Quantum Blockchain: investors buy into new Bitcoin mining technology

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Quantum Blockchain Technologies’ (LON:QBT) latest UK patent application could be a major breakthrough in Bitcoin mining says the technology investment company CEO, Francesco Gardin. No wonder then that shares spiked 35% to 1.60 GBX on the news at the end of last month, before settling back to around 1.45 GBX.

But last week, with the price of Bitcoin escalating and ProShares’ announcing the launch of the first Bitcoin ETF (ProShares Bitcoin Strategy ETF – BITO), Quantum Blockchain jumped again, this time to 2.30 GBX. One reason for the increased interest from investors could be that for UK investors looking to invest in Bitcoin via a regulated entity, Quantum is the closest many of them can get to gaining exposure to the asset.

Looking for the sweet spot

Quantum Blockchain is essentially a support stock in the crypto world. It describes itself as an investment company focusing on the technology sector, although like Bitcoin, it has had a number of its own iterations. Previously operating under the name, Clear Leisure, it started life investing in leisure and Italian real estate.

As of 2020, its main focus is investing in quantum computing, blockchain, cryptocurrencies and AI. Its current investments include ForCrowd, an Italian crowdfunding platform, GeoSim, a 3D special visualisation solution and PBV, an Italian legal services data company as well as some legacy assets.

Recently Quantum Blockchain has launched a Bitcoin mining R&D programme. Funded by £1.7 million in two equity raisings this year, the primary goal of the R&D programme is to develop Bitcoin mining tools and techniques which will significantly outperform existing practices as well as creating energy saving techniques.

An ambitious project but the Board believes that given the radically advanced technologies and methodologies being used, the goal is achievable. Quantum’s R&D intellectual property results are protected by filed patents, which they say will represent a continuously growing asset for the company.

Increased efficiency in Bitcoin mining process

Quantum’s first and only patent application so far, the ASIC UltraBoost, (ASICs being the components used for Bitcoin mining) aims to eliminate redundant computation of a key part of the Bitcoin mining algorithm, resulting in a faster and more efficient mining process. It builds on all other existing optimisations in the market, including ASIC Boost.

More accurate results, including an overall percentage improvement will be available when ASIC UltraBoost is implemented in hardware but the company believes that their algorithm should increase efficiency by 7%, with users able to take advantage of this by either increasing mining speed or saving energy. In both cases, for large mining facilities this optimisation corresponds to significant mining revenues, or saved energy bills, potentially leading to increased profit for Bitcoin miners.

Energy saving for cryptocurrencies is becoming more of a priority and according to the Bitcoin Energy Consumption Index, Bitcoin’s annual electronic waste generation (30.7 metric kilotons or 272g per transaction on average) is comparable to the small IT equipment waste produced by a country such as the Netherlands and overall Bitcoin consumes more energy than Poland.

Whether this is the real deal or not – note that investors are still buying with the share price up again to 3.05 GBX at time of writing – it looks as if Quantum Blockchain’s focus on energy efficiency is timely. Once the patent is approved which the company says will be in a few months, Quantum should hopefully be in a position to take advantage of opportunities that may come their way.

Latest results

The group reported a total comprehensive loss for the period to 30 June 2021 of €1.1 million (as of 30 June 2020: loss €363,000). The operating loss for the period was €714,000 (30 June 2020: operating loss €228,000). At 30 June 2021, the group improved the net liabilities to €1.4 million, compared to negative €1.9 million at 30 June 2020. The net current assets of the group also improved during the period under review, to €6.1 million, compared to €2.1 million at 30 June 2020.

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