December 24, 2024
By Our Correspondent
Shanghai-based automotive dealership Cango Inc. has shifted its focus to Bitcoin (BTC) mining, recently announcing a significant acquisition of 32 exahashes per second (EH/s) in hashrate from Bitmain Technologies, amounting to $256 million.
In November, the company successfully mined 363 BTC, valued at approximately $36 million, without liquidating any of its assets, thereby establishing itself as a prominent player in the global Bitcoin mining sector.
As reported by The MinerMag, this strategic move positions Cango as the fifth-largest publicly traded Bitcoin miner based on realized hashrate and the third-largest by deployed hashrate. The company’s output constitutes 4% of the total BTC mined daily worldwide, a noteworthy accomplishment considering its recent entry into the industry.
Cango’s foray into BTC mining is supported by strategic acquisitions. The initial procurement from Bitmain, which includes on-rack miners, is believed to be hosted in the United States, potentially in Georgia, under an 18-month colocation agreement.
This arrangement enables the company to operate its hardware within a secure and managed environment provided by a service provider, eliminating the necessity for maintaining its own data centers. This is particularly crucial given that cryptocurrency mining was officially banned in China in May 2021 due to concerns regarding financial risks, energy consumption, and environmental effects.
Notably, despite the ban, Chinese mining pools continue to dominate a significant portion of the global BTC hashrate, with estimates suggesting they control around 55%.
Cango is also set to acquire an additional 18 EH/s from Golden TechGen, a firm owned by former Bitmain CFO Max Hua. This agreement, anticipated to be concluded by the end of March 2025, reportedly involves the issuance of $144 million in common stock, which could elevate the NYSE-listed motor dealership’s total hashrate to 50 EH/s. Such an increase would position Cango to compete with industry frontrunners like Marathon Digital Holdings.
There is considerable speculation that the hardware involved will consist of Bitmain’s Antminer S19XP rigs, procured at a relatively favorable rate of $8 per terahash per second (TH/s).
With Bitcoin prices stabilizing around the $100,000 mark and the network hashprice recovering to $63 per petahash per second (PH/s), Cango’s foray into cryptocurrency appears to be well-timed. This move signifies a significant departure from the company’s roots as an automotive transaction service provider, aligning with its ongoing strategy of reinvention.
Established in 2010, Cango initially concentrated on motor vehicle financing before transitioning into car trading in response to regulatory challenges in China. Earlier this year, the company further diversified by launching AutoCango.com, a platform that offers used Chinese vehicles to international buyers.
Nevertheless, Cango has recognized that its new Bitcoin mining initiative may soon overshadow its other revenue streams, particularly as initial earnings from this venture have already far exceeded its Q3 revenue of $3.84 million. This performance has driven the company’s stock price from $3.41 to $6.91, increasing its market capitalization to $500 million.
