Mining hardware startup raises $13 million as it develops new liquid-cooled ASIC

Bitcoin mining hardware startup Fabric Systems raised $13 million in a seed round to fund the development of two core launch products including a liquid immersion-cooled ASIC machine it claims will achieve an energy efficiency of 20 watts per terahash (watts/TH).

Investors include bitcoin miner TeraWulf, Skype co-founder Jaan Tallinn's fund Metaplanet, Blockchain.com and 8090 Partners, the company said.

For now, the company's launch product is an immersion-cooling ASIC machine — meaning that it is submerged in a special liquid instead of being cooled via air with traditional fans. This type of computer cooling technology has been around for decades, but more recently the industry has seen companies like Argo and Riot deploy them at large scale in Texas.

It promises to "outperform every existing bitcoin miner in today’s existing marketplace" in terms of energy efficiency and is engineered to achieve an energy efficiency of 20 watts/TH.

For comparison, Bitcoin mining firm Luxor divides machines into three efficiency tiers: "Old-generation" ASICs are classified as over 68 J/TH, "mid-generation" as 38-to-68 J/TH and "latest generation" as under 38 J/TH. The measure of joules is interchangeable with watts, the firm clarifies.

Fabric Systems's machine is supposed to go into production in the latter half of 2023, with shipments starting in the third quarter.

The software and hardware products are "a culmination of years of R&D since 2019," co-founder and CEO Michael Gao told The Block. 

Gao previously founded Luminous Computing, a photonic AI supercomputing startup backed by Bill Gates, which got over $130 million in funding. He discovered bitcoin in 2011 at the age of 15 and founded a bitcoin mining operation from his dorm room, he said. Fabric Systems' other co-founder is chief technology officer Sagar Reddy, who has 22 years of technical leadership in full-custom chip design and systems architecture.

Founder and CEO of 8090 Origin (a fund that spun out of 8090 Partners) Jasper Lau said that they chose to invest in Fabric Systems precisely because of its CEO.

"Michael is a serial deep tech entrepreneur with a surprisingly far-reaching and concrete vision for the impact breakthrough technology could have on society," Lau said. "We have backed him several times and are proud to be his partners again in creating Fabric Systems, which we believe will be a category-defining company in the >$100b market of cryptography acceleration."