Big investors are pouring $50M into a bitcoin mining startup, and they’re hoping its own mining chips and Texas energy will make it a new powerhouse

As reported by The Block, “A Digital Currency Group (DCG)-backed investment fund is making a pivot into the bitcoin mining business, and venture capitalists including Peter Thiel are committing $50 million to the newish venture that they deem worth $200 million.

“San Francisco-based Layer1 announced on Tuesday that it has raised the multi-million-dollar Series A from Peter Thiel, Shasta Ventures, and crypto industry leaders. Originally established as an activist fund aimed at building an ecosystem around privacy coin, Grin, the firm is now building out a bitcoin mining operation and claims to be the first bitcoin mining company in the U.S. ‘at scale,’ said Layer1 co-founder Alexander Liegl.

“With the move, Layer1 is entering into a market that is around 70% dominated by Chinese miners, which benefit from low electricity prices and easy access to mining machines produced by China-based manufacturers such as Bitmain and Canaan Creative. According to blockchain.com data, the top five known mining pools are also all based in China. Still, Liegl hopes the firm will stand out due to its focus on minimizing the cost of electricity versus maximizing the efficiency of chips.

“‘We expect our chips to be competitive for at least eight years now…you want to have your own chips in hand. We also have our own electricity substations: effectively that’s as close you can get to owning your own power plant,’ said Liegl.

“To that end, the company has bought a dozen acres of land in Texas to build its own electricity substations, partnered with a Beijing-based semiconductor company to create its own mining chips, and built its own mining machine infrastructure. The ultimate goal, according to Liegl, is to own every step of the bitcoin mining supply chain and vertically integrate the mining business. For instance, the firm might expand into lending, derivatives, and other corners of the bitcoin market. Liegl described the firm as the Exxon Mobile of crypto.”

Continue to read the full story at The Block.

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