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 specializing in providing loans to car buyers.
Based in Shanghai and valued at $363 million on the stock market, Cango is in the process of acquiring 50 exahashes per second (EH/s) worth of mining power, meaning the auto lending platform will become one of the largest bitcoin miners in world when its entire fleet goes online.
“I think it’s surprising for people in the (bitcoin mining) industry because nobody has heard of Cango before,” Juliet Ye, the company’s senior director of communications, told CoinDesk in an interview. “But the history of Cango is a history of adaptation. We have diversified into different areas at least two or three times (since the company was founded in 2010).
Getting a massive bitcoin mining fleet isn’t cheap. Cango paid $256 million in cash for the first 32 EH/s worth of computing power, which it bought from bitcoin mining machine maker Bitmain. It will issue $144 million worth of shares for the remaining 18 EH/s, which it is acquiring from Golden TechGen — a firm owned by former Bitmain Chief Financial Officer Max Hua — as well as other undisclosed who sells mining machines. Once the transaction is settled, Golden TechGen and these other sellers will own approximately 37.8% of Cango.
Diversification in bitcoin mining is paying off. Cango stock ended 2024 at $4.56, up 362% from the start of that year. Even better, Ye said, the new bitcoin mining strategy catapulted Cango into the spotlight.
“It’s really difficult for us to get traction around the company, as a small to mid-cap listed Chinese company in the US,” Ye said. “All of a sudden, many people are interested in Cango. The buzz around the company — we’ve never seen it before.”
50 EH/s
Cango is more used to helping Chinese banks issue loans for people who want to buy cars. But the firm, which went public in 2018, had been diversifying its operations years before acquiring its bitcoin fleet.
Cango began handling the export of vehicles from China to the rest of the world and invested in Li Auto, a Chinese electric vehicle manufacturer. Following that investment, Cango explored business opportunities in the renewable energy sector, including high-compute power projects related to AI, before venturing into bitcoin mining.
“Bitcoin mining is a very efficient way to rebalance the energy grids,” Ye said, referring to the fact that bitcoin miners can easily turn their rigs off and on again. Some jurisdictions, such as Texas, take advantage of that ability by encouraging miners to operate during periods of low energy consumption, and paying them to shut down their machines when local demand increases, such as during of heatwave or blizzard.
In Bitcoin’s hashrate which now hovers at 823 EH/s, Cango will provide about 6% of the total computing power behind Bitcoin when the company’s 50 EH/s come fully online. For reference, MARA Holdings (MARA), the world’s largest publicly traded miner, property over 47 EH/s worth of computing power in November, according to TheMinerMag data. CleanSpark (CLSK) and Riot Platforms (RIOT), the next two largest, stand at 32 EH/s and 26 EH/s respectively.
“The Bitcoin mining sector’s need for scaled-down operations was a key consideration in our decision to enter this domain,” Cango’s management team told CoinDesk in an email.
“The current landscape is marked by industry consolidation, with larger operations becoming dominant due to the increasing difficulty of mining and the need for innovative hardware.”
A big difference between Cango and other mining heavyweights is that Cango does not operate its own mining fleet at the moment. With machines scattered around the world — including the US, Canada, Paraguay and Ethiopia — Cango still relies heavily on Bitmain for facilities and infrastructure, and to ensure the sites run smoothly.
“Although we entered the industry with a large amount of computing power, we are still new here, and we need time to adapt to the standards, and get a better understanding of the tax situation and the rest of the market,” Ye said. “So from the beginning, we chose to work with Bitmain and use its operations team.”
That situation is likely to change over time, Ye said, as Cango gains experience in the sector and aims to make its bitcoin mining operations more cost-effective. Nurturing an in-house mining team is likely to be cheaper than relying on Bitmain’s expertise in the long run.
As for what Cango plans to do with its growing bitcoin stash, that will depend on how the year unfolds, Ye said. “We do not rule out the possibility of making some tactical reductions (in bitcoin holdings) based on market conditions,” he said. Cango mined 363.9 BTC in November alone, a value of around $35 million at the time of writing.
