Bitcoin startup 21 Inc. to produce embeddable mining chip

San Francisco-based Bitcoin startup 21 Inc. unveiled this week plans to market a line of chips to embed in consumer gadgets, allowing smartphones and other Internet-connected devices to continuously earn Bitcoin through mining, reported the Wall Street Journal.

In a blog post revealing the company’s product plan, co-founder Balaji Srinivasan outlined several use cases for the embeddable mining chip, which 21 calls a BitShare. One example is Bitcoin-subsidized devices for the developing world.

“We believe the most significant long-term application of bitcoin may be reducing the upfront cost of internet-connected devices to make them more accessible for the developing world,” wrote Srinivasan.

Attributing the success of the iPhone in part to the carrier subsidy, Srinivasan wrote that “with embedded bitcoin mining we can in theory extend that model to any internet-enabled device, turning a lump sum upfront cost into a potentially more manageable cost of power over time.”

Srinivasan also announced in the blog post that he will succeed Matthew Pauker as chief executive of 21 Inc., which announced in March that it had raised $116 million in venture funding. Pauker is slated to take on the role of chairman, confirmed a spokesman to the Wall Street Journal. The paper also reported that the company’s board will now include Ben Horowitz, the founding partner at Andreessen Horowitz, where Srinivasan is also a partner.

While the company will in many cases derive Bitcoin for its own account, its main revenue stream will come from sales of the BitShare, said a spokeswoman to the Wall Street Journal. Aside from those chip sales, 21 Inc. expects to split the proceeds of mining with the device owner, depending on “different form factors” relating to myriad incentive designs for device sales and contracts.

Just as “the iPhone’s subsidy model allowed a reduced upfront price point, allowing millions of people…to get started with a smartphone without a down-payment…we believe the 21 BitShare chip will enable a new generation of bitcoin-subsidized devices to help get the next 1 billion online,” said the spokeswoman.