As a seasoned investor with a knack for spotting promising opportunities, I find Cango Inc.’s pivot into Bitcoin mining nothing short of intriguing. Having navigated through various market cycles and industry shifts, I’ve learned to appreciate the strategic agility that allows companies to adapt and thrive.
Shanghai automobile retailer Cango Incorporated has shifted its focus towards Bitcoin (BTC) mining, revealing a $256 million purchase of 32 exahash per second (EH/s) worth of hashrate from Bitmain Technologies.
In November, the company mined approximately 363 Bitcoins, valued around $36 million, using its resources only, thereby solidifying its status among the leading contenders in the international Bitcoin mining market.
Cango Joins BTC Mining Bigwigs
Based on information from The MinerMag, this action positions Cango as the fifth-largest publicly traded Bitcoin miner in terms of realized hashrate and the third-largest based on deployed hashrate. Notably, the company’s mining operations contribute approximately 4% to the daily global Bitcoin production, a significant milestone considering its relatively recent entry into the sector.
Cango’s move into Bitcoin mining is supported by shrewd purchases. Their first acquisition from Bitmain, which includes on-rack miners, is said to be situated in the United States, potentially in Georgia, as part of a 18-month rental arrangement for space.
With this contract, the company can store its hardware with a service provider in a protected and maintained setting, eliminating the necessity of managing their own data centers. This is particularly crucial because crypto mining was officially outlawed in China starting May 2021 due to fears about financial risk, energy consumption, and environmental concerns.
It’s intriguing that despite the ban, Chinese mining pools are believed to hold a significant portion of the worldwide Bitcoin hashrate, with some estimating their control at approximately 55%.
Additionally, it’s been announced that Cango aims to acquire an extra 18 EH/s from Golden TechGen, a firm controlled by former Bitmain CFO Max Hua. The agreement, tentatively scheduled for completion by the end of March 2025, reportedly includes the distribution of $144 million in common stock. If this deal goes through, it could boost Cango’s total hashrate to approximately 50 EH/s. This potential expansion could enable Cango to compete on par with leading companies like Marathon Digital Holdings.
It’s widely believed that the equipment under discussion might feature Antminer S19XP mining rigs, which were purchased at around $8 for each terahash per second (TH/s), a price considered reasonably competitive.
Bitcoin Bet Pays Off
As Bitcoin prices hover near $100,000 and the network’s hash rate recovering to approximately $63 per petahash per second (PH/s), Cango’s foray into cryptocurrency seems perfectly timed. This move represents a significant change from the company’s initial focus as an automotive transaction service provider, but it aligns with its history of continuous self-reinvention.
Established in 2010, this company originally specialized in auto loans but shifted towards car dealings due to regulatory changes in China. Recently, they expanded their services even more by introducing AutoCango.com, an online marketplace for selling used Chinese vehicles to global customers.
It’s worth noting that Cango has admitted that its Bitcoin mining operation could significantly impact its income sources in the short term. Notably, the earnings from this venture far exceeded its Q3 revenue of $3.84 million. This outstanding performance propelled the company’s stock price from $3.41 to $6.91, consequently raising its market capitalization to a staggering $500 million.
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2024-12-21 22:45