#CryptoReboundStrategy
How the Chinese lending company Cango became a Bitcoin mining powerhouse Cango purchased 50 EH/s of mining power towards the end of 2024, making it one of the major players in the Bitcoin mining industry.
What to know:
Cango, a Chinese automotive transaction services platform, ventured into Bitcoin mining in November.
The company spent $400 million to acquire 50 EH/s of mining power, immediately becoming one of the largest miners in the world.
The company relies heavily on Bitmain for its operational services.
The Bitcoin (BTC) mining industry was shaken in the last months of 2024 by the sudden entry of a new player: Cango (CANG), a Chinese firm that specializes in providing loans to car buyers.
Headquartered in Shanghai and valued at $363 million in the stock market, Cango is in the process of acquiring 50 exahashes per second (EH/s) of mining power, meaning the auto loan platform will become one of the largest Bitcoin miners in the world once its entire fleet is online.
“I suppose it's surprising for people in the industry [of Bitcoin mining] because no one had heard of Cango before,” said Juliet Ye, senior communications director at the company, to CoinDesk in an interview. “But Cango's story is one of adaptation. We have diversified into different areas at least two or three times [since the company was established in 2010].”
Acquiring such a large Bitcoin mining fleet is not cheap. Cango paid $256 million in cash for the first 32 EH/s of computing power, purchased from Bitcoin mining machine manufacturer 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 vendors. Once the transaction is settled, Golden TechGen and these other vendors will end up owning approximately 37.8% of Cango.
Diversification into Bitcoin mining is already paying off. Cango's stock closed 2024 at $4.56, an increase of over 362% since the beginning of that year. Even better, Ye said, this new Bitcoin mining strategy has catapulted Cango into the spotlight.
“We have found it very difficult to gain traction around the company, as a small and mid-cap Chinese company listed in the United States,” Ye said. “Suddenly, a lot of people are very interested in Cango. The buzz around the company... we’ve never seen that before.”
50 EH/s
Cango is more accustomed to helping Chinese banks issue loans for individuals 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 car exports from China to other parts of the world and has invested in Li Auto, a Chinese electric vehicle manufacturer. After that investment, Cango explored business opportunities in the renewable energy sector, including high-computing resource projects related to AI, before venturing into Bitcoin mining.
“Bitcoin mining is a very good way to rebalance energy grids,” Ye said, referring to the fact that Bitcoin miners can easily turn their equipment on and off. Some jurisdictions, like Texas, take advantage of that capability by encouraging miners to operate during periods of low energy consumption and paying them to shut down their machines when local demand spikes, such as during heat waves or snowstorms.
With Bitcoin's hashrate hovering around 823 EH/s, Cango will provide approximately 6% of Bitcoin's total computing power once the company's 50 EH/s are fully online. For reference, MARA Holdings (MARA), the largest publicly traded mining company in the world, had 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, had 32 EH/s and 26 EH/s respectively.
“The imperative for scale operations in the Bitcoin mining sector was a fundamental consideration in our decision to enter this domain,” the Cango management team told CoinDesk in an email.
“The current landscape is characterized by industry consolidation, with larger-scale operations becoming increasingly dominant due to the rising difficulty of mining and the need for cutting-edge hardware.”
An important difference between Cango and other heavyweights in mining is that Cango does not operate its own mining fleet at this time. With machines distributed all over the world (including the United States, Canada, Paraguay, and Ethiopia), Cango still largely relies on Bitmain for facilities and infrastructure, and to ensure that the sites run smoothly.
“Even though we entered the industry with a significant amount of computing power, we are still new here and need time to adapt to the standards and better understand the fiscal situation and the rest of the market,” said Ye. “That’s why, initially, we decided to work alongside Bitmain and use their operational equipment.”
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. Developing an in-house mining team is likely to be more cost-effective than relying on Bitmain's expertise in the long run.
As for what Cango plans to do with its growing Bitcoin reserves, that will depend on how the year unfolds, said Ye. "We do not rule out the possibility of making some tactical reductions [to Bitcoin holdings] based on market conditions," he said. Cango mined 363.9 BTC just in November, an amount worth approximately $35 million at the time of writing this article.