German virtual currency start-up Bitcoin Brothers says it has created a chip that could revolutionize Bitcoin mining at scale.

The proprietary multi-gate ASIC enables the company to build ‘supercomputers’ capable of producing six Petahash per second (a measure of the ability to process mathematical calculations) each. This hardware will be hosted in an Icelandic data center, available on a pay-as-you-go basis early next year.

“With the deployment of a large number of our supercomputers, we offer a true 2nd-generation alternative to stand-alone brick box mining hardware,” said Maik Welle, CEO of Bitcoin Brothers.

“Miners are tired of the risk pre-paying, owning, and operating slow mega- and terahash devices with a limited use-live span, which they may not even receive in time - or at all - after pre-paying for them, or find them out of specifications when in operation.”

Crunching numbers
Bitcoins, or BTC, make up a decentralised virtual currency based on an open-source, peer-to-peer Internet protocol. First introduced in 2009 by a developer known only as ‘Satoshi Nakamoto’, they were traditionally used among people interested in keeping their transactions secret. Recently, a number of major online businesses have started accepting BTC as a form of payment.

Bitcoin is not tied to any real money, but traded on various electronic exchanges to establish its price. New coins can only be produced through an intensive cryptography process dubbed “mining”.

In the early days of Bitcoin, the currency could be mined using standard desktop CPUs. As the difficulty of mathematical calculations increased, miners had to find more powerful alternatives, switching first to GPUs, and then specialized ASIC chips.

Today, whole data centers are dedicated to Bitcoin mining operations, like the 10MW KnC Miner facility in Sweden, or the 22,000 sq ft CryptoMine in Montreal. This nascent market is served by a number of hardware vendors, including HashCoins, CoinTerra and Rockminer, among others.

The Berlin-based Bitcoin Brothers is one of at least three Bitcoin ventures operating under this name. Founded in 2013 by brothers Maik and Mark Welle, the start-up offers an industrial, cloud-based Bitcoin mining service, with customers retaining full logical control of their operation and choice of pool.

CEO Maik believes that disappointment in the first generation of mining tools has depressed the price of Bitcoin. He says the cloud-based approach eliminates the risk related to buying and operating mining hardware, a constant headache for virtual currency enthusiasts.

To better scale its operation, Bitcoin Brothers has designed a customized FinFET ASIC chip on the 16nm process. A whopping 256,000 of these can be combined into a single ‘supercomputer’ with a processing power of six Petahash (equal to 6,000 Terahash or 6,000,000 Gigahash).

Such systems could theoretically merge into a ‘Meta-MSEM’ capable of running 1.5 Exahash worth of operations from a single console.

According to CoinTelegraph, Bitcoin Brothers will run its ASICs from a data center in Iceland, where the energy is cheap. They are expected to come online in the first quarter of 2015.

Bitcoin Brothers expects the market for Bitcoin mining services to grow by US$2 billion in the next two years. It predicts that the arrival of more efficient systems will temporarily disrupt mining operations around the world and rapidly increase the ‘difficulty’ of producing Bitcoin.

This could also have a knock-on effect on the price of virtual currencies – not just Bitcoin, but its competitors like Litecoin or Dogecoin.