Startup That's Unheard of, Has Raised $121.1M by Decentralizing Mining

MEDICIFounder and Chief Strategy & Innovation Officer

Bitcoin mining is the practice of adding transaction records to the public ledger of past transactions. This ledger of past transactions is called the blockchain and miners are paid in bitcoins for successfully identifying a block. Currently, the process of mining is centralized. However, a company called 21 Inc. has come up with an embedded chip to decentralize bitcoin mining. The company plans to market these chips to be embedded in the consumer devices (IOT as they call it), allowing smartphones and other connected devices to earn bitcoins through the process known as mining. If you have not seen a Bitcoin mining facility before than have a look at this image below. This will help you understand the importance of what 21 Inc. is decentralizing (or disrupting).


                                                                    Credits: komonews

21 Inc. started its operations in May 2013 and within a period of two years, has raised $121.1M in two rounds of funding. The most recent round took place in March ‘15 where the company raised $116M (a record in the bitcoin sector). Investors who participated in the second round include venture-capital firm Andreessen Horowitz and RRE Venture, chipmaker Qualcomm Inc., and founders from companies such as eBay Inc., PayPal, Dropbox Inc., Expedia Inc., and Zynga Inc.

The embedded mining chip launched by 21 Inc. is called BitShare that comes in a variety of form factors. The BitShare can be embedded into an Internet-connected device as a standalone chip or integrated into an existing chipset as a block of IP to generate a continuous stream of digital currency. The company claims that it is more interested in using bitcoin as a protocol than as a financial instrument.

The company plans to get customers on board by giving many of these devices away for free, proving once and for all that it’s as easy to earn bitcoins. The company anticipates that its initial revenue will be impressive when compared to the first two years of zero revenue growth at Google and Facebook.


                                        Revenue from BitShare: 21 Inc.’s estimates

Some of the use cases of BitShare include:

- Micropayments: Bitcoins achieved through in-house mining can be used for micropayments, which can change how mobile devices are currently used for making payments.

- Increasing chip sales and IP licensing: 21’s BitShare technology can be integrated into an existing chip. This enables the chip to continuously generate revenues by simply being connected to power and the Internet. This technique has the potential to revolutionize the way chips are built and sold to device manufacturers.

- A new way for authentication: Any device which is connected to the network can authenticate itself by sending a message.


Benefits of BitShare to Players Across the Value Chain

With BitShare, there are some disadvantages as well. At present, the company aims to provide the chip for free to manufacturers of devices, but there is no certainty that the benefit would be passed on to the end consumer. Furthermore, there are also doubts in the minds of the people on whether the revenue from mining will supersede the cost of power (electricity) and Internet required to run these applications in the first place? Likewise, battery life can be a big showstopper when it comes to adoption of BitShare. Modern smartphones already struggle to last for a day without charging. If they start mining on the battery, the battery may not even last for more than couple of hours. Hence, we believe that the future of BitShare will depend a lot on the cost-benefit analysis for the end customer and not from the OEM’s standpoint.

Amit Goel

MEDICIFounder and Chief Strategy & Innovation Officer

Amit Goel is the Founder & Chief Strategy & Innovation Officer for MEDICI. Amit’s vision is to build a strong FinTech market network that involves financial institutions, banks, startups, investors, analysts & other key stakeholders across the ecosystem – helping each one of them in a meaningful way by removing the asymmetry of information and providing a platform to engage & transact.

Amit is passionate about bringing actionable FinTech-focused insights, innovative products & services for the FinTech ecosystem. Some of his work involves startup scores, bank scores/assessments, predictive viewpoints & other innovations that have helped MEDICI’s customers and the ecosystem. He has been named amongst the Top 100 FinTech thought leaders/influencers in the world & Top 10 in Asia multiple times by reputed agencies, consulting firms as well as financial institutions. Amit has built MEDICI (formerly LTP) as a new-age, tech-enabled advisory/research firm, which is now considered the #1 global research & innovation platform for FinTech in the world.

Amit has been writing pioneering viewpoints on financial technology space that have been ahead of the curve since 2010. His data-driven predictions have helped the customers as well as the ecosystem. His past work experience includes a strong background in strategy & market analysis and advisory to clients (from big business houses to Fortune 500 firms) in payments, commerce, financial services & IT/technology. In the past, Amit had also founded a successful consulting & research practice called GrowthPraxis and has worked at Boston Analytics, Frost & Sullivan, and Daimler Chrysler in strategy & research.