Chain of block erupters used for Bitcoin mining is pictured. (Reuters)

Chip makers who assist in designing hardware for "Bitcoin mining" are benefiting from the increased popularity and use of the virtual currency.

Reuters reported that Bitcoin miners are spending thousands of dollars in securing hardware designed to help operate and maintain the Bitcoin network. Some technology professionals are targeting the new market in "souped-up computers and specialised chips."

CoinTerra, a company that designs hardware for bitcoin miners, believes that spending on new Bitcoin mining chips could easily generate $100m (£63m, €74m) a year for the next three years, assuming no change in prices.

Therefore it is a lucrative market for small-scale chip designers.

Bitpay, a company that lets businesses accept payments in Bitcoin, is spending more than $1m on a new bitcoin mining hardware sold by Butterfly Labs.

What is Bitcoin Mining?

Mining is the process of adding transaction records to Bitcoin's public ledger of past transactions. This process is very difficult as it involves solving complex cryptographic algorithms.

Certain technology companies are selling hardware making use of specialised computer chips to do that work. The hardware is also used to unlock or introduce new bitcoins into the system.

The complex technology is replacing the role of a regulator as in the case of traditional currencies, where a central bank decides how much money to print based on factors including inflation rate.

Rising Popularity

The first ever bitcoin ATM in the world was launched earlier in a coffee shop in Vancouver, Canada, as the virtual money is getting popular among more businesses, consumers and investors.

The peer-to-peer virtual currency, was launched in 2008 and is traded within a global network of computers. They can be transferred without going through banks or clearing houses, reducing fees involved in the services significantly.

The value of the virtual currency peaked at $266 per coin in April this year from $13 in January, as more and more businesses and consumers used the currency to buy and sell products and services. Meanwhile, investors used the coin as a gold equivalent to hedge against currency fluctuations.

The currency is not backed by any government or companies.

Nevertheless, critics say that bitcoins could be used for drug transactions, money-laundering and other illegal activities due to its near anonymity.

Earlier in October, US regulators shut down an online marketplace using bitcoins named Silk Road on charges of buying and selling illegal drugs and regulators seized $3.6m worth of bitcoins.