Executive Summary / Key Takeaways

• Cango Inc. has undergone a profound strategic transformation, pivoting from its legacy auto financing and used car business in China to become a leading global Bitcoin mining company, now boasting 50 exahash of computing power.
• The company's asset-light model, focused on acquiring "Plug & Play" mining rigs and strategically securing low-cost energy sites like the recent Georgia acquisition, enables rapid, cost-effective scaling and competitive all-in mining costs despite higher cash costs per Bitcoin.
• Cango's operational efficiency is a key differentiator, with Q1 2025 metrics like a 94% efficiency rate and 21.6 joules per terahash power efficiency placing it among the top publicly listed miners.
• With a "Mine and Hold" strategy and Bitcoin holdings exceeding 5,000 BTC, Cango is poised for significant production growth, projecting over 7,000 Bitcoins in 2025, while actively exploring diversification into AI/HPC workloads and renewable energy solutions for future growth.
• Despite a Q2 2025 net loss driven by one-off accounting adjustments related to its China divestiture and a share-based payment, the underlying Bitcoin mining business demonstrated robust operational strength with RMB 710.1 million in adjusted EBITDA.

A New Era: Cango's Strategic Pivot to Digital Assets

Cango Inc., once a prominent automotive transaction service platform in China, has dramatically reshaped its identity, emerging as a formidable player in the global Bitcoin mining industry. This transformation, initiated in late 2024, marks a decisive shift from its traditional business, driven by a strategic vision to capitalize on the burgeoning digital asset economy and the escalating demand for computing power. The company's journey, from navigating macroeconomic shifts in the automotive sector to establishing itself among the world's top Bitcoin miners, underscores a remarkable adaptability and a clear focus on future growth opportunities.

The foundation of Cango's current strategy lies in its asset-light Bitcoin mining model. This approach prioritizes the rapid and cost-effective acquisition of "Plug & Play" mining rigs, allowing for quicker scaling compared to more capital-intensive, vertically integrated competitors. The company's global footprint, spanning North and South America, the Middle East, and Africa, strategically mitigates regional risks while enhancing operational efficiency. This diversified deployment, coupled with a "Mine and Hold" strategy for Bitcoin, positions Cango to leverage market opportunities while building long-term value.

Technological Edge and Operational Excellence

Cango's competitive standing in the Bitcoin mining sector is significantly bolstered by its technological differentiators and a relentless focus on operational efficiency. The company's asset-light model, centered on acquiring "Plug & Play" mining rigs, provides a distinct advantage. This strategy enables Cango to scale its operations more quickly and cost-effectively than rivals burdened by heavy equipment financing and extensive upfront capital investments in infrastructure. While this model can lead to higher cash costs per Bitcoin, as seen in Q2 2025 with a cash cost of $83,091 per coin, the significantly reduced depreciation expenses from low equipment acquisition costs result in competitive all-in costs, which stood at $98,636 per Bitcoin in the same quarter. This capital efficiency supports a solid return on capital employed and ensures resilience across market cycles.

Operational excellence is further evidenced by specific performance metrics. In the first quarter of 2025, Cango achieved an impressive average power efficiency of 21.6 joules per terahash, with March recording an even better 21.5 joules per terahash. The company's coin yield of 16.6 bitcoins per Exahash per second (Eh/S) and an efficiency rate as high as 94% placed it among the top three publicly listed mining companies. A significant portion of Cango's operational fleet, nearly 90% in Q1 2025, comprised water-cooled S19 XP models. This advanced cooling technology generally translates to more stable and efficient mining operations, particularly in varied climatic conditions, contributing to higher uptime and potentially longer equipment lifespan compared to air-cooled alternatives.

Looking ahead, Cango's technological roadmap is clear. The company aims to maximize value from its 50 Exahash mining capacity through continuous efficiency upgrades and by replicating the low-cost operational model established at its recently acquired Georgia site. This includes dynamically phasing out inefficient capacity and upgrading to more energy-efficient miners. Furthermore, Cango is actively pursuing a global energy strategy, conducting detailed cost analyses of existing hosting agreements and exploring partnerships in energy-rich regions like the Middle East and Australia for low-cost clean energy projects, including solar and natural gas. These initiatives are designed to reduce power costs, enhance energy security, and lay the groundwork for future expansion into high-performance computing (HPC) applications and AI workloads, ultimately aiming for near-zero-cost mining operations in the midterm.

