Thanks for the suggestions! A depth-based cow spawn could definitely work. The main thing I need to figure out is balance, especially for newer players who can't dig too deep early on. Since the Backpack, Flask, and Leather Boots all require quite a bit of leather, that initial grind might be too difficult.
If we do go with depth-based spawns, I really like your second idea of introducing different types of cows based on depth as it would help avoid surface clutter and reduce the need to click multiple cows.
Thanks again for playing! I'm really glad you're enjoying it :)