Barry Silbert's Zcash miner proposes merger, sends Nasdaq stock soaring despite rough month for ZEC

Despite a rough past couple of weeks for Zcash, Digital Currency Group founder and CEO Barry Silbert hasn't lost faith in the privacy-focused blockchain network.

"We believe Zcash represents one of the most compelling opportunities in digital assets," Silbert said Tuesday as part of an announcement that Zcash (ZEC) miner Fortitude Mining, a DCG subsidiary, wants to merge with a small-cap Nasdaq stock, HeartSciences Inc.

Fortitude and HeartSciences said they have entered into a definitive merger agreement to combine the two companies. HeartSciences is a small-cap medical technology company that trades on the Nasdaq. Its shares rose about 60% in early trading on Tuesday and closed at $2.70 per share, an increase of about 55%.

Fortitude CEO Andrea Childs said the business combination — which the two companies hope to close in the second half of this year — has nothing to do with business synergies; it's about funding future growth.

"Going public, we expect it's going to provide us with the flexibility and access to capital to really accelerate our core strategies, which is our venture mining platform, and again, primarily today that's Zcash," Childs told The Block. "And then continue to pursue high return opportunities on the power portfolio side as well."

DCG will own about 95% of the shares in the new company, Childs said.

This isn't a digital asset treasury play

Although the merger is reminiscent of the many business combinations to emerge during the digital asset treasury (DAT) boom that saw many small-cap Nasdaq stocks become crypto-accumulation vehicles for different tokens, Childs stressed Fortitude's strategy is different.

"We are not a digital asset treasury company for several reasons. One, we are an operating company, so we have been purchasing machines and mining Zcash specifically since 2019," Childs said, adding that Fortitude does not currently hold a significant amount of ZEC.

She did say, however, that Fortitude's strategy could evolve in the future.

"We may make the decision to hold more Zcash on the balance sheet such that we don't have to fund the business by liquidating Zcash," she added.

Despite suffering vulnerability, Fortitude aims high

While Zcash is still up nearly 900% over the past 12 months, the token plunged more than 60% earlier this month after disclosure of a counterfeiting vulnerability sparked a selloff. ZEC later recovered some of its losses after Zcash Open Development Lab implemented a two-step emergency update.

ZEC was changing hands at $415.83 as of 3:42 p.m. ET, down about 7% on the day, according to The Block Price Page.

Childs remains optimistic about Zcash's long-term potential. "We believe that Zcash has the ability to be roughly 10% of the total cap of Bitcoin," she said.

Zcash's current market cap sits at about $7 billion versus Bitcoin's $1.25 trillion.

Silbert, however, a Bitcoin bull in his own right, has made similar statements of his own.

"The bet we’re making is 5% to 10% of Bitcoin over the next few years, is going to find its way into privacy-focused cryptocurrencies," he told The Block in February.