Chain Reaction, an Israel-based semiconductor startup that develops blockchain and privacy chips, revealed today that it has raised $70 million in new funding to expand its engineering team and focus on the development of a new chip as its first one comes to market later this year.

The Series C round was led by Morgan Creek Digital, a venture capital firm that focuses on blockchain technology, AI and digital assets, and brings the total amount raised by the company to $115 million. Hanaco Ventures, Jerusalem Venture Partners, KCK Capital, Exor, Atreides Management and BlueRun Ventures also participated in the fundraise.

Cryptocurrencies such as bitcoin use complex computational algorithms to secure transactions stored on them using cryptography using “hashes,” which use large amounts of computing power and can require specialized hardware. These chips, called application-specific integrated circuits or ASICs, are often deployed in bitcoin mining hardware, which is used for securing the bitcoin blockchain and allows its operators to earn bitcoin rewards in the process.

Alon Webman, co-founder and chief executive of Chain Reaction, told Reuters that the company would use the new funds to fuel the mass production of its new blockchain chip Electrum, which is expected to come to market in the first quarter of this year.

“We fully expect Chain Reaction’s blockchain products will become the new industry standard in blockchain compute infrastructure, laying the foundation for all future sustainable blockchain technologies,” said Mark Yusko, managing partner of Morgan Creek Digital. “Blockchain is the key to securing democracy, decentralization, and freedom, but it is compute intensive.”

The blockchain chip sector isn’t Chain Reaction’s only ambition, however, and the company plans to develop another chip planned to launch by the end of 2024 focused on what Webman says will provide “fully homomorphic encryption” capability. It means that users will be able to operate on data passed through the chip while it’s still encrypted.

Webman said the new funds will help scale up the development and production of a chip designed for cloud data centers. The chip will enable privacy and encryption tech supporting Chain Reaction’s privacy-enhancing technology. By allowing data to be acted upon while it’s still encrypted, no private data is exposed to potential third parties that can be leaked or stolen.

“Today, if you have data (which) is encrypted into the cloud and in order to do any data operation or data analytics, do AI, you have to decrypt the data,” said Webman. “The moment the data is decrypted, it can be attacked by a malicious user to read it, to steal it or even to change it.“

In sensitive industries such as healthcare, finance and defense the movement and use of data is highly restricted. Webman explained that “enabling real-time compute on encrypted data is the holy grail of cloud computing” as a result. “Our technology will enable enterprise and government to modernize compute infrastructure by moving private data to the cloud,” he said.

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