The bitcoin (BTC) mining industry was shaken in the final months of 2024 by the sudden entry of a new player: Cango (CANG), a Chinese company that specializes in providing loans to car buyers.
Headquartered in Shanghai and valued at $363 million on the stock market, Cango is in the process of acquiring 50 exahashes per second (EH/s) of mining power, meaning the auto lending platform will become a of the largest bitcoin miners in the world. world once your entire fleet is online.
“I guess it’s surprising to people in the [bitcoin mining] industry because no one had heard of Cango before,” Juliet Ye, the company’s senior director of communications, told CoinDesk in an interview. “But Cango’s story is a story of adaptation. We have diversified into different areas at least two or three times. [since the firm was established in 2010].”
Getting such a large bitcoin mining fleet is not cheap. Cango paid $256 million in cash for the first 32 EH/s of computing power, which it purchased from bitcoin mining machine maker Bitmain. It will issue shares worth $144 million for the remaining 18 EH/s, which it will acquire from Golden TechGen, a company owned by former Bitmain CFO Max Hua, as well as other undisclosed mining machine sellers. Once the transaction is resolved, Golden TechGen and these other sellers will end up owning approximately 37.8% of Cango.
Diversification into bitcoin mining is already paying off. Cango shares ended 2024 at $4.56, up more than 362% since the beginning of that year. Even better, Ye said, this new bitcoin mining strategy has catapulted Cango into the spotlight.
“It has been very difficult for us to gain traction around the company, as a US-listed Chinese small- and mid-cap company,” Ye said. “Suddenly, a lot of people are very interested in Cango. We have never seen the rumors surrounding the company before.”
50 eh/s
Cango is more accustomed to helping Chinese banks issue loans for people looking to buy cars. But the firm, which went public in 2018, was already diversifying its operations years before acquiring its bitcoin fleet.
Cango began facilitating automobile exports from China to other parts of the world and has invested in Li Auto, a Chinese electric vehicle manufacturer. Following that investment, Cango explored business opportunities in the renewable energy sector, including high computing power projects related to AI, before venturing into bitcoin mining.
“Bitcoin mining is a very good way to rebalance energy networks,” Ye said, referring to the fact that Bitcoin miners can easily power cycle their equipment. Some jurisdictions, such as Texas, take advantage of that capacity by encouraging miners to operate during periods of low power consumption and paying them to turn off their machines when local demand increases, such as during heat waves or snow storms.
With Bitcoin’s hashrate now hovering around 823 EH/s, Cango will provide approximately 6% of the total computing power behind Bitcoin once the company’s 50 EH/s are fully online. For reference, MARA Holdings (MARA), the world’s largest publicly traded miner, owned just over 47 EH/s of computing power in November, according to data from TheMinerMag. CleanSpark (CLSK) and Riot Platforms (RIOT), the next two largest, were at 32 EH/s and 26 EH/s respectively.
“The Bitcoin mining sector’s imperative for operations at scale was a critical consideration in our decision to enter this domain,” Cango’s management team told CoinDesk in an email.
“The current landscape is marked by industry consolidation, with larger-scale operations becoming more dominant due to the increasing difficulty of mining and the need for cutting-edge hardware.”
A major difference between Cango and other mining heavyweights is that Cango does not operate its own mining fleet at this time. With machines spread around the world (including the US, Canada, Paraguay and Ethiopia), Cango still relies heavily on Bitmain for its facilities and infrastructure and to make sure the sites run smoothly.
“Although we entered the industry with a significant amount of computing power, we are still new here and need time to adapt to the regulations and better understand the tax situation and the rest of the market,” Ye said. . “So we initially chose to work together with Bitmain and use their operations teams.”
That situation is likely to change over time, Ye said, as Cango gains experience in the sector and seeks to make its bitcoin mining operations more economically efficient. Forming an in-house mining team would probably be cheaper than relying on Bitmain’s expertise in the long run.
As for what Cango plans to do with its growing bitcoin stash, it will depend on how the year unfolds, Ye said. “We do not rule out the possibility of making some tactical reductions [to the bitcoin holdings] depending on market conditions,” he said. Cango mined 363.9 BTC in November alone, a sum valued at approximately $35 million at the time of writing.
