AIM-listed Quantum Blockchain Technologies [LON: QBT], an investor in blockchain-related technologies such as quantum computing, blockchain, cryptocurrencies and AI, has announced the appointment of a UK-based international cryptography expert whose specialism is cryptocurrency mining blockchain optimisations.
The identity of the ‘expert’ is not known, as according to Quantum they have requested anonymity, but as part of the one-year service agreement, the consultant has been awarded share options of over 10 million new ordinary shares of 0.25 pence each in the company, at an exercise price of 5p each, which can be exercised between 15 February 2022 and 15 August 2022.
The consultant will push Quantum’s R&D effort, with a focus on developing advanced proprietary techniques for Bitcoin mining. CEO Francesco Gardin believes there are ‘tangible and disruptive optimisations’ that could result in faster processing and energy saving, and he intends to apply for patents over any intellectual property generated from the process. Gardin says already existing optimisations are expected to be made available within the next three months, with more to come in the course of the next 12 months.
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Quantum’s focus on energy efficiency is timely. The sector’s extremely high level of energy consumption has long been seen as unsustainable, particularly against a backdrop of G7 governments pushing for zero carbon footprints. But the issue was brought sharply into focus thanks to a tweet from Elon Musk on 12 May, who suspended Tesla vehicle purchases with Bitcoin and declared he was “looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction”. In the following week, shares in Bitcoin tumbled some 40% from a peak of $63,500.
Cryptocurreny energy consumption is now a priority
Further turbulence for the sector may be just around the corner, now that China (where it is claimed 65% of Bitcoin mining is conducted because electricity there is cheap) in May officially declared it will “combat mining and trading of Bitcoin”. It is too soon to know what policy action will follow from this statement, but for the sector the need to reduce energy consumption has suddenly become a priority.
No surprise, then, that Quantum and others in the sector are looking at more sustainable and energy efficient solutions. For example, London-listed Argo Blockchain (LON: ARB L), has just signed a deal with DMG Blockchain Solutions to launch Terra Pool, a Bitcoin mining pool powered by green energy, has bought two data centres in Canada mostly powered by hydroelectricity and has joined the new Bitcoin Mining Council, which promotes energy transparency and sustainable mining practices, all in the space of a month.
In February, Quantum (under its previous incarnation Clear Leisure Plc) raised £1,680,000 in two placings, providing working capital to accelerate the development of its crypto currency plans. These include: entering into cloud mining contracts with existing mining pool operators; financing the setup of a Bitcoin mining operation in Italy; sourcing wind farm and hydroelectric energy; building one or more replicas of its existing Bitcoin infrastructure currently located in Serbia; financing the development of innovative hardware solutions for crypto currency mining; and making a direct move in the segment of new crypto validators.
What else does Quantum Blockchain own?
Quantum’s other assets are shareholdings in a number of investments from the previous strategy, primarily in distressed Italian real estate companies, from which Gardin aims to extract value, much like a vulture fund. Gardin is currently engaged in legal proceedings with two investments, with a combined claim of €12m in compensation for mismanagement and has a legal claim against another €20m on another. The outcomes depend on the slow-moving Italian legal system and, if successful, Gardin is unlikely to realise any of these assets before next year at the earliest.
Quantum’s share price had an exciting first quarter, when the share price peaked at 375p in the first week of March, but since then the trend has been downward. The year-to-date and 12-month performances of 420% and 550% respectively look impressive, but only because the shares had been flatlining at around 30p for the best part of two years.
Gardin has a new company and new website but, with his background in Italian real estate, he is going to need his ‘international crypto expert’ to deliver on the promise of his venture in what is an emerging but highly speculative asset class.