Analyzing the Solo Mining Profitability of Zcash Cryptocurrency in the United States of America

Abstract

Zcash is a proof-of-work (PoW) cryptocurrency that has gained attention due to its promise of enhanced user privacy. Notwithstanding, Zcash’s thorough acceptance notably depends on how profitable its mining process can be. To tackle this issue, we propose an analytical model to compute the mining hashrate under solo mining to achieve a liquid revenue equal to the minimum wage in the United States. In the sequence, we then estimate how profitable Zcash solo mining is based on that computed mining hasrate. Our proposed model spans crucial parameters of the whole mining process. In the experiments, we compare Zcash with the popular Bitcoin and also present a competitive analysis encompassing the ten top cryptocurrencies by market capitalization. Final results highlight that: (i) Zcash owns a value of hmin which is about eight orders of magnitude smaller than that of Bitcoin in all investigated scenarios, which refer to the ten least and most expensive american states in terms of electricity tariff; and (ii) Zcash is the second best cryptocurrency for solo mining among the aforementioned ten cryptocurrencies, being the only one whose protocol implements the concept of zero-knowledge proofs. Within this context, our key contribution is to provide the scientific literature with valuable insights to formally pave the way to develop practical analytical models for PoW-cryptocurrency systems, which may be chiefly valuable regarding competitive analyses in general.