Chain Reaction, an Israeli based semiconductor start-up has announced $70 million in series C funding to advance their chip set solutions targeted for cloud privacy and cryptographic blockchain processing applications. With the announcement, the company also emerges from stealth mode having raised a total of $115 million to date at an estimated valuation of $500 million.
The company had been operating in stealth mode for about 6 years and has a highly experienced founding team that sold their prior start-up, Mellanox, a high performance computer networking solution provider, to Nvidia for $7 billion.
Electrum ASIC chip set for crypto mining applications, Image source: Chain Reaction
As advanced encryption and cryptographic processing techniques continue to emerge for secure, private and permission-less (blockchain) networked applications, a major challenge is the ever increasing amount of computational power and energy required to run them.
Chain Reaction believes its new high speed, low power processing architecture can accommodate the computational requirements of these advanced applications with much less power consumption and reduced thermal losses. Working with TSMC, the company is targeting the release of its first advanced processing Application Specific Integrated Circuit (ASIC) within the current quarter (Q1 2023).
The company was initially founded with the goal of developing a solution to address the needs of homomorphic encryption, a novel computational technique by which cloud based data is encrypted end to end for more robust privacy and security. But as the technology developed, the company was approached by cryptocurrency miners looking for better, and more power efficient solutions for their bitcoin and other crypto mining operations. These cryptocurrency miners ultimately became Chain Reaction's first customers.
Chain Reaction continues to pursue both crypto mining and cloud privacy market opportunities, but believes that cloud data privacy applications (homomorphic encryption) represent a larger opportunity for the company, impacting a broad range of industries to include pharmaceuticals, financial services, healthcare, energy and defense.
Due to concerns over data privacy and security, many of these large, legacy industries do not fully leverage the capabilities offered by the cloud. With their unique high speed, low-power processing architecture designed to address the compute and memory limitations of today's processors, the Chain Reaction team believes they can change this.
The company's Privacy Preserving Processing Unit (3PU) is designed for enterprise data centers and cloud service providers to implement in an easy-to-use, standard form factor.
Privacy Preserving Processing Unit (3PU) for the enterprise cloud, Image source: Chain Reaction
Over the past 10 years or so, the rapid growth of AI, privacy encryption and cryptographic blockchain applications has spurred demand for, and investment in, more advanced chip sets capable of handling the increasingly complex data and algorithm processing requirements. Despite the onset of the latest "crypto winter", the resurgence of AI in the form of ChatGPT, and other blockbuster use cases, will likely ensure that these advanced processing investment and development trends continue.