A bitcoin mine near the Arctic Circle is to start using 16 nanometer chips to improve mining efficiency. KnCMiner said the technology would make mining cheaper and allow it to increase production.

The move from 20nm to 16nm reduces the die and transistor size, improving the power efficiency of the chip and cutting the cost of power-intensive mining. The new technology should protect bitcoin mines against fluctuations in the value of the cryptocurrency and the challenge of mining bitcoin.

The Stockholm-based firm has also secured $15m (10m) in Series B funding led by Accel Partners. It said the extra money would allow it to expand and future-proof its mining operation.

KnCMiner CEO Sam Cole said the use of more advanced proprietary hardware was allowing bitcoin mines to cut costs. He also dismissed concerns that it was becoming too expensive to mine bitcoin.

"We do not think the cost is prohibitively high, if we did we'd turn our farms off. We're also developing our own hardware in-house, using several proprietary techniques to achieve higher efficiency."

He said that at the current rate of exchange (158 is equal to one bitcoin at the time of writing) there would be "no problems". Cole explained that KnCMiner was also able save money by using natural cooling as its bitcoin mines are all based either in or near the Arctic Circle.

KnCMiner worked with Taiwanese component manufacturer Alchip to create its new 16nm chip, which has been specially designed for bitcoin mining. Bitcoin mines around the world are investing heavily in new chip technology. In September 2014 Texan firm CoinTerra also announced the switch to 16nm chips, which are expected to start work in the coming months.

KnCMiner's new chip is the first of its kind to enter production. The company has generated over $100m (66m) in revenue since it launched in 2013 and plans to invest a further $150m over the next 18 months to improve and expand its services.

Cole said that KNCMiner's proprietary mining system would speed up the hashing process while reducing power consumption. He added that focusing on the bitcoin algorithm was also keeping his company ahead of its competitors.

"People tend to overestimate the impact of new technology in the short-term, but greatly underestimate the impact in the longer term. We're in this for the long-term, believing that Bitcoin technology will make steady inroads and increase in usefulness as well as in value over many, many years to come."

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Arctic bitcoin mine switches to 16nm chip to boost efficiency