Chief Product Officer Rubén Gómez. Welcome.
All right. Thank you for the introduction. I'm Ola, this is Rubén . We're both Founders of some of the key subsidiaries of Lokotech Group. First, a very short safe harbor statement. I'm sure you're used to disclaimers. Not going to spend any time on it. Before we begin, I wanted to give you a crash course in what cryptocurrency mining really is. Rubén , take it away.
All right. Well, Bitcoin and cryptocurrency mining is very different than what you likely have heard all today, especially because last presentation was about banking, and we're very different than traditional banking. Bitcoin mining and cryptocurrency mining is the act of turning a machine on and have it do some compute, and you get rewarded money for it. Essentially, it's a system that allows you to have a power input, an internet connection, and makes you money. What we do is we're producing these machines that allow people to buy them and make these cryptocurrencies. Essentially, this is a gold rush, and where people make money in a gold rush is the only people that are selling the shovels and the land. This is essentially what we're doing. We're selling the shovels and the land.
Lokotech Group today, we've been listed on Euronext Growth since 2021. Market cap is still quite small at NOK 425 million. We operate in the cross-section between semiconductor design, services on top of that to miners worldwide. We have some data center projects in Northern Norway, that has Europe's cheapest renewable energy. We've been working in an R&D phase now for six years, developing an ASIC, that's an application-specific integrated circuit. It's also known as a chip. We just taped out the design, which means that we take the finished commercial size design of the production partner, GlobalFoundries in Malta and New York, and they have started to produce the mask set, a stencil that is used to mass produce any chip. We will receive the first physical silicon later this year.
Our chip is not only for cryptocurrency mining. The mathematics behind it is very close to edge AI inferencing. That's another huge market opportunity for us. In the cryptocurrency mining vertical, it's all about power performance, how efficient are the chips at generating these calculations. The market has grown tremendously fast late last years, although it has been stagnant through October 2026. This is what the products look like. Rubén, you can explain.
Yep. What you see here is the three main products that we're going to be selling end of this year. What you see on the left there in the picture is the Hashblade. That's the unitary unit that we're selling, which is the one compute blade. In these machines, there are multiple of these. For example, on the one in the middle, there are six of these. On the one on the right, you have the equivalent of 12 of these, but there are just six that are a little bit taller. One unique product that can be scaled up to different form factors for different people.
It's all based on the same chip, the same basic, an engine that drives the computational part of the mining of cryptocurrencies. If you're looking at Lokotech from an investor perspective and consider it most interesting for the deep tech, the chip part of it, I want to inform you some of the considerations I would have made. First of all, the design team has completed 15 chips already without any major issues. Our chip, compared to any current competitor, has an onboard microcontroller. It improves the reliability and programmability of it. That's also why we can use it for AI purposes. It's being produced in a relatively mature production node.
We use GlobalFoundries 12 nanometer node, which future-proofs the design where we can take the same design and reassign it or port it for a more dense, more advanced production node, giving it a lot longer economic viable lifetime than designs that are already on more mature nodes. Regardless of this, we see that there might be some engineering risk left. The technical risk is covered. We've been running a prototype now since September 2024, on mainnet, and that part is proven. Any chip has potential issues with the mask set and the precision of it, and a potential respin might happen, either for fixing it for functionality reasons or for improving production yield and therefore the economics behind the product.
The chip itself is the by far largest contributor to the cost of the final products. It's not only for crypto. We've been assigning this for AI now for six years already. Little did we know that AI will grow into the business that it is today and with the expected growth in the coming years. If our simulations hold true, what you have here is a 256-core ASIC for full-stack AI. It's the only edge AI ASIC out there that we know that can also train itself. Typically, edge AI chips are only inferencing, only executing the LLMs and not feeding back for improvement on the model. That represents a conversion of different traditional segments, edge AI computing, edge computing, AI inferencing, and also hardware for agentic AI.
