The Chinese market is bleak! Shanghai used car dealer Cango spends $400 million to 'enter the US Bitcoin mining market', and its stock price skyrockets by 84%.

Cango, an automotive trading service platform headquartered in Shanghai, announced its entry into the Bitcoin mining business, investing a total of $400 million to acquire 50 EH/s of computing power, making it one of the largest miners in the world. Cango's Director of Communications, Juliet Ye, stated in an interview with CoinDesk yesterday that this move aims to seek diversified revenue sources. (Background: Ethiopia Power Company '18% of revenue comes from Bitcoin mining', cheap hydropower makes it a new paradise for mining enterprises) (Background: Russia announced a ban on mining in 10 regions until 2031, fearing the electricity grid will be drained) Cango Inc. (NYSE: CANG), based in Shanghai, announced its foray into the cryptocurrency mining sector last November, sparking curiosity from the outside world. The details of this transaction and the reasons why Chinese companies choose to bypass domestic mining bans and invest in Bitcoin mining overseas were finally explained by Cango's relevant personnel recently. Is the slowdown of China's economy stimulating overseas expansion? According to reports, the recent economic situation in China is not optimistic, with economic data from first-tier cities such as Shanghai and Beijing showing signs of deflation, with average consumer spending actually declining by 14-18%. The situation is even worse in second-tier cities, causing disturbances in traditional industries primarily based on domestic demand. Cango's latest financial report shows a significant decline in its traditional business revenue. As of the third quarter of 2024, total revenue was only 27 million yuan (about $3.8 million), down 92.36% compared to 353.6 million yuan in the same period of 2023, which may explain why Cango ultimately chose to 'escape China' and operate in overseas markets. How to profit from car loans to Bitcoin mining? Recently, Cango's Director of Communications, Juliet Ye, stated in an interview with CoinDesk on the 3rd that the Bitcoin mining industry might surprise the market, as no one had heard of Cango before. However, Cango's history is one of adaptation and transformation. Since its establishment in 2010, we have undergone at least two to three business diversification transformations. Cango primarily provided auto loan services to Chinese banks, but even before venturing into Bitcoin mining, it had already begun diversifying its business. First, Cango started facilitating the export of Chinese cars to overseas markets and invested in Li Auto, a Chinese electric vehicle company. Subsequently, the company further ventured into the renewable energy sector, exploring high-computing power projects related to artificial intelligence (AI), eventually entering the Bitcoin mining business. Juliet Ye stated that Bitcoin mining is an effective way to balance the energy grid: Bitcoin miners can flexibly turn mining equipment on or off. For example, in Texas, the local government encourages miners to operate equipment during low energy demand and pays miners to shut down during peak demand periods (such as heatwaves or snowstorms) to stabilize the grid load. How do Chinese companies operate mining companies? Although Cango possesses large computing power, the company stated that it is still a newcomer in the field, adapting to industry regulations and understanding tax and market conditions. Therefore, its main difference from other mining giants is that Cango is currently not operating its own mining equipment but has chosen to cooperate with Bitmain, leveraging its operational team to ensure smooth operations. According to the press release at the time, these mining machines will not be deployed in China, where mining is banned, but will be operated under a contract where Cango takes over Bitmain's mining machines that have already been deployed in the United States. An anonymous mining expert was also inquired by the media, indicating that this typically belongs to a form of cloud computing power purchase, where the ownership of the mining machines belongs to Cango, while the operation and mining entities are in the United States, managed by Bitmain. This avoids the legal risks for Chinese companies unable to operate Bitcoin mining since Cango will ultimately only gain foreign currency income from mining. Cango plans to cultivate an internal mining team to make its Bitcoin mining business more economically efficient. Regarding how it will handle the mined Bitcoin, Cango stated that there are currently no clear plans, but they do not rule out the possibility of selling according to market conditions. As of now, Cango has mined 363.9 Bitcoins in November and 569.9 Bitcoins in December, increasing its Bitcoin holdings to 933.8 Bitcoins, valued at approximately $91.51 million. No Bitcoin has been sold yet. The company's average computing power reached 30.4 EH/s, an increase of 2% quarter-on-quarter. Stock price surged after entering mining. Entering Bitcoin mining has spurred Cango's stock price to rise. The company's stock closed at $4.56 in 2024, an increase of over 362% since the beginning of the year. As of the time of writing, it is reported at $5.25, a surge of about 84% in just two months compared to early November stock prices. Juliet Ye stated that this new mining strategy has made Cango a focal point of market attention. As a small to medium-sized Chinese company listed in the United States, we have found it difficult to attract outside attention in the past, but now, suddenly, many people are expressing great interest in Cango, and the discussions about the company are unprecedented. Becoming one of the largest mining companies in the world. According to a recent report from TheMinerMag, Cango initially purchased its first batch of 32 EH/s of computing power from Bitcoin mining machine manufacturer Bitmain for $256 million in cash and has agreed to acquire an additional 18 EH/s of computing power through the issuance of $144 million worth of common stock from Golden TechGen and other entities. Therefore, Cango has invested a total of $400 million to acquire 50 EH/s of computing power, making it one of the largest miners in the world. The current Bitcoin computing power hovers around 753.11 EH/s, meaning that once Cango's 50 EH/s is fully operational, it will provide approximately 6.6% of the computing power behind Bitcoin. In comparison, according to TheMinerMag's data, as of November, the largest publicly traded mining company, MARA Holdings (MARA), had slightly over 47 EH/s of computing power, followed by CleanSpark (CLSK) and Riot Platforms (RIOT), with computing powers of 32 EH/s and 26 EH/s, respectively. Related Reports: Is Alipay's new cryptocurrency advertisement a sign of lifting the ban? Lawyer: China may open currency franchise, but mining and issuing currency are still far off. In Malaysia, multiple landlords have been victims of 'power theft mining'! Electricity bills exceed 2 million TWD, selling houses is not enough. (Opinion) If the US becomes the center of Bitcoin mining and AI, ultra-high voltage transformers will become a new concept stock for Trump. "The Chinese market is bleak! Shanghai used car dealer Cango spends $400 million to 'enter the US Bitcoin mining market', and its stock price skyrockets by 84%!" This article was first published on BlockTempo (the most influential blockchain news media).