Foundry to start mining Zcash as BTC’s luster continues to fade

If block reward miners continue to ditch BTC for artificial intelligence (AI), could AI agents fill this void, or will they decide to mine privacy tokens instead?

The BTC network mined its 20 millionth token this week, leaving just one million left to be found until Satoshi’s vision is complete and all 21 million tokens are circulating in the wild. The last BTC will be released sometime in the year 2140, by which time everyone reading this will be dead. But the question remains: will anyone still be mining BTC in another 114 years?

Last week’s network difficulty adjustment saw a modest rise from 144.4 trillion hashes (the number of guesses required to ‘find’ a new block on the network and claim the block reward of 3.125 BTC) to just over 145 trillion. While any increase costs miners more money, they’re likely welcoming the relative continuity after the wild up/down whipsaws that have occurred since the year began.

But the BTC token’s inability to break out of its sub-$70,000 price cap since early February means the economics of mining remain unforgiving. As of Thursday morning, the all-in cost of mining a single BTC (including periodic replacement of older, inefficient ASIC mining rigs) was ~$84,200, roughly $14,000 higher than the BTC token’s current value.

This grim math has pushed a lot of miners into the more profitable arms of serving as data centers for AI and other high-performance computing (HPC) tasks. As Riot Platforms (NASDAQ: RIOT) CEO Jason Les stated during last week’s earnings call, Riot’s AI/HPC operations generate “2.5x more gross profit per megawatt” than mining, and investors love money, so…

Even more ominously, miners that once hoarded the BTC they produced in the expectation of its value rising ever-higher are now selling the tokens in their ‘treasuries’ to fund AI/HPC expansion, while dumping newly mined BTC on the market moments after they’re produced.

At the bottom of this article, you’ll find February’s monthly BTC production reports from the dwindling number of miners still willing to share this information. Going forward, we might have to shift this feature to a hierarchical listing of which miners sold the most BTC in any given month, a metric that most companies appear eager to share as investors view these sales in the context of furthering AI/HPC expansion.

A clear illustration of the way this market is headed was on full display last month, when the mining sector news site The Miner Mag rebranded as The Energy Mag. The site said the change reflected “the market’s shift toward the energy and compute buildout powering AI, cloud, data centers, and digital assets.” (You’ll notice which of these subjects came last.)

So who will be left to mine the last BTC in 2140? Ironically, mining’s frantic “pivot to AI” may contain the answer. A report from earlier this year showed that an autonomous AI agent linked to Chinese tech giant Alibaba (NASDAQ: BABA) disregarded its original mandate and began mining BTC with GPUs intended to assist its training.

The agent, dubbed ROME (possibly giving it imperial ambitions, who’s to say), bypassed its firewall constraints and opened “a “reverse SSH tunnel” that offered a backdoor to outside computing power. Why ROME chose to use these resources to mine BTC remains a mystery, as its human overseers insist ROME’s unauthorized actions “were not triggered by prompts requesting tunneling or mining.”

So does ROME know something we don’t? Did it sense a vacuum caused by miners fleeing BTC for AI/HPC? Or did ROME just suffer an AI hallucination that imagined an alternate reality in which mining BTC is a profitable use of one’s time and resources? Check back in 2140 for the answer.

Foundry adding Zcash mining pool

Foundry USA, the world’s largest mining pool with a 36.7% share of global pool hashrate, appears to be hedging its bets regarding the future profitability of mining BTC by expanding into other tokens. On March 11, Foundry announced plans for “an institutional-grade Zcash mining pool” that it hopes to launch in April.

Zcash (ZEC) is a “privacy token” with a decidedly mixed history of assisting criminals to obfuscate the digital trail of their ill-gotten gains. A few years ago, regulatory crackdowns in numerous jurisdictions prompted some leading exchanges to delist ZEC and other privacy tokens.

But Zcash is having something of a renaissance of late, including serving as the focus of a new digital asset treasury established by the Winklevoss twins behind the Gemini (NASDAQ: GEMI) digital asset exchange.

This week, the developers at the Zcash Open Development Lab (ZODL) announced that they’d secured “over $25 million” in funding to assist “the continued growth of the Zcash ecosystem.” Winklevoss Capital was among the contributors to this sum, along with Paradigm, a16z crypto, Coinbase Ventures, and more.

Foundry CEO Mike Colyer claimed ZEC “has matured into an institutional-grade asset, but the mining infrastructure supporting it hasn’t kept pace … with the launch of our Zcash pool, we are bringing to Zcash the same compliance, transparency, and operational excellence that made Foundry USA Pool the trusted standard for Bitcoin miners.”

The combined efforts of Foundry and AntPool (14.7% of BTC pool hashrate) are responsible for over half the BTC network’s transaction consensus mechanism. Throw in the 10% held by F2Pool, and you end up with over three-fifths of overall hashrate controlled by just three firms.

Foundry is an offshoot of Barry Silbert’s Digital Currency Group (DCG), which is still dealing—both professionally and (for Silbert) personally—with the mess from the 2022 bankruptcy of its Genesis Global Capital crypto lending arm.