It has no existing competition in that niche . The GPUs that are currently being used are too expensive and way too power-hungry to be utilized on the edge. The edge NPUs have no on-device learning. If you're going to use the cloud, it's expensive and it takes a long time for a round trip. It also introduces a lot of privacy concerns. We also have Powerpool, our main service subsidiary. Rubén founded it, so I'll give him the word.
All right.
What is a mining pool and why is it a great business?
Like I said, when you're Bitcoin mining or you're crypto mining, you have to find something that is called a block, and that's a solution to the consensus protocol solution, which means that you get credited some amount of money. This is a very rare occasion when you're having a small operation in your house or in your data center that you have somewhere nearby. That's what a Powerpool does. It aggregates all these people together so that they all work towards the same goal of finding those blocks and then distribute the rewards proportionally to how much each of them has contributed. Essentially, this is a play on volume. The more volume you have, and you take a commission out of it, the more money you're making in revenue as the pool.
We have about a 1% fee, but our margins are about 3% of the total volume that flows through the platform due to other arbitrage strategies that we have on top of the main service. We have a very good growth and retention. While the market has only grown by about 50%, we have grown six and three times fold that amount, meaning that we're eating the market out of our competition. By this rate, we'll be one of the biggest mining pools in the world very, very soon, just because we're retaining more clients than other pools are receiving. We recently switched from a B2C focus more to a B2B focus, trying to convince institutional players to join us instead of only going after little customers.
That has been scaling up very quick, and we've actually received SOC 2 certifications on November of last year, and now we're going after SOC 1 certifications as well. We're expected to receive SOC certification type 1 in Q3 of 2026. We're also preparing other sort of products for very large institutional miners, which involve on-site installations, whether that's a server or that is different equipment that is running in their facilities to facilitate their operations. Like we said, the stickiness is unprecedented, and you can see it also in our figures. The growth is constant and exponential in the two main algorithms, which is Scrypt and SHA-256. That's the Bitcoin and Litecoin plus Dogecoin algorithms, and those are the ones that give us the most money. That's the ones that we really care about.
These graphs are from the very beginning of operations, and you can see that exponential nature on the first two. One additional thing that is very recent and is brand new also for us, we recently started allowing for a different kind of equipment to run in our systems, and that's the Z15 family, which is also from the competition of the machines that we're producing. They've been running for about 10 days now, or 11 at this point. The profitability of them is incredible. People love being able to connect all their machines to the same system, that's why they've been switching towards us to connect their machines. Like I said before, our market growth is a lot higher than the overall market, meaning that we're cannibalizing the space.
We're eating the competition and being able to get their customers, so that they switch to us instead of staying where they are. The main reason is because we make them more money and we're also a lot more user-friendly and closer to the customer. That's the case for SHA-256, but in the Scrypt case, we also have the same effect. While the market grew about 62% since 2025, we actually grew by 304%, meaning that slowly but surely we're getting up there and we're climbing the ranks.
Very important to notice that there's a lot more room to grow.
Yep. On the Scrypt algorithm, we're about 2% of the market. On the Bitcoin algorithm, we're about 0.1%. We're already very cash flow positive as a whole company at this rate of market share, and there's a lot of room to growth. The top competing players have about 100 and 150 times bigger size than us. We have a lot of things that are pushing us to grow. Some of them are, for example, we started a different company within Norway that it's operating a data center for our own balance sheet as well as our customers'. We first deployed a small batch of units which are already working, and that validates our roadmap for Q3 of this year, where we're going to be scaling up to a data center that's 10 times the size.
We're also adding more machines to be compatible with our system, which is something that is very important for this sort of services to do, especially because new machines are being released by the competition all the time. It's not only that we have to be compatible with Lokotech's equipment, we have to be compatible with everyone's equipment. As they're being deployed in Q3 of this year, we'll also be compatible with them. Like I said about the SOC certifications, we received them in November, which is a very big step to be able to get those institutional miners.
