HashRabbit, a startup that supplies enterprise-focused software to facilitate the management and security of bitcoin miners, has raised $500,000.
The funding comes from Tim Draper's Draper Associates along with VegasTechFund, an investment firm run by Zappos founder Tony Hsieh. Alongside the funding announcement, HashRabbit is making its software suite available to all bitcoin miners.
The company also has announced a partnership with mining hardware manufacturer Spondoolies-Tech, whose gear is compatible with HashRabbit's management software.
Chris Shepherd, co-founder and CEO of HashRabbit, told CoinDesk:
"We make software for bitcoin miners. What that means is we are essentially the firmware that actually runs on the bitcoin miner itself."
Benefits of experience
Shepherd explained the idea for HashRabbit came from running his own mining rig in a Las Vegas garage during the winter of 2013. During this time, Shepherd kept having problems keeping his mining equipment operational, which resulted in lost revenue opportunities.
"Every minute, every second this thing is not hashing, not getting credit, you're losing money."
To figure out how to better manage his mining rig, Shepherd recruited his roommate, Gabe Evans, a developer and sometimes white-hat hacker.
Evans realized the code that was being run on most mining gear at that time was not terribly good. Eventually, he became the technical co-founder of HashRabbit.
A product user experience designer, Melissa Volkmann, who advocates for consensus on the bitcoin symbol, currently rounds out the team.
With an early product prototype of its mining management software, HashRabbit became part of 'Tribe 4' at Boost VC, the bitcoin startup accelerator.
Fixing security flaws
During its time at Boost's San Mateo, California, incubator, the company discovered that security was a huge issue in the bitcoin mining market. The team found several flaws that existed in many bitcoin miners on the market that critically needed to be fixed.
However, they also discovered there was no easy way to patch a miner, even when a solution to a flaw was found. That's when HashRabbit realized its existing management software would be able to help send updates when a security patch was required.
"We realized that firmware is the problem, and we needed to make a better system that allows for updates when zero days come out."
By working directly with hardware manufacturers on security issues, HashRabbit has gained credibility with companies such as Israel-based mining manufacturer Spondoolies-Tech.
"[Spondoolies-Tech] is focused on hardware, and we can focus on the software and make sure it is consistently secure, fast and easily updated," Shepherd noted.
Shepherd indicated that HashRabbit is also working with other hardware manufacturers, but could not provide details at this stage.
The enterprise mining era
The dawn of ASICs (application-specific integrated circuits) in 2013 ushered in a new marketplace for consumers to purchase bitcoin miners. However, the industry has increasingly shifted from small home-based set-ups to serious enterprise operations based in the datacenter.
This is beneficial for HashRabbit, as many of these mining operations are labor-intensive – something the startup has a solution for with its product.
"There are a lot of mining operations right now that have a lot of manpower, using a lot of people. For example, when a mining rig goes down or overheats, they have someone go and manually fix it."
With HashRabbit's software, not only can miners expedite the process of making sure firmware is updated, it can also enable operators to power cycle and control each unit from one source.
Going forward, the company hinted it may expand its product to enable more advanced cloud mining capabilities.
Images via HashRabbit