Original Author: Joy Lou
Event: Canggu (Cang.us) announced three important announcements consecutively in November, acquiring Bitmain's 32 Eh/s operational cryptocurrency mining machines for $256 million; planning to issue $144 million in stock for the subsequent acquisition of 18 Eh/s operational cryptocurrency mining machines; and producing 393 Bitcoins in total for November.
Comment:
1. Canggu's first phase obtained 32 Eh/s of operational cryptocurrency mining machines, with a shutdown price of about $70,000 per coin (including Bitmain's hosting and operational costs). The project is mainly distributed across five countries, including the United States, the Middle East, and Africa, and the mining machines mainly use Bitmain's flagship S19 miners, which currently have a remaining depreciation period of about 4 years.
2. The second phase of 18 Eh/s of operational cryptocurrency mining machines, requiring $144 million, will be obtained through a targeted issuance approach, mainly from an investment entity formed by 9 individuals. The expected completion date is March 2025, with the seller being Golden TechGen (GT).
3. Canggu simultaneously 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 be awarded to the aforementioned 9 individuals forming the investment entity.
4. Although the price of Bitcoin has recently seen a significant increase, the company engaged with the project relatively early, reaching an agreement with the seller of the target project when Bitcoin was around $60,000 to $70,000 per coin. Therefore, the acquisition price is basically at fair value.
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 operations to continue to extend into diversified business operations including computing power leasing and cloud hosting, further smoothing out significant fluctuations in company profits caused by Bitcoin price volatility.
Investment Suggestion: After Canggu completes the remaining acquisition of the 18 Eh/s project in March 2025, the operational computing power will reach 50 Eh/s, becoming the largest publicly listed mining company in the U.S. as of now. Currently, among North American mining companies, Marathon Digital (Mara.us) has a self-operated mining power of 46 Eh/s and a market value of $7.9 billion, corresponding to $170 million/Eh; Cleanspark (Clsk.us) has a self-operated mining power of 32 EH/s and a market value of $3.6 billion, corresponding to $110 million/Eh. Considering the company's shutdown price is relatively high, selecting $110 million/Eh as the valuation basis corresponds to a market value of $3.52 billion before the completion of the second batch of acquisitions in March, and a post-acquisition market value of $5.5 billion. Compared to the company's current market value of only $720 million, it is significantly undervalued, with potential increases ranging from 3.9 times to 6.6 times. This article was written on December 18, 2024, with the current CANG price at $6.
