QBT shares are spiking with the volatility of a newly created altcoin. The stock may be an opportunity.
Quantum Blockchain Technologies (LON: QBT) shares combine the risk of the AIM market with the risk of cryptocurrency-based investments, to create an investment case that contradictorily— at the face of it — seems apparently not too risky by small cap standards.
The stock remains extremely volatile; shooting up from 0.95p to 3.00p last month, falling to 1.51p at the end of October, recovering to 2.75p on 9 November, and then finally correcting to 2.26p today.
Perhaps the first factor to note is that this level of volatility usually means two things: traders are looking to profit from the violent swings, thus exacerbating them further, and further that the market cannot currently accurately price the value of the company.
This leaves a potential opportunity — though only for those investors with the appetite for risk.
Let’s dive in.
Quantum Blockchain Technologies: what does it do?
QBT is working on an ‘aggressive R&D and investments programme’ within the blockchain technology space. Crucially, this includes both cryptocurrency mining, but also other blockchain applications — in other words, not all eggs are in the crypto basket.
While Bitcoin (the crypto bellwether) may have substantially more than doubled over the past year to circa $37,000, it’s worth remembering that the crypto collapsed during the era of tightening monetary policy from highs of over $64,000 to less than $17,000 — and giant exchanges like FTX and Celsius also came crashing down.
Then there’s the political atmosphere to consider; US-based lawsuits by the SEC against XRP may have ended in a win for the developer, but the wider global community seems to be coming down on the side of developing state-backed crypto using blockchain tech in the form of Central Bank Digital Currencies.
This would create several changes:
- this ‘money’ would be created at source by central banks rather than at retail operations
- it would be completely traceable at all times
- making the effects of monetary policy much easier to track and potentially AI-enabled but at the sacrifice of privacy
- these CBDCs would be in direct competition with he likes of Bitcoin, Ethereum etc
Of course, many might liken Bitcoin to digital gold, with it able to co-exist with CBDCs — but this is a question for another day. The point is that individual cryptocurrencies — even the mainstream ones — face uncertain futures.
But blockchain technology, which underpins their functions, isn’t going anywhere. And QBT is focusing on cryptography — using quantum computing and AI to develop disruptive blockchain tech — both at an R&D level, but also through investments in start-ups with promising assets in development.
On 20 October at 1.16pm — and probably at the behest of a NOMAD — the company sent out a hurried update, referencing a Twitter post stating that some of its software is now ‘available as a SaaS client-server cloud application by uploading an upgrade to the mining rigs’ firmware.’
This message was reinforced by updated product descriptions on its website — stating that both Method A and Method B software are now available as SaaS.
The company noted that the ‘need to adapt both Methods to a client-server architecture emerged from discussions with potential BTC mining clients/partners and their request for QBT source code to be installed on their mining rigs to be inspected for security and other technical reasons.’
However, QBT is not prepared to share its source code with third parties — for obvious reasons — and so instead is offering its solutions to be accessed through a protected server by potential Bitcoin mining clients, who can then assess its potential, but through layered protection.
For context, the company’s methodology RE Bitcoin is to increase mining win rates, which is significantly cheaper for a client than buying more mining rigs. Numbers being thrown about on social media indicate a 260% faster software solution — which not only would be revolutionary for BTC mining, but also for wider blockchain applications.
It’s in talks with some of the largest North American BTC miners for good reason. And better yet, the placing to raise £2 million on 30 October — which was inevitable given both the elevated share price and lack of cash at hand — at a price of 1.5p per placing share, leaves it further derricked.
Crucially, Executive Chairman and CEO Francesco Gardin thinks that ‘it will fund the Company through to revenue.’ Or in other words, further near-term placings — as long as all goes well — will not be necessary, and the CEO believes that ‘that this opportunity significantly outweighs any short-term effect caused by the additional shareholder dilution.’
The bottom line
QBT expects that using the placing cash to set up its SaaS infrastructure will see revenue generated either though subscription fees or through revenue-sharing agreements for extra Bitcoins mined. If the software is as good as the company suggests, then the shares could still be exceptional value.
But the proof is in the pudding — theory and practice are rarely the same thing — and only volatility can be guaranteed. However, a small speculative investment could well be rewarding.
This article has been prepared for information purposes only by Charles Archer. It does not constitute advice, and no party accepts any liability for either accuracy or for investing decisions made using the information provided.
Further, it is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.