Cangu: Transformation and Rebirth, Value Potential Underestimated

Recently, Cangu Company has consecutively announced three important announcements, marking a significant shift in its business direction. The company acquired operational cryptocurrency mining equipment with a hash rate of 32Eh/s for $256 million and plans to further acquire operational mining equipment with a hash rate of 18Eh/s by issuing $144 million in stock. In addition, Cangu produced a total of 393 bitcoins in November.

The first phase of this acquisition involves operational cryptocurrency mining equipment with a hash rate of 32 Eh/s, with a shutdown price of approximately $70,000 per unit (including hosting operating costs). These devices are distributed across five countries, including the United States, the Middle East, and Africa, primarily using the flagship S19 miners, and are expected to have about four years of depreciation left.

The second phase plans to acquire 18Eh/s of operational cryptocurrency mining equipment, with the required funding of $144 million to be raised through a targeted issuance aimed mainly at an investment group composed of 9 individuals. This transaction is expected to be completed by March 2025, with the seller being Golden TechGen (GT).

It is worth noting that Cangu has also signed a supplemental agreement. According to this agreement, if the company's market value reaches a specific level for 30 consecutive trading days within the next 30 months, the company will issue additional shares valued at $97.1055 million as a reward to the aforementioned group of 9 individual investors.

Although the price of Bitcoin has recently seen a significant increase, the agreement between Cangu and the project seller was made when the price of Bitcoin was between $60,000 and $70,000 per coin, so this acquisition is essentially conducted at market value.

After the completion of this acquisition, Cangu will completely transform from an automobile dealership business to a self-operated cryptocurrency mining business. The company plans to further expand its business scope based on this, including diversified operations such as hash power leasing and cloud hosting, in order to reduce the impact of Bitcoin price fluctuations on the company's profits.

From an investment perspective, after Cangu completes the acquisition of the remaining 18Eh/s project in March 2025, its operational hash rate will reach 50Eh/s, making it likely the largest mining company among publicly listed companies in the United States. In comparison, the current situation of other major mining companies in North America is as follows: one company has a self-operated mining farm with a hash rate of 46Eh/s and a market value of $7.9 billion, corresponding to $170 million/Eh; another company has a self-operated mining farm with 32EH/s and a market value of $3.6 billion, corresponding to $110 million/Eh.

Considering that the shutdown price of Cangu is relatively high, we can conservatively use $110 million/Eh as the valuation basis. Based on this calculation, before the completion of the second batch of acquisitions, Cangu's market value should reach $3.52 billion; after the acquisition is completed, the market value should reach $5.5 billion. However, Cangu's current market value is only $720 million, indicating a significant undervaluation, with potential growth space of 3.9 to 6.6 times in the future.