Quantum Blockchain Technologies Plc – Update on Bitcoin R&D

15 November 2022

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

R&D Update

The Board of Directors of Quantum Blockchain Technologies (AIM: QBT) is pleased to update the market with the latest advances from its research and development (“R&D”) team, which is working to develop proprietary methods to create cheaper, faster and more energy efficient Bitcoin (” BTC”) miners.

Highlights

• Preliminary results of machine learning method “B” indicating 30% improvement over commercially available ASIC chip-based miners,

• Regularities identified in the SHA-256 algorithm mark progress toward potential patent filing

• Explores the potential of third-party licensing strategy to leverage early revenue

• Appointment of Dr. Rita Pizzi as head of research

Machine learning and AI

The initial results achieved by two of the company’s three machine learning (ML) groups with respect to the development of the company’s first two knowledge-based algorithms (described in the company’s RNS dated 23 May 2022 as method “A” and method “B”), applies to a prototype proprietary software accelerator for BTC mining, which is now able to undergo intensive testing.

The computational requirements to validate both Method A and Method B by testing on the current BTC mining difficulty are very challenging. The company has not ruled out the use of a supercomputer for such tests, but a more pragmatic approach in the short term is based on the use of existing commercially available ASIC miners. The company has already acquired a number of ASIC miners with the intention that the control software on the ASIC miners will be replaced by QBT’s own proprietary software, based on Method B.

Additional miners will be acquired to test the performance of both Method A and Method B at the current mining difficulty.

Interesting preliminary laboratory results have been obtained to date with Method B, which is based on two different combined ML methods, indicating a statistical improvement of up to 30% over existing commercially available ASIC chip-based BTC miners. That is, regardless of the performance of the ASIC chip used by the miner, the company’s proprietary software can statistically still increase the mining speed by up to 30%, without affecting the miner’s power consumption.

The story continues

Provided that the performance of the method “A” and/or method “B” algorithms is confirmed, the aim is to run them on existing commercial miners to improve their performance, as mentioned above, by replacing the original control software with QBT’s own control software. Based on current test data, we expect to see an immediate improvement in the overall performance of the mining rig, without the need for additional hardware investment.

To ensure the success of this approach, the company is also working on modifying the control software of the mining system.

Quantum Computing

While the company believes that its approach to Quantum Computing has great potential, it also believes that it will be a few years before sufficiently powerful quantum computers become available for the company to take full advantage of its approach.

Meanwhile, QBT continues to refine the quantum algorithm it has developed.

SHA-256Optimization

The company continues to work closely with its cryptography expert, who has now consulted for QBT for 18 months. Our recent findings for local improvements to the SHA-256 computation are currently being aggregated to reach a critical mass, which (following the 23 May 2022 RNS) may have the potential to justify filing a new patent application specifically relating to a proprietary ASIC implementation.

FPGA/ASIC

While we wait for the consolidated results from both the cryptography expert and ML R&D teams to be confirmed, the FPGA/ASIC Input/Output interface and intra-ASIC communication protocols are being developed.

At the same time, several performance assessments of different architectures that can be included in the ASIC design implementation of method “B” have now been preliminarily evaluated, with the result expected to prove the effectiveness of this method of hardware implementation.

IT infrastructure

Over the past few months, the IT R&D platform has improved, reaching nearly 100,000 GPU cores. Also, a first set of 100TH/s ASIC miners have been procured, where the ML Method A and Method B mining software will soon be installed.

As mentioned above, more ASIC miners are likely to be acquired shortly to speed up testing of Method “A” and Method “B”.

Head of Research

QBT has recently appointed Dr. Rita Pizzi, as its head of research. Dr. Pizzi is a former senior researcher and professor in artificial intelligence and data analysis at the Department of Informatics in Milan University (http://pizzi.di.unimi.it/CV.html). Dr. Pizzi will be responsible for coordinating several research teams, while working in close operational contact with Francesco Gardin, QBT’s chairman and CEO. Dr. Pizzi will not be joining the board at this time.

Dr. Pizzi has worked with the company for approximately 18 months.

R&D tax Relief

The company, as part of HMRC’s Research and Development Tax Relief scheme, has received £109,000, net of adviser commissions and fees, from HMRC, as a contribution towards the company’s R&D costs for 2021. A similar application will be submitted for 2022 R&D costs, at the beginning of 2023.

Francesco Gardinmanaging director and executive chairman of QBT, commented: “WhileSt The company is still considering direct mining, a more immediate and less capital-intensive approach is to leverage mining revenue with an existing BTC miner, who under license will be allowed to adopt the company’s method “B“ control software. The company is currently to explore this route.

“We are engaged in an extremely demanding R&D effort to deliver competitive results. The amount of information processed to achieve these goals is enormous, searching and analyzing regularities in data spaces of large orders of magnitude. Verification testing of hypotheses about discovered regularities is extremely demanding, hence the difference in the timing of result confirmation between a finding and its confirmation.

“I am therefore very pleased that, despite the long verification time this approach takes, such regularities and correlations have been identified. Moreover, the ability to control commercial ASIC mining chips with our Machine Learning methods can provide a tactical shortcut to generate revenue .This will allow us to continue with our proprietary ASIC chip design and work on our Quantum Computing algorithm, pending the availability of quantum ccomputers with enough qubits to run our software”.

For further information please contact:

Quantum Blockchain Technologies Plc
Francesco GardinCEO and Executive Chairman +39 335 296573

SP Angel Corporate Finance (Nominated advisor and broker)
Jeff Keating +44 (0)20 3470 0470
Kasia Brzozowska

Leander (Financial PR)
Christian Taylor-Wilkinson +44 (0) 7795 168 157

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.

Dictionary

ASIC: An application-specific integrated circuit is an integrated circuit chip adapted for a specific use, rather than intended for general use. ASIC chips are typically manufactured using metal-oxide-semiconductor (MOS) technology, such as MOS integrated circuit chips.

FPGA: A field programmable gate array is an integrated circuit designed to be configured by a customer or a designer after production – hence the term “field programmable”. The FPGA configuration is typically specified using a hardware description language (HDL), similar to that used for an application-specific integrated circuit (ASIC).

GPU: A graphics processing unit (GPU) is a computer chip that renders graphics and images by performing fast mathematical calculations.

Hash: A hash is a mathematical function that converts an input of arbitrary length into an encrypted output of a fixed length.

SHA-256: Secure Hashing Algorithm (SHA)-256 is the hash function and mining algorithm of the Bitcoin protocol, and refers to the cryptographic hash function that outputs a 256-bit long value.

Qubit: A classical bit can be in two states, it can either be zero or it can be one. However, a quantum bit or quantum bit can be in a kind of zero state and in a state at the same time. This situation is called a superposition of (quantum) states. Qubits have some very special properties: for example, it is not possible to make copies of qubits