Zcash's core value lies in providing financial privacy. Its shielded transactions, utilizing zk-SNARK cryptography, are a key technological feature that distinguishes it from Bitcoin and other transparent blockchains. However, Foundry's newly launched institutional pool will only distribute mining rewards through transparent t-addresses (a non-shielded address type that functions identically to Bitcoin addresses and is fully visible on-chain).
This institutional mining pool for a privacy coin, requiring participants to pass KYC and AML checks and paying out only through transparent addresses, is, in a sense, a privacy coin mining pool that eliminates privacy. Foundry CEO Mike Colyer positions this move as addressing a critical gap in Zcash infrastructure: the lack of a compliance wrapper to allow regulated institutions to participate without triggering regulatory concerns similar to the OFAC sanctions on Tornado Cash. These concerns have also prevented privacy coins from being listed on major US exchanges.
The pool will obtain SOC 1 Type 2 and SOC 2 Type 2 compliance certifications, the same auditing standards as Foundry's Bitcoin mining pool. Institutional participants, including publicly traded companies, will receive dedicated reporting tools and 24/7 dedicated support. Each participant must pass KYC verification, and every payment is traceable.
What Does Foundry Bring to the Zcash Network?
Foundry USA Pool handles approximately 30% of the global Bitcoin hashrate. This concentration gives it unparalleled infrastructure, operational experience, and institutional relationships in the mining industry. Its entry into the Zcash space aims to address a specific structural problem in the network: the concentration of hashrate in the hands of a few non-US operators who lack the compliance frameworks required by North American institutional miners.
Zcash founder Zooko Wilcox noted that Foundry's addition could attract miners who have specifically avoided Zcash due to the lack of a US operator with institutional-grade services and compliance infrastructure. Foundry's Pay Per Last N Shares payment model rewards miners based on recent contributions rather than luck, providing more predictable income compared to a purely proportional model. This is crucial for institutional miners managing finances and operational forecasts.
Hashrate diversification reduces the risk of the network being subjected to coordinated attacks or policy decisions by any single dominant mining pool. A more dispersed hashrate base between compliant and non-compliant operators also makes it more difficult to target Zcash through regulatory actions against any single pool operator.
The Broader Issue of Institutional Privacy Coins
Foundry's launch is a test of whether institutional infrastructure can coexist with privacy-focused assets without compromising the asset's core value proposition. Miners using the Foundry pool will earn ZEC in a fully auditable manner.