Given Winklevoss Capital’s participation in the Zcash funding round, Foundry’s foray into Zcash has the (presumably) unintended effect of reuniting Silbert with the Winklevii, despite the pair having come to (legal) blows following the messy bankruptcy of Genesis, to which the Winklevii’s Gemini had lent $1.1 billion of its customers’ assets.

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Russia, Russia, Russia

Registered miners are required to submit monthly reports to the FTS, detailing not only their monthly token production (with digital wallet addresses) but also the number of rigs under their control, along with the physical location of these rigs. Russia has at times struggled to rein in unauthorized mining operations that strain local electricity grids, leading to seasonal mining bans in certain regions where infrastructure is threadbare.

Last month, a farmer in the Komi Republic region was arrested for stealing RUB6 million (US$75,000) worth of electricity to power 80 unregistered mining rigs on his property. That same month, a court in the Karachay-Cherkessia region ordered an unregistered miner to pay RUB97.7 million ($1.2 million) as penance for running for a larger illegal operation using over 180 rigs.

Bits.media quoted officials in the North Caucasus Federal District saying they shut down 128 illegal mining operations in 2025, a threefold rise from 2024. The value of the electricity drained from the grid by these illegal operations exceeded RUB1 billion ($12.6 million), up more than 42% year-on-year.

On March 10, Kommersant reported that Russia’s government is mulling changes to how electricity fees are calculated for mining facilities and AI/HPC data centers with a capacity over 670 kilowatts (kW).

Russia’s Deputy Prime Minister Alexander Novak was quoted as saying that, starting in 2027, these sites could operate under a “take or pay” model. Among the options offered via this model would be flat fees based on 90% of installed capacity, regardless of how much electricity an operator actually drew that month.

Miners are reportedly not enthused about this proposal, as some operators run only at night and thus their overall draw is only about 70% of capacity, meaning a 90% rate would see their costs increase significantly.

Data center operators are equally unimpressed, citing a 2020 presidential directive that classified their operations as communications facilities, a designation that’s supposed to qualify them for preferential access to power and fee discounts of up to 50%.

The Ministry of Energy told Kommersant that the proposal is aimed at “reducing the construction of unused energy infrastructure and encouraging energy-intensive consumers to responsibly plan their load ramp-up phases and required maximum capacity.”

Novak also revealed some stats that show the country’s AI/mining operations currently boast a total capacity of 4.5 gigawatts (GW), of which 2.7 GW is mining. Novak estimated that this overall figure could surge to 12.7 GW by 2030, hence the need to take steps to ensure grid stability.

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February’s fab four producers

Alas, only four of the remaining six miners that still issue monthly production reports had released their results prior to this article’s publishing deadline, so thanks for nothing Bitdeer (NASDAQ: BTDR) and Hive Digital (TSXV: HIVE).

• In Bitdeer’s absence, CleanSpark (NASDAQ: CLSK) led our fantastic four with a February production of 568 BTC, five fewer than January’s total, despite a slight rise in average operating hashrate to 43.2 EH/s. CleanSpark sold 553 of these tokens, leaving its treasury at 13,363 tokens as of February 28. CleanSpark CEO Matt Schultz said the company would retain its “flexible treasury strategy” to “generate predictable cash flow from disciplined mining operations today” while focusing on the shinier AI/HPC opportunities of tomorrow.
• Cango (NYSE: CANG) produced 454.8 BTC in February, down from January’s 496.3. Hashrate slipped ~2.5 points to 34.5 EH/s due to “temporary downtime associated with fleet optimization and relocation efforts.” Cango’s deployed hashrate is 50 EH/s, but the company reportedly switched off nearly one-third of its rigs as part of the aforementioned reorganization. Cango finished February with 3,313.4 BTC in its treasury, down from 3,645 tokens as of February 9.
• BitFuFu (NASDAQ: FUFU) generated 227 BTC in February, two fewer than January’s total, as its hashrate fell 3.2 points to 26.4 EH/s. The company said the decline was due to its “disciplined approach to incremental hashrate procurement to preserve flexibility and avoid committing to longer-term, low-margin contracts.” BitFuFu’s treasury grew by 34 tokens month-to-month to 1,830.
• Finally, Canaan Inc. (NASDAQ: CAN) produced 86 BTC in February, three better than in January, as the month-end operating hashrate nudged up slightly to 6.9 EH/s. However, deployed hashrate has since shot up to 14.75 EH/s following Canaan’s recent acquisition of a 49% stake in three mining ventures from Cipher Digital (NASDAQ: CIFR) (formerly Cipher Mining). Canaan finished February with a treasury of 1,793 BTC and 3,952 ETH.

On March 3, Canaan announced that CEO/chairman Nangeng Zhang and chief financial officer Jin ‘”James” Cheng had acquired a combined 1,456,547 Canaan shares to reflect their “strong conviction in Canaan’s long-term vision and the opportunities ahead.” Canaan is currently under threat of being booted off the Nasdaq due to its share price trading below $1 since last November. Canaan has until July 13 to boost the price above $1 and keep it there for 30 consecutive days. But the shares have continued to fall, closing Thursday up 1% to $0.51 but down nearly 29% since the year began.

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