Author: Joy Lou
Event: Canggu (Cang.us) announced three important announcements consecutively in November, acquiring Bitmain's 32Eh/s operating cryptocurrency mining machines for $256 million; planning to issue $144 million in stocks for the subsequent acquisition of 18Eh/s operating cryptocurrency mining machines; and producing 393 Bitcoins in November.
Comment:
1. Canggu Phase I has acquired 32Eh/s of operating cryptocurrency mining machines, with a shutdown price of about $70,000 per coin (including Bitmain's hosting and operating costs). The project is mainly distributed across five countries, including the United States, the Middle East, and Africa. The mining machines primarily use Bitmain's flagship S19 miners, which currently have a depreciation period of about 4 years remaining.
2. Phase II will require $144 million for 18Eh/s of operating cryptocurrency mining machines, which will be obtained through a targeted issuance method, mainly formed by an investment entity consisting of 9 natural persons. The event is expected to be completed by March 2025, with Golden TechGen (GT) as the seller.
3. Canggu has also signed a supplemental agreement as an option reward. If Canggu's market value reaches a specific value for 30 consecutive trading days within the next 30 months, the company will further issue $97.1055 million worth of shares to the aforementioned investment entity formed by the 9 natural persons.
4. Despite a significant recent increase in Bitcoin prices, the company engaged with the project relatively early, reaching an agreement with the seller of the target project when Bitcoin was around $60,000–$70,000 per coin. Therefore, this acquisition price is essentially at par.
5. After the completion of this acquisition, Canggu's main business will transform from automotive dealership operations to self-operated mining operations. The company will then rely on these businesses to continue expanding into diversified operations, including computing power leasing, cloud hosting, etc., further smoothing out the significant fluctuations in company profits caused by Bitcoin price volatility.
Investment suggestion: After Canggu completes the remaining 18Eh/s project acquisition in March 2025, the operating computing power will reach 50Eh/s, becoming the largest listed mining company in the United States to date. Currently, among North American mining companies, Marathon Digital (Mara.us) has a self-operated mining power of 46Eh/s and a market value of $7.9 billion, corresponding to $1.7 million/Eh; Cleanspark (Clsk.us) has a self-operated mining power of 32EH/s and a market value of $3.6 billion, corresponding to $1.1 million/Eh. Considering the company's relatively high shutdown price, we take $1.1 million/Eh as the valuation basis, corresponding to a market value of $3.52 billion before the completion of the second batch of acquisitions in March, and a market value of $5.5 billion after the acquisition, significantly undervalued compared to the company's current market value of only $720 million, with an upside potential of 3.9 to 6.6 times.
This article was written on December 18, 2024, with the current CANG price at $6.
