At the North American Bitcoin Conference in Miami, we were able to sit down for a one-on-one interview with Valery Vavilov, CEO of BitFury. So many changes have happened over the past couple years in the Bitcoin Transaction Processing industry (Bitcoin Mining), and many Bitcoin mining companies have began to branch out. BitFury has not only invested in and developed new technologies, but has also continued investing in themselves; the company’s talented team and stellar board of advisors continues to grow. BitFury secured significant capital funding in 2014, has just announced the roll out of its 28nm ASIC, and is already hard at work on its next generation, 16nm chip. Valery Vavilov, BitFury CEO and one of the company’s founding members, had lots to say about Bitcoin, transaction processing and more.
Note: the publication of this interview was delayed for the sake of getting clarification from Valery on a few points.
When did we start? We started thinking about it in 2010, but the first real experiments started in 2011. At first it was just for fun. The CTO and co-founder of BitFury is a genius guy. In 2010 he called me and said: “For the last 15 years I have been thinking about how to create something better than the Internet. I found Bitcoin Blockchain protocol, learned it and 90% of all my thoughts, of what I had been thinking these last 15 years is already realized in this protocol. We should do this project!” And we started our research. The more we have researched, the more we understood how major this could be and that this is potentially the most disruptive technology for the next 20 years. In 2011 we started our first experiments with CPU, then switched to GPU (video cards). In 2012 we completely switched our focus from other projects we had worked on to BitFury and it became our first priority, full-time project. We had a general understanding of Bitcoin Blockchain technology, but did not have any experience with microelectronics and with silicon at that time, so it was an amazing learning experience. It was a challenge all around: every step we made we had to overcome challenges and solve seemingly unsolvable problems. If the task was too complicated we would split it into several simple tasks and solve each of them in the most efficient way. The whole philosophy of our company is to do things fast and simple and that’s why the name of the company is BitFury – “Bit” means 0 or 1 , or “simple” and “Fury” means extremely fast. Anyway, it’s a long and very interesting story how we started, the challenges we had and how we solved them.
It was an amazing year for venture capital investment into Bitcoin. You have stated BitFury is doing more than just the transaction processing. You are already looking at shrinking things down, so it could be your cell phone or a refrigerator that is processing transactions. These goals as well as doing more than Bitcoin currency related technology, that’s something that you’ve mentioned before that you guys are looking at doing some other ASIC technologies?
Now we are focusing on Bitcoin blockchain technology. What is important to understand is that we are not just a Bitcoin mining company. We are a technology company first and foremost that’s currently focusing on processing bitcoin transactions. Our mission is to secure the Blockchain, by processing and verifying each transaction and confirming that each particular block – and every block after it – is legitimate. Mining reward is our compensation to keep the bitcoin core engine running. Bitcoin is not just another e-currency. Bitcoin is inseparable from the Blockchain, a truly unique technology. Blockchain is a global public ledger that can be used to digitize and transfer assets easily and securely. Assets like smart contracts, ownerships, copyrights, etc. Blockchain brings many advantages. It keeps all history of assets movements and exchange, it is fully transparent and it allows to avoid money or asset falsification or duplication.
Blockchain technology provides an excellent base for new business opportunities. It’s like the Internet of the 90s. Right now no one really knows all the possibilities of it. We are trying to support and develop it and foster the development of the surrounding business.
It is expected that some 25 billion devices will be connected by 2015, and 50 billion of things – Internet of Things devices (IoT) – will be connected to the Internet by 2020. Now, the biggest issue with machine to machine iteration is security. This issue could be solved with the use of blockchain . There will be trillions of transactions to process by 2020 – huge potential market.
BitFury Builds Data Centers in Days
You are inventing many of these things because much of it has never been done before?
We put our souls into everything we do. Everything we design and build is custom built. We pay attention even to small details in each and every case. Sure we have never built such huge DC before. But with careful analysis and planning, we were able to build a 20 megawatt data center in weeks, and it did not cost us much.
Wow, we had heard it was fast but I did not realize it was in weeks.
We are working 24-7, but we also come up with some low-cost solutions while building. It’s not just the question of creating the best chip; it’s the question of creating the most efficient infrastructure, from chip level to data center level. In 2013, our focus was to create the best full custom design ASIC. Everything we build – from our chip to our data centers is built full-custom and in-house. Now we are implementing this design and leveraging this experience in the new generation of chips. Last year our focus was to establish a fast production and deployment process as well as to create the infrastructure to deploy our next generation chip as fast as possible. To create the super chip is one level of complexity, to deploy it properly in scale is a completely different challenge. It’s not easy to even get the power from the energy company in such amount in short time period. In one country, we discussed with an energy company our plans to build a new data center, and we asked how much time they need to deliver 20 megawatts and they said “we need 9 to 12 months.” Obviously we went with a different option.
