Zcash (ZEC) could erode Bitcoin’s (BTC) dominance as artificial intelligence intensifies surveillance concerns, according to a Grayscale Investments research note published on Thursday. The report, authored by Grayscale’s head of research Zach Pandl, argues that Zcash’s privacy features—including shielded transactions—position it to challenge Bitcoin’s network effects despite the latter’s entrenched liquidity and scale.
Pandl highlighted Zcash’s ‘second-mover advantages,’ noting that prior Bitcoin alternatives such as Litecoin (LTC) failed to replicate its success. The report comes amid ZEC’s 19-fold price appreciation over the past year, though its market capitalization remains below 1% of Bitcoin’s. Grayscale estimates Zcash could reach a valuation of $4,000 per token if its market cap expands to 5% of Bitcoin’s current level.
The analysis underscores the growing premium on financial privacy as AI systems improve their ability to analyze transaction data at scale. Grayscale cautioned, however, that Zcash remains a high-risk asset with volatile price dynamics. The report follows recent infrastructure developments in the Zcash ecosystem, including a $33.33 million equity-based acquisition by Cypherpunk Technologies, a Nasdaq-listed privacy technology firm. The deal transferred a mining fleet from Winklevoss Capital to Cypherpunk, adding approximately 4.2 GSol/s of Equihash hashrate—equivalent to 18% of the Zcash network’s total computing power.
Cypherpunk’s mining division now operates the largest active fleet on the Zcash network, with operations already live across U.S. facilities. The expansion coincides with broader institutional interest in Zcash, as reflected in its price performance and ecosystem growth.
