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Could Fabric’s computer chips revolutionize cryptography? The company just got a $50 million order for a product that doesn’t exist yet

A woman measures various Bitcoins with measuring tape.
Fabric Cryptography is just one of a rush of startups raising funds to experiment with zero-knowledge proofs.
Illustration by Fortune

Computer chips are not one-size-fits-all. There are custom designs for satellites, Bitcoin miners, and even A.I algorithms.

Michael Gao, who started investing in Bitcoin when he was just 15 years old, wants to build a computer chip for an area of computing that has yet to become mainstream: zero-knowledge proofs, a buzzy cryptographic technique popular in the world of Web3, as well as other advanced cryptographic algorithms.

On Tuesday, his startup, Fabric Cryptography, announced that it had raised $6 million to create what Gao calls a VPU, or a verifiable processing unit. Metaplanet led the pre-seed funding round. Other participants included the Nil Foundation, Inflection, Novawulf, and Jasper Lau of Era.

Gao, cofounder and CEO, declined to provide his company’s valuation. But he did say Fabric has already received a $50 million order for the chip it’s designing—one that currently doesn’t exist. “The design is—I would say it’s about halfway,” Gao told Fortune, adding that “we already have enough evidence” the chip will deliver strong performance.  

Fortune saw the $50 million purchase order under the stipulation that it could only report the dollar value of the order, not the buyer, disbursement schedule, or other details of the contract. “We think of this purchase order as actually the starting gun for the entire zero-knowledge proof hardware industry,” Gao said.

He also told Fortune that Fabric, in addition to the $50 million order, has signed letters of intent worth about $100 million from potential buyers.

“Cryptography is a very software-centric ecosystem, so most teams in the space underestimate the width and depth of expertise required to design, manufacture, and deliver high-performing chips,” Jonatan Luther-Bergquist, an investor at Inflection, said in a statement, emphasizing that he believes Fabric can succeed where others have not.

The firm’s fundraise and purchase order are part of a larger wave of crypto companies raising serious cash to bring zero-knowledge proofs, once only the realm of academic theory, beyond research papers. Their capital injection follows a $40 million round for RISC Zero, which is building a platform to let developers easily generate zero-knowledge proofs for most types of computations.

Gao, 27, has been in crypto for more than a decade. After he bought Bitcoin as a teenager, he invested his crypto winnings in a company that planned to design a computer chip specifically optimized for Bitcoin mining. “The fact that you could invest purely based on trust over an internet forum as a 16-year-old into a Chinese company,” he told Fortune, “it was like a new paradigm.”

Since then, the college dropout (he went to MIT for a year) has started two separate companies. His most recent, Luminous Computing, raised $115 million in venture capital, according to Crunchbase, to build an A.I. supercomputer.

Gao set off to start off Fabric, which already has approximately 30 full-time employees, because he thinks that his “chip is going to accelerate the entire domain of cryptography the same way that the GPU accelerated not just video games, not just scientific computing, but eventually A.I.”

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