This is crucial because one very big institutional miner could multiply our revenue in the same way it would multiply the profits by about 5 to 15x, which is a market that we have not been able to tap in yet, but with the SOC certification, it allows us to do so.
Supporting hardware products that increase the stickiness l ike a PowerBridge.
That's helping a lot as well, because a lot of data centers have been struggling with connections, either because their ISPs, their internet service providers, don't want them to be contributing to crypto or because they're in a legislation that is not very crypto friendly. Though our services and our products would allow them to not be able to connect against their laws, but be able to maintain a reliable connection and not have to worry about uptime and issues that come with the infrastructure.
What I think is interesting with this business is that, from the net revenue, we convert a high 90% into profits. It's a very cost-efficient model, and when you're growing on all the fundamental KPIs, even though the prices have been declining throughout the year, the revenue will quickly pick up if the market turns around.
He has neighbors?
What you can see here is.
I don't think he likes neighbors.
The data center that we have up there. We were setting up the machines, and they're actually liquid cooled. they're sitting inside of a. Because it was a busy area, but you can see that they're inside of a liquid so that the machines are staying incredibly cool, and you're able to squeeze as much efficiency out of them as possible. This is running actually in a very cold climate in the north of Norway, allowing us to push them beyond what they were designed for.
In summary, Lokotech Group, we're listed on Euronext Growth Oslo. We have a small market cap of merely NOK 425 million. We have five key subsidiaries. We focus on semiconductor design and the production of it. Data centers, we own a cryptocurrency mining pool, and we have now also started hosting services so that the clients can purchase hardware on the shelf, mining directly to the pool. We have the world's most efficient chip for mining Scrypt, the algorithm that secures Litecoin and Dogecoin and some 50 other cryptocurrencies. We beat Bitmain, a $40 billion-$50 billion Chinese competitor, with 100%, or 111%, to be precise. We sign framework agreements for pre-purchasing all this equipment in the range of, well, it says two to 13, but it's more like $5 million-$13 million.
We've stopped pre-selling until we have the first physical silicon in hand. That also gives us a very clear cost picture, and we can price it more precisely. We are cash generating. Our mining pool can cover our operation costs. We have a pipeline of significant milestones this year and early next year. What's special with this type of semiconductor business is that the clients are used to paying a year of cash upfront in full. When we start to scale the sales, we quickly turn into a negative working capital environment. Thank you. Some Q&A.
Yes. Thank you. I was interested in hearing about your backgrounds and how you came about starting this company.
Sure. I'm a Master of Science in Business Administration. I worked as an angel investor and a portfolio manager for multiple smaller startup companies. My previous employer didn't want to fund Lokotech and Lokotech's vision. I funded it out of pocket with my partner, Benjamin. We backed a technical founder, Christian, and those were rough startup years in the beginning. In 2020, we got a breakthrough on the research, and that's what made us found Lokotech and eventually reverse merge it with what is now Lokotech Group. We had two financing rounds on the stock exchange, about NOK 13 million both times.
How has the time been from starting to now? Have you been trying different things or have you been going on a straight path the whole way or?
We have attempted to enter into verticals that we have withdrawn from. More traditional data center business is not necessarily compatible with our vision of being cryptocurrency mining related. Different cost picture. That's the only business vertical that we've winded down. We acquired Powerpool, settled in May 2024. Partly cash and partly shares, brought Rubén into the team to also fill that C in the A to Z. He also was part in verifying the technology back then. It's been a rough ride. You're listed, you have to send updates. You're a relatively small company, and you're going through an iterative R&D process, right? I wouldn't recommend other with a high degree of technical risk to do it in public.
Yeah. Just interested in who your biggest owners are right now, and how does the board look like?
We have a pretty large group of shareholders for a company our size. 2,500 shareholders and growing. A lot of them are retailers. We have Nordea Invest, an institutional long-time investor. The founders still retain, I believe, 20% of the equity. Yeah. Does that answer your question?
Yeah. The board, sorry.
