Revolutionizing Bitcoin Mining with German Engineering

By Jacob Cohen Donnelly Aug 20, 2014 4:58 PM EDT

NEW YORK (InsideBitcoins) — Adding more efficient hardware to a mining solution will get a user more bitcoin, but costs will grow with it. If a company can cut the amount of energy in half that it takes to mine a single bitcoin, its level of profitability will increase tremendously. One company believes it can produce chips that are 2-4 times as energy efficient as those currently available. And if they find enough investors to buy-in to their concept, they’ll prove it.

[See also: What is Bitcoin Mining?]

The most energy efficient ASIC currently requires about 0.37 joules per gigahash. Coinbau, a startup in Dresden, Germany, believes their bitcoin-specific ASIC can cut the energy requirement in half — down to 0.19 joules per gigahash. An ASIC, otherwise known as an application-specific integrated chip, can be programmed to focus on mining bitcoin only. These chips will then do one job: run the mathematical formulas required to power the cryptocurrency network, and ultimately produce a bitcoin as a reward for its effort.

In a post on, Markus Winter, the primary developer of the ASIC chip, said, “Based on record-breaking 0.19 W/GH/s at chip level we will realize bitcoin mining hardware for datacenter usage with a performance of 4.8 TH/s per 19” case and a targeted energy consumption of 0.27 W/GH/s per case.” What this means is that the units will be able to run 4.8 terahash — the mathematical equation — per second while only using 1,296 watts.

$15 million on a deadline

On their website, Coinbau says their target is “15% of the global hashrate.” In other words, they are not looking to sell this highly-efficient chip to the retail miner, but rather, will use it to power their own, internal mine. But to achieve that, they’re looking for investors.

In an investment prospectus, Coinbau offers two options: to be a “Major Investor” with a minimum investment of $250,000 or a “Minor Investor” for a minimum investment of $10,000.

“With an investment of $10,000 you can get a dividend payout after year three (and in each following year) of about $3300 plus the grown value of the shares,” Winter said.

A race to the bottom

Naturally, many people are skeptical. A user on reddit, Physalisx, in reply to the projected energy consumption said, “They don’t know that until they have built it. Every ASIC producer had similar Utopian ideas when doing their software simulations.”

It’s important to understand that this becomes a race to the bottom. As more energy-efficient chips are released for miners, the amount of bitcoin they can mine increases. This results in an increase in the complexity of the bitcoin algorithms. In order to regulate how many bitcoin were released at any one time, the creators put this design in place to make it more difficult to mine as more was mined.

Should Coinbau raise the $15 million they want by September 30th, they plan to develop the chip in Germany in partnership with GlobalFoundries, a U.S. semiconductor maker.

Written by Jacob Cohen Donnelly

  • Mikael Arhelger

    By that time more powerful chips are required.

Read more:
bitcoin this week
The Most Important Bitcoin Developments This Week: November 29, 2014

NEW YORK (InsideBitcoins) -- The bitcoin price flirted with a double-digit weekly gain of nearly 12% before settling back to...