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Cryptography hardware technology company Fabric Systems raised $13 million in a seed round from investors to build energy-efficient Bitcoin mining hardware.
The money came from early stage investment firm Metaplanet, run by Skype co-founder Jaan Tallinn, crypto exchange Blockchain.com, and venture firm 8090 Partners.
The investment from Metaplanet is not Tallinn’s first foray into crypto: a keen Bitcoin enthusiast, the Estonian engineer previously admitted he holds most of his wealth in cryptocurrency, and has donated digital assets to companies before.
Silicon Valley-based Fabric Systems will use the money to build an “immersion-native” Bitcoin miner and a general purpose accelerator for cryptographic algorithms.
The cryptographic accelerator is intended to make calculations faster and more efficient on the blockchain, allowing for advanced cryptographic algorithms such as zero knowledge proofs—a cryptography method to prove that something is known without revealing the known information directly. The tech was first used by the privacy coin Zcash but Fabric Systems said the plan is for the accelerator to be used by other industries outside of crypto—such as real estate.
“Immersion-native” machines refers to Bitcoin miners which are dunked in a thermally-conductive liquid to cool them down and make them more energy efficient, because the process allows for more BTC to be mined with fewer machines.
Bitcoin mining—the process of using lots of computers to process transactions on the blockchain’s network and mint new coins—has been criticized for the huge amount of energy it uses.
To process transactions on the Bitcoin blockchain, mining machines have to solve complex mathematical puzzles which takes time and a lot of electricity—as much as entire countries.
This has regulators stressed: The U.S. government said last month that Bitcoin mining companies should use “environmentally responsible crypto-asset technologies” or be banned from mining altogether.
Using immersion native machines is just one of the ways to make the process more energy-efficient. Such machines are a must for the industry, Fabric Systems founder and CEO Michael Gao told Decrypt. “If the industry doesn't wake up and pursue ESG [Environmental, Social, and Governance] as a goal, there’s going to be regulatory action,” he said.
“Immersion has benefits for noise and noise pollution and also from a water usage perspective. We want to be at the forefront of making this industry more friendly to local communities,” said Gao.