Original author: Joy Lou
Event: Cang.us released three important announcements in November. It acquired Bitmains 32 Eh/s cryptocurrency mining machine for US$256 million. It plans to issue US$144 million in stocks for the subsequent acquisition of 18 Eh/s cryptocurrency mining machines. It produced a total of 393 bitcoins in November.
Comments:
1. In the first phase, Cangu obtained 32 Eh/s cryptocurrency mining machines in operation, with a shutdown price of about US$70,000 per coin (including Bitmains hosting and operating costs). The projects are mainly distributed in five countries including the United States, the Middle East and Africa. The mining machines mainly use Bitmains flagship S19 mining machines, which currently have a depreciation cycle of about 4 years.
2. The second phase of 18 Eh/s will be issued with the required USD 144 million for the operation of cryptocurrency mining machines through a private placement, mainly by nine natural persons as investment entities. The expected completion date is March 2025, and the seller is Golden TechGen (GT).
3. Cangu also signed a supplementary agreement as an option reward. If the market value of Cangu reaches a specific value for 30 consecutive trading days in the next 30 months, the company will further issue shares worth US$97.1055 million to the investment entity formed by the aforementioned 9 natural persons.
4. Although the price of Bitcoin has risen significantly recently, the company came into contact with the project at an early stage and reached an agreement with the seller of the target project when Bitcoin was around US$60,000 to US$70,000 per coin. Therefore, the acquisition price this time is basically a par acquisition.
5. After the completion of this acquisition, Cangus main business will be transformed from automobile dealership business to self-operated mining business. After that, the company will rely on such business to continue to expand outward to include computing power leasing, cloud hosting and other diversified business operations, further smoothing the companys profit fluctuations caused by Bitcoin price fluctuations.
Investment advice: After Cangu completes the acquisition of the remaining 18 Eh/s projects in March 2025, the operating computing power will reach 50 Eh/s, becoming the largest mining company listed in the United States so far. Among the current North American mining companies, Marathon Digital (Mara.us) has a self-operated mining power of 46 Eh/s, a market value of US$7.9 billion, corresponding to US$170 million/Eh; Cleanspark (Clsk.us) has a self-operated mining power of 32 EH/s, a market value of US$3.6 billion, corresponding to US$110 million/Eh. Considering that the companys shutdown price is relatively high, US$110 million/Eh is selected as the valuation basis, corresponding to a market value of US$3.52 billion before the completion of the second batch of acquisitions in March, and a market value of US$5.5 billion after the acquisition. Compared with the companys current market value of only US$720 million, it is significantly underestimated, and the room for growth is 3.9 to 6.6 times.
This article was written on December 18, 2024, and the current CANG price is $6.
