① What is its issuance mechanism?

Imagine the issuance process of $ZEC as an everyday scene: it’s like a group of people racing to solve a math problem. Whoever finds the answer first gets the newly issued coins for that round. This is what’s known as mining. Zcash uses the Equihash algorithm. Miners use graphics cards or specialized mining machines to perform calculations over and over. When they find a result that meets the rules, they can create a new block, which comes with a block reward. That reward is where new coins come from. There’s no central authority issuing coins according to a schedule; new coins can only be created through this computational process, and the total supply is capped at 21 million.

One detail is worth noting: the block subsidy does not all go to miners. Under the rules, part of the subsidy goes into a developer fund to support project development. How this portion is divided, and how much is allocated to it, has long been a point of debate in the Zcash community. Some believe it is necessary to sustain development, while others think it takes away from miners’ rightful share. Both sides’ arguments are presented here; I’ll leave it to readers to decide who is right.

② Can ordinary people still participate in producing coins today?

The short answer: yes, but the barrier to entry is higher than many people think, and you’ll most likely only be able to participate on a small scale. That’s because Zcash supports both GPU mining and ASIC miners designed specifically for the Equihash algorithm. An ASIC is a specialized chip that can solve only this particular kind of problem, and it is far more efficient than a regular graphics card. This means you’ll be competing against specialized equipment. On top of that, ongoing electricity costs are a real expense. Whether the coins you mine will cover your electricity bill depends on your equipment’s efficiency and the price of power; there’s no one-size-fits-all answer.

There’s another source of uncertainty: the allocation rules themselves. How the block subsidy is split between miners and the developer fund has long been debated in the community, and the rules are not set in stone. So, for someone with no experience in cryptocurrency, participating in coin production isn’t impossible, but it requires equipment, electricity, and continued attention to the rules. Missing any one of these can make it very difficult.

③ What if you can’t participate in mining?

If you don’t want to deal with mining hardware and electricity bills, the alternative is straightforward: buy coins on an exchange or in an on-chain market. But first, be clear about one thing: the coins you buy have already been produced by someone else. You don’t bear the equipment and electricity costs of producing them, nor do you take part in the distribution of the block subsidy. In other words, the production happens outside your participation.

What this section should clarify is who controls the hashrate. Mining is a game in which opportunities are distributed in proportion to hashrate: the higher the total network hashrate, the lower the chance that any one device will find the next block. Today, a large share of Zcash’s hashrate is controlled by professional mining farms and pools. The odds of a household mining on its own with one or two graphics cards finding a block are so low as to be negligible. Mining pools combine the hashrate of many small participants and distribute rewards in proportion to each participant’s contribution. This makes returns more consistent, but it also means that hashrate becomes even more concentrated among a small number of pools. So the idea that “I can mine coins with just one graphics card” is far removed from reality.

④ The takeaway in one sentence

New Zcash coins are produced through mining with the Equihash algorithm. Under the rules, part of the block subsidy goes to a developer fund, and how that portion is allocated remains a point of debate in the community. Also, remember a common misconception: simply holding ZEC won’t increase the number of coins you have. New coins are created only through mining; they don’t appear in your account out of nowhere.

⚠️ This article only explains “where coins come from.” It does not offer buying or selling recommendations and is not investment advice.

Sources: Official specifications (EIP/ZIP/BEP) · ZIP-1014 (Establishing a Dev Fund) (https://raw.githubusercontent.com/zcash/zips/main/zips/zip-1014.rst)