Computer chips are not one-size-fits-all. There are custom designs for satellites, Bitcoin miners, and even A.I algorithms.
Michael Gao, who started investing in Bitcoin when he was just 15 years old, wants to build a computer chip for an area of computing that has yet to become mainstream: zero-knowledge proofs, a buzzy cryptographic technique popular in the world of Web3, as well as other advanced cryptographic algorithms.
On Tuesday, his startup, Fabric Cryptography, announced that it had raised $6 million to create what Gao calls a VPU, or a verifiable processing unit. Metaplanet led the pre-seed funding round. Other participants included the Nil Foundation, Inflection, Novawulf, and Jasper Lau of Era.
Fabric Cryptography is an offshoot of Fabric Systems, which announced a $13 million fundraise in November. Michael Gao is named in a lawsuit filed in California’s Santa Clara County Superior Court from Coinmint, a Bitcoin miner, against Katena Computing Technologies, a company that Gao does not disclose he is part of on LinkedIn. In the lawsuit, Gao and other alleged co-conspirators are accused of luring Coinmint to send over approximately $23 million to Katena for a Bitcoin mining chip it has yet to receive.
Gao, cofounder and CEO of Fabric Cryptography, declined to provide the valuation of his new company and said the chip it’s designing also doesn’t currently exist. “The design is—I would say it’s about halfway,” Gao told Fortune, adding that “we already have enough evidence” the chip will deliver strong performance.
“Cryptography is a very software-centric ecosystem, so most teams in the space underestimate the width and depth of expertise required to design, manufacture, and deliver high-performing chips,” Jonatan Luther-Bergquist, an investor at Inflection, said in a statement.
The firm’s fundraise and purchase order are part of a larger wave of crypto companies raising serious cash to bring zero-knowledge proofs, once only the realm of academic theory, beyond research papers. Their capital injection follows a $40 million round for RISC Zero, which is building a platform to let developers easily generate zero-knowledge proofs for most types of computations.
Gao, 27, has been in crypto for more than a decade. After he bought Bitcoin as a teenager, he invested his crypto winnings in a company that planned to design a computer chip specifically optimized for Bitcoin mining. “The fact that you could invest purely based on trust over an internet forum as a 16-year-old into a Chinese company,” he told Fortune, “it was like a new paradigm.”
Since then, the college dropout (he went to MIT for a year) has started two separate companies. His most recent, Luminous Computing, raised $115 million in venture capital, according to Crunchbase, to build an A.I. supercomputer.
Gao set off to start off Fabric, which already has approximately 30 full-time employees, because he thinks that his “chip is going to accelerate the entire domain of cryptography the same way that the GPU accelerated not just video games, not just scientific computing, but eventually A.I.”
Update, July 27, 2023: This article has been updated with more details about Fabric Cryptography’s relationship to Fabric Systems, Michael Gao’s legal dispute with Coinmint, and removes mention of a $50 million purchase order Gao said Fabric Cryptography supposedly received.
