After a major climb last autumn, investors have been waiting for Quantum Blockchain Technologies [AIM:QBT] to deliver. Sadly the stock price has been slipping all year and is looking increasingly moribund. But a tech venture like this does require patience.
Quantum Blockchain is an investment company providing its shareholders with access to the technology sector, with special emphasis on hot areas like blockchain, artificial intelligence and cryptocurrencies. It makes direct investments as well as acting as a manager of venture capital funds.
Why the excitement in Quantum Blockchain Technologies last year?
Many investors have been following the company because of the work it has been doing in Bitcoin mining. It has been experimenting with a couple of proprietary Bitcoin mining algorithms and plans to protect these with patents at the earliest possible opportunity. Interestingly, it is also exploring extreme silicon energy optimisation techniques which could help deliver a superior chip to assist with ASIC-based traditional Bitcoin mining.
It is a highly complex task and is being pushed forward by an R&D team which is small for a project of this scale – at least compared with the budgets and personnel deployed on similar Bitcoin mining research. CEO Francisco Gardin has appealed for shareholder patience as these projects continue to evolve.
Appointment of Peter Fuhrman
Shares were temporarily suspended on AIM on 16 August because at the time the company only had one director – Gardin – this following the sad death of Reginald Eccles. He has now been replaced by Peter Fuhrman, chairman and CEO of China First Capital, which is something of a coup for the firm in our view. A further non-executive director is expected to be appointed in the next three months.
Quantum Blockchain Technologies is a small company focused on a technology that could be highly profitable if it comes good. It has a market cap of £16.5m. But the balance sheet still looks healthy enough. It was recently ranked by Deshe Analytics as 83/100, versus 70/100 for its nearest peers. This shows it is still being responsibly managed from a fiscal perspective.
A slow burn investment
The set of interim results were neither surprising nor really that exciting. Given the health of the company’s balance sheet, it seems to us that most investors who are on board with Quantum Blockchain’s vision are going to stick around for the long run, hence not much in the way of shares changing hands. For those not yet aware of what is going on under the hood, the share price right now could be a decent entry point.
Management sound bullish on the progress with the technology. There is obviously going to be impatience in some quarters around the speed of delivery of the next generation mining technology that Gardin has been promising. But on the other hand, tech plays like this are often not available on public markets but will be firmly ensconced within a VC with a five plus year time horizon.
Can QBT deliver? It is going to take time. The technology patents process, an essential one, is also a complex one to navigate. But the noises coming from management certainly sound positive at the moment.