Israeli Blockchain Startup Chain Reaction Raises USD 70M To Develop Chips

Chain Reaction, a Tel Aviv-based blockchain chip startup, announced on Thursday that it has raised $70 million to expand its engineering team as it develops its next chip and prepares to launch its first one this year.

According to Alon Webman, co-founder and CEO of Chain Reaction, the company will begin mass production of its blockchain chip Electrum in the first quarter of this year. He claims that the chip is designed to perform blockchain operations known as "hashing" very quickly and efficiently, and that it can also be used to mine digital currencies such as bitcoin.

Webman expressed confidence that the company could gain market share in the blockchain chip segment, which he believes will support its more ambitious goal of developing a chip that allows users to work on data while it is encrypted.

He hopes to launch that chip by the end of 2024.

Many industries, including defence and government, he claims, cannot fully transition to the cloud due to security concerns. "Today, if you have data (that is) encrypted into the cloud, you have to decrypt the data in order to do any data operation or data analytics, do A.I.," Webman explained. "Once the data has been decrypted, it can be attacked by a malicious user to read, steal, or even change it."

Webman claims to have worked on the design of more than 30 chips. He is a co-founder of Mellanox Technologies Ltd., a datacenter networking chip company acquired by Nvidia Corp in 2020 for nearly $7 billion.

Morgan Creek Digital, a venture capital firm specialising in blockchain technology, AI, and digital assets, led the latest funding round, bringing the total raised to $115 million.