparency, have begun to shift their funds toward anonymous assets. Grayscale's ZEC Trust conveniently provides a compliant channel—allowing exposure to privacy coins while operating through traditional financial channels.
Bearish
Is ZEC's miner economic model, network security, and on-chain interaction activity really sufficient to support a fully diluted valuation (FDV) of over $10 billion? Lacie (@Laaaaicieee) raised this question and conducted an in-depth analysis.
Extremely Short Payback Period (High ROI) Often Precedes Mining Crashes and Price Collapses
Calculating the payback period for ZEC mining using the most mainstream ZEC miner, the Bitmain Antminer Z15 Pro, shows that a single Z15 Pro generates a net profit of over $50 per day, with a static payback period of only about 105 days, translating to an annualized return rate of nearly 350%. Historical data indicates that such high returns have persisted for at least a week.
Lacie pointed out that this figure is extremely rare in the entire PoW history—one could even say it is abnormal:
- The payback period for BTC mining cycles typically ranges from 12 to 24 months.
- The ROI for ETH during the PoW era was between 300 and 600 days.
- Historically, PoW projects with payback periods under 120 days (such as FIL, XCH, RVN, etc.) have almost all collapsed within months.
Lacie also reviewed the repeatedly occurring Hardware–Price Scissors cases, such as Chia and KAS. Hardware-Price Scissors is a recurring "harvesting" script in PoW mining history, where miners order mining machines at several times the price during the peak of coin prices and FOMO sentiment (at this point, ROI appears extremely low, with a payback period of only 4 months). However, when the mining machines are finally delivered and hash power surges (usually delayed by over 3 months), the manipulators often sell at high prices, leading miners to face a double whammy of "price halving + output halving," turning their mining machines into high-priced scrap metal.
Network Security Issues Caused by Hash Power Scale
Lacie pointed out that according to the latest network data, ZEC's total network hash power is about 12.48 GSol/s. Based on a Z15 Pro's hash power of 0.00084 GSol/s, only about 14,857 Z15 Pro miners are needed, with corresponding energy consumption at around 40 MW, equivalent to a small to medium-sized Bitcoin mining farm. Generally, launching a 51% attack requires controlling over 50% of the network's hash power at the same time. If nearly 16,000 Z15 Pros can constitute the main force for ZEC, then an attacker only needs to rent or purchase thousands of devices to potentially control over 50% of the hash power. On a public chain with an FDV nearing $10 billion, a hash power investment in the millions could initiate potential chain reorganizations or double-spending, which is a structural risk that cannot be ignored.
ZEC's current hash power is not only far below that of mainstream PoW chains like BTC/LTC/KAS, but even lower than that of chains like ETC, BTG, VTC, and BSV, which have successfully suffered 51% attacks, indicating that ZEC's network security has actually fallen into a vulnerable range that can be attacked.
The Growth of Real Privacy Usage Demand is Not So Optimistic
Regarding the real privacy usage demand for ZEC, Lacie also raised doubts. The average daily transactions over the past month were only 15,000 to 18,000 transactions per day, accounting for only 1% to 2% of large public chains. As a privacy chain, the vast majority of transactions remain transparent, with shielded transactions (privacy-protected transactions) accounting for less than 10%.
On this point, Shivam Thakral, CEO of BuyUCoin, has also warned that ZEC's rise is more driven by speculation than by fundamental growth. The core basis is the limited growth in the number of Zcash's shielded transactions.
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