“How a Lending Company from China Transformed into a Bitcoin Mining Giant”

In the latter part of 2024, Cango (CANG), a Shanghai-based company that has traditionally focused on providing car loans, surprised the cryptocurrency world with its bold move into the bitcoin mining sector, rapidly positioning itself as one of the largest players in the industry.

Cango, which holds a market capitalization of $363 million, has secured 50 exahashes per second (EH/s) of mining power, aiming to become one of the top bitcoin miners globally. This ambitious move will transform the company’s operations and make it a formidable presence in the mining arena.

“It might be surprising to some in the bitcoin mining community, as few had heard of Cango before,” Juliet Ye, Cango’s senior communications director, shared with CoinDesk. “But our history is one of adaptability. We’ve pivoted into new sectors several times since our founding in 2010.”

The transition into bitcoin mining comes with significant financial commitment. To acquire the first 32 EH/s of mining power, Cango paid $256 million in cash to Bitmain, a leading manufacturer of mining machines. The remaining 18 EH/s will cost Cango $144 million, in the form of shares issued to Golden TechGen, a company led by former Bitmain CFO Max Hua, as well as other undisclosed sellers. Post-transaction, Golden TechGen and other sellers will hold approximately 37.8% of Cango.

Cango’s new direction is already producing strong results, as evidenced by a remarkable 362% increase in the company’s stock price in 2024, closing the year at $4.56 per share. Ye highlights that the company’s growing presence in the bitcoin mining space has helped attract attention that it had struggled to gain in the past.

“Being a small- to mid-cap Chinese firm listed in the U.S. was tough for us to gain visibility,” Ye explained. “But now, with our move into mining, we’ve sparked a lot of interest. It’s something we’ve never seen before.”

Historically, Cango has been known for assisting Chinese banks in providing car loans. However, over the years, it has expanded its business into different areas. After going public in 2018, Cango explored ventures such as exporting cars and investing in Li Auto, an electric vehicle manufacturer. The company also delved into renewable energy projects before setting its sights on bitcoin mining.

Ye sees bitcoin mining as a way to complement energy grid management, especially because miners can easily adjust their operations based on fluctuating energy demands. For instance, in areas like Texas, miners are incentivized to pause their operations during times of high demand, like during heatwaves, which helps balance the grid.

With Bitcoin’s current hashrate around 823 EH/s, once Cango’s 50 EH/s are fully operational, it will control roughly 6% of the network’s total mining power. For comparison, MARA Holdings (MARA), the world’s largest publicly traded miner, operated just over 47 EH/s as of November, with CleanSpark (CLSK) and Riot Platforms (RIOT) at 32 EH/s and 26 EH/s, respectively.

“The bitcoin mining industry’s focus on scalability was a critical factor in our decision to enter this field,” Cango’s leadership team told CoinDesk via email. “We’re witnessing industry consolidation, with larger operations dominating due to increasing mining difficulty and the need for state-of-the-art hardware.”

Unlike many established players in the sector, Cango is not yet operating its own mining facilities. Instead, the company has its equipment located in several countries, including the U.S., Canada, Paraguay, and Ethiopia, relying heavily on Bitmain for operational support and infrastructure.

“Even with significant computing power, we’re still new to the industry,” Ye noted. “We’re taking time to understand the industry’s standards, tax regulations, and market trends. Initially, we decided to partner with Bitmain to leverage its operational expertise while we ramp up.”