Chinese Auto Dealer Dives Into Bitcoin Mining With $256M Investment

Shanghai-based automobile dealership Cango Inc. has pivoted to Bitcoin (BTC) mining, saying a $256 million acquisition of 32 exahashes per second (EH/s) in hashrate from Bitmain Applied sciences.

In November, the corporate extracted 363 BTC, value about $36 million, with out liquidating any property, positioning it as one of many prime gamers within the world Bitcoin mining trade.

Cango Joins BTC Mining Bigwigs

In accordance with The MinerMag, the transfer makes Cango the fifth-largest public Bitcoin miner by realized hashrate and the third-biggest by deployed hashrate. Its manufacturing accounts for 4% of the BTC mined every day world wide, a significant achievement given the agency solely not too long ago entered the sector.

Cango’s enlargement into BTC mining is backed by strategic acquisitions. The preliminary buy from Bitmain, together with on-rack miners, is reportedly hosted within the U.S., probably in Georgia, beneath an 18-month colocation settlement.

Such a contract permits the corporate to accommodate its {hardware} with a service supplier in a safe and managed atmosphere with out the necessity to preserve its personal knowledge facilities. That is particularly necessary provided that crypto mining was formally prohibited in China in Could 2021 on account of considerations about monetary threat, vitality consumption, and environmental influence.

Curiously, even with the ban, Chinese language mining swimming pools nonetheless management an enormous chunk of the worldwide BTC hashrate, estimated by some consultants to be round 55%.

Cango additionally plans to safe one other 18 EH/s from Golden TechGen, an organization owned by ex-Bitmain CFO Max Hua. The deal, anticipated to be finalized by the top of March 2025, is claimed to contain the issuing of $144 million in frequent inventory, doubtlessly bringing the NYSE-listed motor dealership’s complete hashrate to 50 EH/s. This is able to permit Cango to doubtlessly match trade leaders resembling Marathon Digital Holdings.

Hypothesis is rife that the {hardware} in query will embody Bitmain’s Antminer S19XP rigs, purchased at a comparatively aggressive $8 per terahash per second (TH/s).

Bitcoin Guess Pays Off

With BTC costs hovering across the $100,000 degree and the community hashprice rebounding to $63 per petahash per second (PH/s), Cango’s enterprise into crypto seems well-timed. Whereas it additionally marks a dramatic shift from the corporate’s origins as an automotive transaction service supplier, it’s in line with the agency’s fixed reinvention of itself.

Based in 2010, it initially centered on motorized vehicle financing earlier than shifting into automobile buying and selling on account of regulatory pressures in China. Earlier within the 12 months, it diversified its operations additional, launching AutoCango.com, a platform providing used Chinese language vehicles to patrons worldwide.

Nonetheless, Cango has acknowledged that its new BTC mining operation might dominate its income streams within the close to time period, particularly provided that its preliminary revenue from the enterprise surpassed its Q3 income of $3.84 million many instances over. The efficiency pushed the corporate’s inventory value from $3.41 to $6.91, boosting its market cap to $500 million.