Financial Performance and Liquidity

Cango's financial performance in the first half of 2025 reflects the profound impact of its strategic transformation. In the second quarter of 2025, the company reported total revenue of RMB 1 billion, with Bitcoin mining contributing the vast majority at RMB 989.4 million. This marked a significant shift from its legacy business, which generated only RMB 12.4 million in automobile trading income during the same period. While the company incurred a net loss of RMB 2.1 billion in Q2 2025, this figure was primarily influenced by two one-off accounting adjustments: a $352 million loss from discontinued operations related to the divestiture of its legacy China assets in May, and a non-cash hedge accounting adjustment for mining equipment acquired via a share-based payment. Excluding these adjustments, Cango's adjusted EBITDA for Q2 2025 was a robust RMB 710.1 million, a clear indicator of the underlying operational strength of its Bitcoin mining business. This represents a substantial increase from RMB 27.6 million in adjusted EBITDA reported in Q1 2025.

In the first quarter of 2025, Cango mined 1,541 Bitcoins, generating RMB 1 billion (USD 144 million) in Bitcoin mining revenue out of a total revenue of RMB 1.1 billion (USD 145 million). The average cash cost to mine Bitcoin, excluding depreciation, was $70,602.1 per coin in Q1 2025. The company's operating loss of $21.42 million in Q1 2025 was largely attributed to a decline in Bitcoin prices towards the end of March, impacting the fair value of its Bitcoin holdings. Looking back to the fourth quarter of 2024, Cango's total net revenue surged over 400% year-over-year to RMB 668 million, driven by the nascent Bitcoin mining business, which contributed RMB 653 million. For the full year 2024, the company achieved total revenue of RMB 804.5 million and a net profit of RMB 299.8 million.

Cango maintains a strong liquidity position, crucial for funding its ambitious expansion plans. As of June 30, 2025, the company held $118 million in cash and cash equivalents, providing ample capital for strategic initiatives. The $352 million cash proceeds from the divestiture of its China business further bolstered its financial flexibility. With a relatively low debt-to-equity ratio of 0.22 (TTM), Cango has ample room for additional leverage and plans to prioritize debt financing over equity financing for future growth. The company's "Mine and Hold" strategy, with Bitcoin holdings exceeding 5,000 BTC as of Q2 2025, further enhances its balance sheet strength and long-term value proposition.

Competitive Landscape and Strategic Positioning

Cango has rapidly ascended to a prominent position within the highly competitive Bitcoin mining industry. With 50 exahash per second (EH/s) of deployed computing power as of June 30, 2025, representing approximately 6% of the global network hashrate, Cango firmly ranks among the world's top miners. This scale was achieved swiftly, with the company becoming the third-largest Bitcoin miner globally by November 2024 with 32 EH/s, and aiming to be the second-largest, closely trailing industry leader Marathon Digital Holdings (MARA). Other notable competitors in the space include CleanSpark (CLSK), Riot Platforms (RIOT), BitFuFu (FUFU), and Canaan Inc. (CAN).

Cango's asset-light strategy provides a distinct competitive advantage. By focusing on the strategic acquisition of "Plug & Play" mining rigs with minimal upfront capital, the company can scale its operations more rapidly and cost-effectively than vertically integrated competitors who bear the heavy burden of building out extensive infrastructure. This model, while potentially leading to higher cash costs per Bitcoin, results in competitive all-in costs due to significantly reduced depreciation expenses. The company's diversified geographic footprint across North and South America, the Middle East, and Africa further mitigates regional risks and enhances operational stability, a critical factor in an energy-intensive industry.

The acquisition of a 50-megawatt mining facility in Georgia, USA, in August 2025 for $19.5 million, marks a pivotal step towards vertical integration and cost optimization. This facility will not only reduce power costs and enhance operational stability but also provide Cango with critical hands-on management expertise, laying a solid foundation for future business expansion into the energy plus High-Performance Computing (HPC) sector. This strategic move allows Cango to gain control over a portion of its energy supply, a key competitive battleground in Bitcoin mining. While the crypto industry presents high barriers to entry, including substantial capital investment and comprehensive operational readiness, Cango's established scale, operational efficiency, and strategic relationships position it favorably against potential new entrants and existing rivals.

