Successful Redesign of Lokotech’s Commercial Scrypt ASIC - Final Power Simulations

Referring to the stock exchange notice dated August 28th and the Half Annual Report on August 30th. Lokotech AS, a wholly owned subsidiary of Lokotech Group AS, received the results of the final power simulations today, Thursday, September 5th, 2024.

We are thrilled to announce a significant breakthrough in the development of our ASIC chip technology. After a series of rigorous design iterations, including 19 updates to the IP library from our IP vendors, comprehensive simulations, testing, and validation, our engineering team has successfully redesigned the commercial ASIC. The final power simulations for the commercial ASIC design, with a 95% confidence level in accurately reflecting post-silicon power metrics, indicate highly efficient performance. This methodology provides the best pre-production estimate of real-world operation, with simulations concluding that the ASIC achieves a power efficiency of 0.079 Joules per Megahash (J/MH) for the Scrypt hashing algorithm.

Each ASIC consumes just 0.77 watts of power, delivering an impressive 9.75 Megahashes per joule (MH/J). This new design not only surpasses our initial performance expectations but also positions us as the leading global provider of mining hardware for the Scrypt algorithm. Our ASIC outperforms all existing Scrypt miners and those expected to enter the market soon, significantly enhancing our competitive advantage by stratigically designing it on the 12nm node, which is regarded as an older generation production process. This exceptional performance sets a high industry benchmark, highlighting our commitment to market leadership with state-of-the-art technology in this winner-takes-all landscape. Notably, this redesign delivers a remarkable 139% improvement in power efficiency over the previous 2021 design, which consumed 0.189 Joules per Megahash. This advancement aligns with our dedication to reducing energy consumption for both our clients and our own self-mining operations, further strengthening our market leadership.

This design directly addresses concerns highlighted in the Operational Update on June 28, 2021, regarding the high production costs associated with the previous chip design, which required up to 10 times more chips to achieve the desired performance. The new design substantially increases density, measured as output (Megahashes/second) per silicon wafer, significantly reducing the number of chips needed per miner. This improvement not only lowers production costs but also enhances the competitiveness of Lokotech's Scrypt miners.

“We appreciate our stakeholders' patience with the delays we have encountered, and we now confidently know that the strategic decision made in the summer of 2021 was the right one. Our commitment to continuous innovation remains strong, and we are actively exploring strategic opportunities to enhance our product offerings, including parallel use cases of the ASIC for Edge AI applications. Our primary focus remains on delivering technology that meets the evolving demands of the cryptocurrency mining industry. Currently, our efforts are concentrated on the tape-out process and bridging the financing gap to deliver the first batch of miners,” commented Ola Stene-Johansen, CEO.

“Over the past few years, we have overcome numerous obstacles, and it is incredibly rewarding to see that we have successfully navigated those challenges. Our team, both here and in North America, has demonstrated resilience, grit, and innovation, allowing us to now face the competition head-on with unwavering certainty,” commented Benjamin Miklozek, CFO.

"These final power simulations reflect our dedication to the project and the vision we established for the blockchain mining industry years ago. We are excited to keep pushing the limits of ASIC technology and continue challenging the status quo of mining hardware. Additionally, we are happy to annouce that are developing three new designs for the next batch of presales, currently referred to as: Single Barrel, Double Barrel, and RackStack,” commented Christian Rustad, CTO.

For further information, please contact: Ola Stene-Johansen, CEO of Lokotech Group AS, at osj(æ)lokotech.no.

This announcement complies with Section 5-12 of the Norwegian Securities Trading Act, constituting inside information under the Market Abuse Regulation (MAR).

Published on behalf of Lokotech Group AS by Benjamin Miklozek, CFO, at 14:59, on September 5, 2024.