Yeah, we have a completely independent board of directors. Our chairman, Yngve, he is the R&D portfolio manager for subsurface, so Aker BP, the third-largest oil company in Norway. We have an engineer from Nordic Semiconductor. Susheel Naguru. We have Kristin w ho is representing Northa and has a data science background, but ensures the governance part of it. We have a electronics engineer for system design purposes. Hans-Jørgen .
Yeah. Just from interest, could you explain again, maybe to the broader audience, what crypto mining is and why it requires so much energy?
We try to solve the energy problem, though.
You can explain.
Crypto mining is, like we said, it's being able to use a computer or some sort of a system that performs those calculations and pays you for that compute. It's the perfect solution for a lot of situations where you don't have a lot of power. You may have cellular data or satellite internet, but you don't have anyone to sell that power to. It's a way to convert that power back into money, and that helps in, for example, stranded gas operations that they have gas that's coming out the ground. They can either burn it into CO2, so it doesn't pollute as much as the gas itself, or they can convert that into power and use it for something useful.
A lot of people use that for either CO2 recovery, clean hydrogen operations, or crypto mining, where it allows you to use that power and convert it into crypto. That way, you can get it into euros or dollars or whatever you need.
There's also the other side of that calculation. After this industry had been modernizing, you also recapture the heat and utilize the heat. Even though the power consumption is high. It would've been an oven instead. I think our client in Sweden, he heats 10,000 apartments by mining instead of using traditional ovens. There are some adaptations where we feel like you get too much negativity around the power consumption. Like it's water that would've flown through the hydropower plant with no way to go anyways. It also creates the fundamental value of proof of work blockchains. If it was easy or very cheap to attack and tamper with the decentralized system, it wouldn't have any value.
How would you describe the environment, like the market environment right now for Scrypt mining, hardware, and the infrastructure? What are the customers prioritizing most?
The biggest thing that the miners in this space are looking for is efficiency. You're competing against the same pie of coins to be mined. If you have one machine and you're the only one, you're eating the whole pie. If you have two people competing, then each of them get half of it. As more people have been purchasing machines, everyone makes a little bit less money every day. That's a crucial effect on your balance sheet. The thing is that your electricity is constant. It depends on your spot price of electricity, but it's essentially constant, and your revenue slowly decreases. If you have more efficient machines, you're able to continue operating at a higher electricity rate compared to your competition. That means that you're able to mine for a longer time.
This essentially means that all miners tend to go to the more efficient producers of equipment. In this case, since we're more than twice as efficient than the competition, all the market can be eat up by us because we're more efficient, and people will want to purchase our equipment compared to other ones just because it makes more sense because you will be making money for a longer time. We've seen this happen as new players come to the market with a slightly more efficient than the status quo solution. They've eaten the percentage of the market by double-digit figures in a couple of months. Then someone else comes up with something more efficient and they're the ones that are taking the rest of the market. This is the same thing that we're going to be doing.
Yeah. Looking at the customers who are interested in this, do you have any ongoing discussions with potential customers and could you explain who they are?
Sure. I've never been in or seen an industry that has such a varied customer base. Like you have hobbyists sitting in a modest basement toying with this thing to 1.2 gigawatt centers that are a square kilometer wide, has their own substation, and spends a quarter billion dollars worth on hardware. That's the upper end. We wanted to create a product that is possible to use at home, but also can be utilized on an enterprise level. Therefore, t he three variations. The easiest one would be you could put it into your home computer. The furthest one is priced, well, we've pre-sold them at $22,000 per pop. It fits into an existing data center infrastructure.
You got cowboys that run around with a gas turbine machine in another truck, and they pump up gas in Texas, and then you have government-backed entities like people flaring gas on an oil field in Brazil. Instead of wasting that energy, they'll mine. We've got a little bit of everything out there.
Nice.
Yeah, we keep in touch with them on a daily basis.
All right. We're running out of time. Good luck. Looking forward.
Thank you.
Thank you.