Outlook, Guidance, and Future Growth

Cango's outlook is characterized by an ambitious roadmap for continued growth and diversification within the digital asset and computing infrastructure sectors. In the near term, the company is focused on maximizing value from its current 50 exahash of mining capacity. This will be achieved through implementing efficiency upgrades, such as dynamically phasing out inefficient miners and enhancing its operational team, and by replicating the low-cost operational model of its newly acquired Georgia site. Management anticipates that the full deployment of its 50 exahash capacity will significantly increase absolute Bitcoin production and improve the cost profile on a per-coin basis, despite expected industry-wide headwinds from the rapid increase in global network hashrate in Q3 2025. Based on its deployed hashrate, Cango forecasts an annual production of around 6,000 Bitcoins, with potential to exceed 7,000 Bitcoins and possibly reach 8,000 Bitcoins by the end of 2025.

Looking to the midterm, Cango plans to pilot renewable energy storage projects aimed at achieving near-zero-cost mining operations. This initiative, alongside retrofitting select facilities to support HPC applications, represents a strategic move towards leveraging its energy expertise for higher-value computing. The long-term vision is to build a dynamic computing platform that intelligently balances Bitcoin mining and AI workloads, powered by its expanding energy infrastructure. This strategic evolution into AI data centers and green energy computing centers is a key driver for future growth and diversification, addressing the global surge in computing power demand.

Management holds an optimistic view on Bitcoin's future, anticipating it may trade between $90,000 and $120,000 in 2025, driven by increased institutional adoption and regulatory approvals. The company's "Mine and Hold" strategy is predicated on this long-term value appreciation. While the Bitcoin mining business is the primary focus, Cango will continue to operate its lean, asset-light AutoCango used car export platform, projecting to escrow 1,500 used cars with a total value of $15 million in 2025. The company also plans to change its reporting currency from RMB to U.S. dollars starting from the third quarter of 2025, reflecting its global operational profile.

Risks and Challenges

Despite its compelling growth trajectory, Cango faces several pertinent risks. The inherent volatility of Bitcoin prices remains a significant factor, as evidenced by the Q1 2025 operating loss primarily due to a decline in Bitcoin's fair value. While Cango's "Mine and Hold" strategy and substantial capital reserves aim to mitigate this, sustained price downturns could impact profitability and liquidity.

Another challenge is the continuous upward pressure on mining costs across the sector, driven by the rapid increase in the global network hashrate and rising electricity expenses. Cango is actively addressing this through efficiency optimization, strategic site acquisitions, and exploring low-cost clean energy projects, but these efforts require ongoing investment and execution. Regulatory risks, particularly in the U.S. where a significant portion of its operations are located, also warrant close monitoring. While most computing-friendly states currently have no restrictive policies, potential changes or increased scrutiny, such as calls for national security probes, could introduce uncertainty and impact operational flexibility.

Furthermore, with Bitcoin mining accounting for nearly all of its Q1 2025 revenue, Cango faces a concentration risk. While the long-term strategy includes diversification into AI/HPC, the company's immediate financial performance is heavily tied to the Bitcoin market.

Conclusion

Cango Inc. has executed a remarkable transformation, shedding its legacy auto financing business to become a rapidly scaling, asset-light leader in Bitcoin mining. The company's strategic pivot, underpinned by a robust 50 exahash computing capacity and a "Mine and Hold" philosophy, positions it at the forefront of the digital asset economy. Its focus on operational efficiency, evidenced by strong power efficiency metrics and the strategic acquisition of low-cost energy sites, provides a tangible competitive edge against rivals.

While the journey is not without risks, particularly Bitcoin price volatility and rising mining costs, Cango's proactive management of these challenges through technological optimization, geographic diversification, and a clear roadmap for future growth into AI/HPC computing offers a compelling investment narrative. The company's strong balance sheet and commitment to strategic expansion underscore its potential to unlock significant long-term value, making CANG a noteworthy consideration for discerning investors seeking exposure to the evolving landscape of digital infrastructure.