Quantum Blockchain Technologies Plc – Bitcoin Mining Update

10 May 2023

Quantum Blockchain Technologies Plc
(“QBT” or the “Company”)

Significant improvements in bitcoin mining success rate and energy usage

driven by advances in proprietary software

Quantum Blockchain Technologies plc (AIM: QBT) has now completed a key testing phase of its proprietary bitcoin mining search algorithm and is pleased to announce satisfactory results. The test results show that QBT’s algorithm, known as Method B, has theoretically increased the rate of successful bitcoin mining by 2.6 times compared to standard bitcoin mining industry practices widely used during the same time period.

The research results and the statistical methodology used to validate them give the company confidence that the research approach used has uniquely identified some characteristics of the SHA-256 domain that other research teams have not discovered.

The company’s algorithm also theoretically reduced power consumption by 4.3%. To illustrate this, a mining farm – with 100,000 miners⁽¹⁾ – would save up for 4.5 million dollars per year using method B and only considering the effect of the reduced energy consumption.

Given the cost and availability of current bitcoin mining equipment, ASIC chipsets and mining strategies, these results are based on a bitcoin mining difficulty⁽²⁾ lower than the level of difficulty in the market now. However, the research results and the statistical methodology used to achieve them give the company confidence that its algorithms should be scalable for commercial use. This will enable an incremental improvement in the probability of successfully mining bitcoin using current bitcoin mining standards in mining equipment, ASIC chipsets and mining strategies similar to what is in commercial use globally.

Until now, the bitcoin mining industry has mainly tried to achieve improved mining efficiency by optimizing the hardware and its integrated firmware. The company’s R&D team of senior researchers from leading European universities has taken a different approach. It focuses its intensive R&D efforts on identifying and exploiting certain key predictive properties in the operation of bitcoin’s SHA-256 cryptographic hash functions originally designed by the United States National Security Agency and first published in 2001.

The story continues

Assuming continued successful progress with testing, the company believes that its proprietary software has the potential to significantly improve the financial performance of bitcoin mining when implemented at full scale. It is currently expected by the board that QBT’s algorithm can improve the probability of mining success while reducing the energy costs of the process.

Francesco GardinChairman and CEO of Quantum Blockchain Technologies summarizes the company’s recent experimental success, “After nearly two years of research by our machine learning AI teams, we believe we have conceptually achieved what appears to be a real breakthrough in the bitcoin mining industry. Under rigorous testing conditions, our algorithms achieve a marked increase in the rate of successful mining bitcoin, while reducing power consumption.

“We will now accelerate the next phase of testing so that we can confirm our current results at a difficulty level as close as possible to the conditions currently prevailing in the bitcoin mining industry. In addition, we intend to begin the development of the industrial commercialization phase of our bitcoin -mining method B, including deployment on mining rigs of the type currently widely used by major bitcoin mining companies.

“The company’s R&D work is both designed and executed by a team of senior researchers, including researchers who have previously worked as tenured professors at leading European universities.

“In parallel, the company continues its R&D efforts to design and manufacture a next-generation bitcoin mining ASIC, as well as use quantum computing hardware and software to similarly improve bitcoin mining success rates.”

(1) Assumptions are nominal 100 Th/s hash power, 3050W energy consumption per miner and electricity cost of 0.04 $/kWh.

(2) Each blockchain has a mining process where miners can generate new coins. An algorithm regulates how difficult it is for the miners to mine a particular block. This difficulty is represented by a number known as mining difficulty. The more the hash rate, the more difficult it will be to find valid hashes for a block. Currently, it takes about 10 minutes to mine a Bitcoin block. After every 2016 blocks are mined, Bitcoin adjusts the mining difficulty to keep the total block time at 10 minutes. The difficulty increases based on the number of miners and their combined hash rate. In 2009 the difficulty level started from 1, today it is more than 48T.

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About Quantum Blockchain Technologies Plc

QBT (AIM: QBT) is an AIM-listed investment company that has recently realigned its strategic focus to technology-related investments, with particular regard to the quantum computing, blockchain, cryptocurrencies and AI sectors. The company has embarked on an aggressive R&D and investment program in the dynamic world of Blockchain Technology, which includes cryptocurrency mining and other advanced blockchain applications.