Cangu's transformation into crypto mining business may be undervalued in the market

Recently, Cangu Company has released three important announcements, attracting widespread attention in the industry. The company acquired 32Eh/s of operating crypto mining equipment for $256 million and plans to acquire an additional 18Eh/s of operating mining equipment through the issuance of $144 million in stocks. In addition, Cangu produced a total of 393 bitcoins in November.

These measures mark the official entry of Cangu into the crypto mining sector. The 32Eh/s mining equipment acquired in the first phase is distributed across five countries in the United States, Middle East, and Africa, primarily using flagship S19 mining machines, with an expected depreciation period of about 4 years. The shutdown price of the equipment is approximately $70,000 per bitcoin, which includes the hosting operational costs.

The funds required for the acquisition of the 18Eh/s equipment planned in the second phase will be raised through a targeted issuance method, with the transaction expected to be completed by March 2025. It is worth noting that CanGu has also signed a supplementary agreement, which states that if the company's market value reaches a specific level for 30 consecutive trading days within the next 30 months, additional shares worth $97.1055 million will be issued as a reward.

Despite the recent significant rise in Bitcoin prices, the price at which CanGu acquired is relatively reasonable. This is because the company had already reached an agreement with the seller when Bitcoin prices were in the range of $60,000 to $70,000.

This strategic transformation will turn Cangu into a self-operated crypto mining company from an automobile dealer. In the future, the company plans to further expand its business scope, including computing power leasing and cloud hosting services, to reduce the impact of Bitcoin price fluctuations on the company's profits.

From an investment perspective, after completing the second phase of its acquisition, Cangu will reach an operational hash power of 50Eh/s, potentially becoming the largest mining company among publicly traded companies in the United States. In comparison, the current self-operated hash power of major North American mining companies like Marathon Digital is 46Eh/s, with a market value of $7.9 billion; Cleanspark's self-operated hash power is 32EH/s, with a market value of $3.6 billion.

Considering that the shutdown price of Cangu is relatively high, we can conservatively use 110 million USD per Eh as a valuation benchmark. Based on this calculation, Cangu's potential market value after completing the second batch of acquisitions could reach 5.5 billion USD. Compared to the current market value of only 720 million USD, Cangu's stock price may be severely undervalued, with future growth potential estimated to be between 3.9 times and 6.6 times.