REG-Quantum Blockchain Technologies Plc: Update on Bitcoin R&D

Quantum Blockchain TechnologiesAnnouncement

15/11/2022 07:15

15 November 2022

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

R&D Update

The board of Quantum Blockchain Technologies (AIM: QBT) is pleased to update
the market with the latest advances by its research and development
(“R&D”) team, which is working at developing 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 within the SHA-256 algorithm mark progress towards
potential patent filing
* Investigating potential of third-party licensing strategy to exploit early
revenues
* Appointment of Dr. Rita Pizzi as Chief Research Officer
Machine Learning and AI

The first results obtained by two of the Company's three Machine Learning (ML)
groups in respect of 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"), relate to a prototype proprietary software
accelerator for BTC mining, which is now in a position to undergo intensive
testing.

The computational requirements to validate both Method A and Method B by
testing at the current level of difficulty of BTC extraction 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 market-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 achieved 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 could statistically
still increase mining speeds by up to 30%, whilst not impacting the miner’s
power consumption.

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

To ensure the success of this approach, the Company is also working to modify
the control software of the miner operating system.

Quantum Computing

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

In the meantime, QBT is continuing to refine the quantum algorithm it has
developed.

SHA-256Optimisation

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

FPGA/ASIC

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

At the same time, several performance assessments of different architectures
which could be included in the ASIC design implementation of Method “B”
have now been preliminarily evaluated, with the outcome expected to prove the
efficiency of this method of hardware implementation.

IT infrastructure

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

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

Chief Research Officer

QBT has recently appointed Dr. Rita Pizzi, as its Chief Research Officer. Dr.
Pizzi is a former senior researcher and professor of Artificial Intelligence
and Data Analysis at the Department of Computer Science of 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 been working 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 2021 R&D costs. A similar
application will be filed for 2022 R&D costs, at the beginning of 2023.

Francesco Gardin, CEO and Executive Chairman of QBT, commented: “Whilst the
Company is still considering direct mining, a more immediate and less
capital-intensive approach is to exploit mining revenue with an existing BTC
miner, who would be allowed, under licence, to adopt the Company's Method
“B” control software. The Company is currently exploring 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 huge,
searching and analysing regularities in data spaces of large orders of
magnitude. Verification testing on hypotheses of discovered regularities is
extremely demanding, hence the disparity of the timing of results confirmation
between a discovery and its confirmation.

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

For further information please contact:

Quantum Blockchain Technologies Plc
Francesco Gardin, CEO and Executive Chairman  +39 335 296573

SP Angel Corporate Finance (Nominated Adviser & 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 which has recently
realigned its strategic focus to technology related investments, with special
regard to Quantum Computing, Blockchain, Cryptocurrencies and AI sectors. The
Company has commenced an aggressive R&D and investment programme in the
dynamic world of Blockchain Technology, which includes cryptocurrency mining
and other advanced blockchain applications.

Glossary of Terms

ASIC: An Application-Specific Integrated Circuit is an integrated circuit chip
customized for a particular use, rather than intended for general-purpose use.
ASIC chips are typically fabricated using metal-oxide-semiconductor (MOS)
technology, 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 manufacturing – hence the term
"field-programmable". The FPGA configuration is generally 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 rapid 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, referring to the cryptographic hash
function that outputs a 256 bits long value.

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



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