The Bitcoin (BTC) mining industry witnessed a significant shift in the latter months of 2024 with the unexpected entry of Cango (CANG), a Chinese company traditionally focused on automobile loans. Based in Shanghai and valued at $363 million on the stock market, Cango is in the process of acquiring an impressive 50 exahashes per second (EH/s) of mining power. This strategic move positions Cango to become one of the largest bitcoin miners globally once its complete fleet is operational.
As Juliet Ye, Cango’s senior director of communications, noted in an interview with CoinDesk, the company’s foray into bitcoin mining took many in the industry by surprise: “I guess it’s surprising for people in the [bitcoin mining] industry because nobody has ever heard of Cango before. But the history of Cango is a history of adaptation. We’ve diversified into different areas at least two or three times since the firm was established in 2010.”
Acquiring such a substantial mining operation is a considerable investment. Cango initially paid $256 million in cash for 32 EH/s worth of computing power from Bitmain, a leading manufacturer of bitcoin mining machines. To secure the remaining 18 EH/s, Cango plans to issue $144 million in shares, acquiring hardware from Golden TechGen—a company owned by Max Hua, a former CFO at Bitmain—along with other unnamed sellers. This deal will result in these entities owning approximately 37.8% of Cango.
The diversification strategy into bitcoin mining has already yielded remarkable results, with Cango’s stock closing 2024 at $4.56, reflecting a 362% increase since the beginning of the year. Ye remarked on the newfound attention: “It’s been really hard for us to gain traction around the company, as a small- to mid-cap listed Chinese firm in the U.S. Now, a lot of people are very much interested in Cango, and we’ve never seen this buzz before.”
50 EH/s: A New Era for Cango
While Cango’s core business has revolved around facilitating loans for car buyers in China, the firm has a history of diversification dating back years. After going public in 2018, Cango began exporting cars from China and invested in Li Auto, a Chinese electric vehicle manufacturer. More recently, the company has explored opportunities in the renewable energy sector, particularly high-compute power projects related to AI, paving the way for its current venture into bitcoin mining.
Ye highlighted the advantages of bitcoin mining, stating that it is “a very good way to rebalance energy grids.” The flexibility of bitcoin miners to adjust their operations can help balance local energy demands, particularly in states like Texas, which incentivizes miners to operate during low consumption periods and to temporarily cease operations when demand peaks, such as during extreme weather conditions.
With the Bitcoin hashrate currently around 823 EH/s, once operational, Cango’s 50 EH/s will contribute roughly 6% of the total computing power supporting Bitcoin. In comparison, MARA Holdings (MARA), the world’s largest publicly traded miner, had a little over 47 EH/s as of November, followed by CleanSpark (CLSK) and Riot Platforms (RIOT) with 32 EH/s and 26 EH/s, respectively.
Cango’s management emphasized the industry’s need for larger-scale operations as a key factor in their entry into bitcoin mining. They explained, “The current landscape is marked by industry consolidation, with larger-scale operations becoming increasingly dominant due to escalating mining difficulty and the necessity for state-of-the-art hardware.”
Despite its ambitious plans, Cango does not currently operate its own mining fleet. The company relies significantly on Bitmain for infrastructure and operational support, with mining machines strategically placed across the globe, including in the U.S., Canada, Paraguay, and Ethiopia. Ye acknowledged this reliance, stating, “Even though we enter the industry with a significant amount of computing power, we are still new here and need time to adapt to the norms and better understand the market.”
Moving forward, Cango aims to build its own mining team to enhance operational economics and reduce external dependencies. Regarding the management of its growing bitcoin reserves, Ye indicated a flexible approach: “We don’t rule out the possibility of making some tactical reductions based on market conditions,” she said, adding that Cango mined 363.9 BTC in November alone, a sum valued at roughly $35 million at that time.
