From Car Loans to Crypto: Inside Cango’s 50 EH/s Bitcoin Mining Power Play

The Bitcoin mining landscape witnessed a dramatic shift in late 2024 with the unexpected entry of Cango (CANG), a Shanghai-based firm primarily known for providing auto loans in China. With a market capitalization of $363 million, Cango is in the process of acquiring a substantial 50 exahashes per second (EH/s) of mining power, instantly positioning itself among the world's largest Bitcoin miners.

This surprising move has generated considerable buzz within the industry. As Juliet Ye, Cango’s senior director of communications, explained, “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.” Established in 2010, Cango has a track record of diversifying its business ventures.

The acquisition of this significant mining capacity comes at a considerable cost. Cango invested $256 million in cash for an initial 32 EH/s from Bitcoin mining hardware manufacturer Bitmain. An additional 18 EH/s will be acquired through a $144 million share issuance to Golden TechGen, a firm owned by former Bitmain CFO Max Hua, and other undisclosed sellers. This transaction will grant Golden TechGen and these sellers approximately 37.8% ownership of Cango.

This strategic diversification into Bitcoin mining has already yielded positive results. Cango's stock price surged by over 362% in 2024, closing the year at $4.56. According to Ye, this new direction has significantly boosted Cango's visibility. “All of a sudden, a lot of people are very much interested in Cango. The buzz around the company — we’ve never seen this before in the past,” she said.

Cango’s journey to becoming a Bitcoin mining powerhouse is part of a broader diversification strategy. The company has previously ventured into car exports and invested in the Chinese electric vehicle manufacturer Li Auto. Cango also explored opportunities in renewable energy and high-compute power projects related to AI before setting its sights on Bitcoin mining.

Ye highlighted the potential of Bitcoin mining for energy grid stabilization, explaining how miners can adjust their operations based on energy demand. This flexibility is particularly valuable in regions like Texas, where miners are incentivized to operate during periods of low energy consumption and curtail operations during peak demand.

With Bitcoin’s hashrate currently around 823 EH/s, Cango’s 50 EH/s will contribute approximately 6% of the network’s total computing power once fully operational. This puts Cango in direct competition with major players like MARA Holdings, CleanSpark, and Riot Platforms.

Cango’s management team emphasized the importance of scale in the Bitcoin mining industry, stating, “The Bitcoin mining sector's imperative for scaled operations was a pivotal consideration in our decision to enter this domain.” They acknowledged the growing dominance of larger-scale operations due to increasing mining difficulty and the need for advanced hardware.

Initially, Cango will rely on Bitmain for facilities, infrastructure, and operational support, with its machines located in various regions, including the U.S., Canada, Paraguay, and Ethiopia. This collaborative approach allows Cango to gain experience and adapt to the industry's intricacies. However, the company plans to develop its own in-house mining team in the future for greater efficiency.

Cango’s strategy for its mined Bitcoin will depend on market conditions. While they don't rule out selling some holdings, their November mining output of 363.9 BTC, valued at approximately $35 million, demonstrates their potential in this space.

Cango's unexpected entry into Bitcoin mining marks a significant development in the industry. The company's rapid ascent and strategic approach highlight the evolving dynamics of the digital asset landscape. This move not only diversifies Cango’s business but also signals a growing interest from established corporations in the Bitcoin ecosystem.