Glamorous Turn: A Listed Company Makes Further Investments in Crypto Mining Business

Recently, a listed company has released three important announcements in a row, attracting widespread attention from the market. The company announced the acquisition of operating crypto mining machines with a total hash rate of 32Eh/s for a price of $256 million. In addition, the company plans to acquire an additional 18Eh/s of operating crypto mining machines by issuing $144 million in stock. It is worth mentioning that the company produced 393 bitcoins in November.

These measures mark the company's official transition into the crypto mining sector. Let's delve into the significance of this series of actions:

First of all, the 32Eh/s mining machines acquired by the company are distributed across five countries, including the United States, the Middle East, and Africa. These devices are mainly flagship products from a well-known mining machine manufacturer and are expected to have about 4 years of depreciation left. It is worth noting that the shutdown price for this batch of mining machines is approximately 70,000 per coin, which includes the hosting operation costs.

Secondly, the company plans to raise $144 million through a private placement to acquire an additional 18 Eh/s of operating mining machines. This transaction is expected to be completed in March 2025, with the seller being a company named Golden TechGen. Interestingly, the company has also signed a supplementary agreement that if the company's market value reaches a specific level for 30 consecutive trading days within the next 30 months, it will issue additional shares worth $97.1055 million to investors as a reward.

Despite the recent significant rise in Bitcoin prices, the company had already reached an agreement with the seller when Bitcoin was priced in the range of $60,000 to $70,000. Therefore, this acquisition was essentially conducted at par.

This transformation is of great significance to the company. After completing the acquisition, the company will completely transition from its original automobile dealership business to self-operated crypto mining business. In the future, the company also plans to further expand its business scope by venturing into areas 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 completing the acquisition of the remaining 18Eh/s projects in March 2025, the company's operating hash rate will reach 50Eh/s, which is expected to make it the largest mining company among publicly listed companies in the United States. Currently, the valuation levels of other well-known mining companies in North America range from $110 million to $170 million per Eh. Considering the company's relatively high shutdown price, we can conservatively use $110 million per Eh as the valuation benchmark.

Based on this valuation criterion, the company's market capitalization potential is approximately $3.52 billion before completing the second round of acquisitions; after the acquisitions are completed, the market capitalization potential could reach $5.5 billion. Compared to the company's current market capitalization of only $720 million, there is a significant undervaluation. According to this calculation, the company's stock price may have an upside potential between 3.9 times and 6.6 times.

Overall, the company's strategic transformation and expansion plans demonstrate its ambition in the crypto mining field. However, investors should remain cautious when making decisions, fully considering the high volatility of the crypto assets market and the associated regulatory risks.