As you can see, BitFury is changing more than just ASICs in the way they do things. They are working hard to be able to build out infrastructure and even immersion cooling as well. BitFury has recently purchased Allied Control – a top immersion cooling company based in Hong Kong. The purchase along with the company’s new super 28nm chip will mark a large shift again in the global hash rate as well as ASIC manufacturers’ race to make the most efficient chips.
What could you tell us about the new chip? We have heard how power efficient this is going to be.
We are currently deploying our new, energy efficient 28nm chip and building new data centers powered by immersion cooling technology. More information about it I will share later, after we have collected enough data. What we see now – efficiency of this new infrastructure is much better compared to the air cooled data centers.
Speaking about the lower BTC value causing mining to become unprofitable for many people and borderline for even larger farms. I know that must be difficult for you also. One of the things I’ve been researching, because we are talking about everything from smart contracts, smart escrow services without third parties, trusted services, lot of these things can be built on the Blockchain. You have all these companies that want to build on the Blockchain and use existing network hash rate. How will we get that, and what ideas do you have for being able to incentivize that for the miners as well?
Say you’re processing Bitcoin transactions and you’re processing counterparty whatever they’re doing, and you’re processing something else and with your machines at the same time, you should be making, you know, a little bit of income from Sidechains and things built on top of the Blockchain. Have you guys thought about that, how it should be best implemented through a combination of software and hardware, should it be separate pools so they could mine at the same time?
The Bitcoin Blockchain is the mother of all Blockchains. Sidechains will extend Bitcoin Blockchain. The main information in encrypted form will be stored in the Blockchain and the rest of the data could be stored on sidechains. The more sidechains are being developed the more we will benefit, because we directly benefit from the growth of the ecosystem. The more ecosystem grows, the more transactions occur and the more revenue we have. Regarding the price drop-it was a combination of different factors. But when the Tsunami is coming, it’s better to be on the top of the hill! We created our company to be prepared for such a situation. And it’s a good shakeout for the industry, because in 2013 and the first part of 2014, everything was very exciting and growing fast. Like bubbles coming and growing, but we also need to be a little conservative, and analyze the risks. And what if something will drop – you should be prepared to protect the downside in this case. The Bitcoin price volatility is very big, that’s why we are working with other market players to push the Bitcoin adoption.
BitFury Partners with BitGo and Other Major Companies After Record VC Funding
You have made partnerships with BitGo and other companies along with pushing adoption, this all being done to protect this investment. You are working to bring it to people in a way that they could use it. It’s a very big one, and these partnerships you make are aggressive and smart moves. Could you tell us more about them?
BitGo is a great company, and they provide a very good service for the industry. They are really protecting the assets of the companies. We are using BitGo service in our operations.
As I said before, we directly benefit from the ecosystem’s growth. The bigger the adoption, the more transactions occur and the more revenue we will have. I see it as a win-win situation. We are investing into infrastructure development and roll out of new generation chips, and other players are investing in marketing and attracting clients – together we are pushing the adoption.
The bigger we grow as a global, transparent company, the better it will be for the Bitcoin Blockchain and the ecosystem. This year we also plan to sell hashing contracts to our b2b partners and to move Blockchain transaction processing to consumer electronics.
It’s important to understand that we are not a Bitcoin mining company, we are a technology company. Of course, we have a lot of compute power to process Blockchain transactions. At the end of the day, we are securing the Bitcoin Blockchain and processing Blockchain transactions. That’s why I don’t like the word “mining”. But mining rewards are needed to create the infrastructure. The faster will be the adoption, the faster transaction processing will go up and fees from transaction processing will replace mining rewards.
And you guys are leading the way.
We are working hard to establish ourselves as a major player and to operate as a transparent company. We understand that transparency in this industry is very important, you cannot be successful otherwise.
That is one thing we did not quite touch on, when you were talking about how you were going public, because you raised so much venture capital a lot of people have questions as to why do an IPO now. As you just said though it’s about transparency. Do you have a rough idea when you are ready to go live with the IPO?
An IPO of a leading Bitcoin company like ourselves without a doubt would be milestone event for the industry and would benefit the entire industry. From a financing perspective, an IPO is one of many options available to us and we will consider all options. For legal reasons we cannot comment further on IPO plans and timing, etc.
Valery of BitFury and his team have worked hard to build more than just a transaction processing company. The steady influx of VC funding and strategic partnerships with BitGo and many other companies shows a diverse and solid business plan. Valery sees the Bitcoin Blockchain as much more than just the currency as many of us do. We look forward to seeing what BitFury has in the works, and that means much more than just ASICs. Thank you, Valery, for your time in doing this interview.
What do you think of BitFury and their moves in the industry? Let us know in the comments below!
Image Sources: BitFury and BitGo