What to know:
- Cango, a Chinese automotive transaction service platform, forayed 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 firm is heavily relying on Bitmain for operational services.
As a seasoned researcher with over two decades of experience under my belt, I must admit that the sudden foray of Cango, a Chinese automotive transaction service platform, into bitcoin mining has caught my attention. Having closely followed the cryptocurrency market since its inception, I’ve seen many players come and go, but few have managed to make such a splash as quickly as Cango did.
The scale of their investment – $400 million on 50 EH/s of mining power – is staggering, especially considering that they are heavily relying on Bitmain for operational services. This move has not only propelled them into the ranks of the largest miners in the world but also brought them under the spotlight, a feat that was previously elusive given their relatively low profile as a small- to mid-cap listed Chinese firm in the US.
What’s intriguing is Cango’s history of adaptation and diversification. From automobile loans to car exports, renewable energy, and now bitcoin mining, they have consistently demonstrated an ability to identify opportunities and seize them with remarkable agility. Their foray into Bitcoin mining, in particular, seems to be paying off handsomely, given the significant growth in their stock price and the attention it has brought to the company.
However, as a researcher, I can’t help but wonder about the long-term implications of this move. Cango is currently relying on Bitmain for facilities and infrastructure, which raises questions about their ability to navigate the complexities of the mining industry independently. Only time will tell if they can build an in-house mining team and become self-sufficient, or if they’ll continue to rely on partnerships with established players like Bitmain.
In a lighter vein, I find it amusing that a company known for providing loans for automobiles is now using the electricity those cars consume to mine digital gold. It seems fitting in today’s world where traditional industries are increasingly intertwined with the digital economy!
2024 saw a significant disruption in the Bitcoin mining sector towards its end, as a fresh competitor emerged – Cango (CANG), a Chinese company known for offering auto loans.
As a researcher based in Shanghai, I’m excited to share that Cango, with a market value of $363 million, is in the midst of acquiring mining power equivalent to 50 exahashes per second (EH/s). Once fully operational, this auto lending platform will catapult itself into the ranks of the world’s largest Bitcoin miners.
In an interview with CoinDesk, Juliet Ye, senior director of communications for Cango, expressed that it might be surprising to those within the bitcoin mining industry as they’ve never heard of Cango before. However, she emphasized that Cango’s history is one of adaptability; the company has expanded into multiple sectors at least twice or thrice since its inception in 2010.
Obtaining such a substantial Bitcoin mining operation doesn’t come cheap. Cango spent $256 million in cash for the initial 32 EH/s of computing power from Bitcoin mining machine manufacturer Bitmain. They plan to issue shares worth $144 million for the remaining 18 EH/s, which they are acquiring from Golden TechGen, a company owned by former Bitmain CFO Max Hua, and other unnamed sellers of mining machines. Once the deal is finalized, Golden TechGen and these other sellers will hold approximately 37.8% of Cango’s shares.
The shift towards Bitcoin mining by Cango is proving to be successful. By the end of 2024, Cango’s stock closed at $4.56, representing a significant increase of over 362% from the beginning of that year. Moreover, Ye stated, this novel Bitcoin mining approach has brought Cango into the limelight.
As someone who has spent years working with small- to mid-cap listed firms, I can attest that gaining traction in a new market, particularly in the U.S., is no easy feat for Chinese companies. However, in the case of Cango, things seem to be turning around dramatically. The level of interest and buzz surrounding the company is unlike anything I’ve ever seen before in my professional experience. It feels like a breath of fresh air after years of hard work and perseverance. This newfound attention could be just what Cango needs to take off and achieve success in the highly competitive U.S. market.
50 EH/s
Cango has traditionally been involved in aiding Chinese banks in offering car purchase loans. However, this company, which became publicly traded in 2018, had begun expanding its business ventures long before it acquired its Bitcoin-related assets.
Initially, Cango began assisting with auto exports from China and even took part in investing in Li Auto, a Chinese electric vehicle producer. Subsequently, after this investment, they delved into potential business prospects within the renewable energy field, specifically focusing on high-performance computing tasks associated with artificial intelligence. Later on, they decided to step into the bitcoin mining industry as well.
As a seasoned energy expert with years of experience in grid management, I firmly believe that Bitcoin mining can play a crucial role in balancing energy grids. Having observed the dynamic nature of the cryptocurrency market and the adaptability of bitcoin miners, I have come to appreciate their ability to quickly turn their mining rigs on and off. This flexibility is not just a technical feat but a valuable resource for energy management.
In jurisdictions like Texas, where energy consumption patterns can vary significantly due to weather conditions, this attribute of Bitcoin mining can be leveraged effectively. By encouraging miners to operate during periods of low energy demand and offering incentives for them to shut down their machines when local demand surges, such as during heatwaves or blizzards, we can achieve a more stable and efficient grid.
This approach not only benefits the cryptocurrency market but also contributes to the broader goal of sustainable energy use. By harnessing the power of Bitcoin mining’s flexibility, we can create a greener and more resilient energy infrastructure for future generations.
When Cango’s 50 EH/s mining operations are fully operational, they will contribute approximately 6% of the total computational power driving Bitcoin, as its current hashrate stands at around 823 EH/s. For context, MARA Holdings, the world’s largest publicly traded miner, manages over 47 EH/s of computing power according to data from TheMinerMag in November. CleanSpark and Riot Platforms, the next two biggest players, had approximately 32 EH/s and 26 EH/s respectively at that time.
In their email to CoinDesk, Cango’s management team mentioned that the need for large-scale operations within the Bitcoin mining industry played a crucial role in their choice to join this field.
As a researcher, I find myself navigating an environment where large-scale mining operations are on the rise. The reasons being, the mining process has become progressively challenging, leading to the dominance of these larger entities. Furthermore, as technology advances and the demand for state-of-the-art hardware intensifies, these larger players seem to be better equipped to handle the requirements of modern mining.
One significant distinction between Cango and other prominent mining companies lies in its current lack of self-managed mining operations. As opposed to them, Cango’s mining equipment is dispersed globally – in locations such as the U.S., Canada, Paraguay, and Ethiopia. Consequently, Cango continues to heavily depend on Bitmain for operational facilities and infrastructure, ensuring smooth site operations.
Despite bringing a substantial computing power into the industry, we are still fresh faces here and require some time to acclimate to the standards, grasp the tax landscape, and familiarize ourselves with the market as a whole. Recognizing our need for guidance and experience, we initially opted to collaborate with Bitmain and leverage their operational teams.
Over time, the current situation is expected to evolve as Cango becomes more knowledgeable about the sector and strives to optimize its bitcoin mining operations for greater economic efficiency. In the long term, it seems that developing an internal mining team may prove less costly than depending on Bitmain’s expertise.
Regarding Cango’s intended actions with its expanding Bitcoin reserves, these decisions will likely be influenced by how the upcoming year unfolds, according to Ye. She also mentioned that they might consider strategic reductions in their Bitcoin holdings if market conditions warrant it. Notably, Cango mined approximately 363.9 Bitcoins in November, which at the time of writing was roughly equivalent to $35 million in value.
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2025-01-03 18:33