Hashplex lands $400,000 in funding to bring cloud-based bitcoin mining to the masses

Screen Shot 2014-06-13 at 11.11.31 AMHashPlex, a company that hosts Bitcoin mining equipment, announced today that it raised $400,000 in a seed round. The round was led by Barry Silbert, the Founder of the Bitcoin Opportunity Corporation, and Facebook engineer Jason Prado.

The Seattle-based company allows Bitcoin miners to send in their equipment – usually specially-designed circuits that run calculations very quickly – and let professionals take care of the rest. HashPlex customers pay a regular fee for the amount of power capacity their gear will consume, and in exchange, HashPlex will work to keep their equipment safe and maintain consistent uptime to maximize the amount of money they make.

The new infusion of cash will be put towards finishing HashPlex’s HashCenter in Central Washington, a data center that will be able to supply 1 megawatt of power for Bitcoin mining equipment. The first HashCenter, which the company opened in mid-April, was filled to capacity in less than a month. The company has plans to build “tens” more HashCenters in the future to provide for further capacity.

HashPlex CEO Bernie Rihn

HashPlex CEO Bernie Rihn

Bitcoin mining is a part of the backbone of the cryptocurrency: transactions are logged in what’s known as a block (all of the blocks put together compose what’s known as the blockchain, a global ledger of all Bitcoin transactions), and each block contains the answer to a complex mathematical problem. Miners use computational power to try and find that answer and solve the block. If a miner successfully completes that task, they’ll get a reward, in Bitcoins.

There are a few wrinkles to the system: the mathematical problem gets increasingly more complex as more blocks get mined, and miners are trying to come up with increasingly faster ways to figure out the answer. Most miners band together in what are known as “pools,” so that everyone who worked on solving a block will get some reward for their work, even though the current setup bestows Bitcoin in a winner-take-all fashion.

Right now, it can be incredibly costly for people to jump into Bitcoin mining, and that’s exactly what HashPlex is seeking to fix.

“HashPlex (and companies like it) will actually be a critical piece to ensuring that we keep Bitcoin distributed,” HashPlex CEO Bernie Rihn said in an email to GeekWire. “As mining becomes less and less profitable, only industrial-scale miners are able maintain competitive cost-structures. HashPlex is a gateway for all others to continue to participate and have their voice heard (though their contribution of their work to their pool of choice).”

The company’s service could be a key part of preventing a possible failure in Bitcoin’s future. If someone gains control of 51 percent of the total mining power on the Bitcoin network, they could push through fraudulent transactions in an attack on the network. By making it easier for smaller miners to contribute, HashPlex could help head off an attack.

In the future, the company may make it even easier for consumers to pick up Bitcoin mining by partnering with hardware vendors.

Yeah, we do actually have plans to support sales of mining hardware through our site eventually,” Rihn said. “We’re working on developing relationships with a few of our favorite mining hardware vendors right now. As a first step in that direction, we’ll likely arrange for the vendors to offer customers the opportunity to ship to us as part of their checkout flow.”

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