Cango's Q2 2025: Contradictions Emerge on Acquisition Strategy, Mining Priorities, and Green Energy Goals

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 5, 2025

Financials Results

• Revenue: RMB 1.0B (Q2 2025); Bitcoin mining RMB 989.4M; automobile trading RMB 12.4M; no prior-period comparison provided

Guidance:

• Near term: maximize value from 50 EH via efficiency upgrades, machine upgrades, and raising effective hashrate.
• H2 focus: selectively acquire low-cost U.S. mining sites (e.g., Georgia); consider Middle East where attractive.
• Maintain disciplined capex; remain open to M&A to expand computing power.
• Advance “green energy + storage” via global M&A and partner-led pilot projects.
• Retrofit select facilities to support AI/HPC; build hands-on ops expertise.
• Midterm goal: pilot renewable energy storage targeting near‑zero‑cost mining.
• Capital allocation prioritizes high-return operational expansion/AIDC; buybacks considered under existing program.
• Reporting currency to change to USD starting with Q3 2025 results.

Business Commentary:

* Bitcoin Mining Expansion and Growth: - Cango reported 50 exahash of computing power, representing approximately 6% of the global network's hashrate as of June 30, 2025. - The company mined 1,404.4 bitcoins in the second quarter of 2025, with July's production reaching 650.5 BTC, up 44% from June. - The growth was driven by the full deployment of 50 exahash mining equipment and strategic acquisitions of low-cost mining sites.

• Financial Performance and Strategic Investments:
• Total revenue in the second quarter 2025 was RMB 1 billion, with Bitcoin mining contributing RMB 989.4 million.
• Despite incurring a net loss due to accounting adjustments, adjusted EBITDA was RMB 710.1 million, reflecting the underlying strength of the Bitcoin mining business.

• The net loss was due to a one-off loss from discontinued operations and non-cash impairment loss, related to the divestiture of China assets and mining equipment acquisitions.

• Mining Operations and Cost Efficiency:

• Cash costs per BTC were $83,091 during the quarter, with all-in costs at $98,636 per BTC.
• The company's asset-light strategy resulted in higher cash costs but maintained competitive all-in costs due to reduced depreciation expenses.

• Cost efficiency was achieved by acquiring Plug & Play mining rigs with minimal upfront capital and leveraging regional diversified footprint.

• Green Energy and Infrastructure Investments:

• Cango acquired a 50-megawatt mining site in Georgia to reduce power costs and enhance operational stability.
• The company is pursuing pilot renewable energy storage projects and retrofitting facilities for HPC applications.

• These investments aim to achieve near-zero-cost mining operations and build a dynamic computing platform powered by expanding energy expertise.

• Legacy Business Leverage and Growth Opportunities:

• Cango's used car export platform, AutoCango, attracted over 6 million visits and surpassed 456,000 registered users.
• The platform hosts over 800,000 vehicles listings, connecting China's used car market with international buyers.
• Despite being a non-core focus, the legacy business continues to provide growth opportunities and supports a lean asset-light operation model.

Sentiment Analysis:

• Scaled to 50 exahash (~6% of network); July production 650.5 BTC, up ~44% m/m post full deployment. Adjusted EBITDA RMB 710.1M vs RMB 5.4M last year, demonstrating underlying strength. Net loss driven by one-off discontinued operations and noncash accounting impacts. Cash and equivalents RMB 843.8M (~$118M) support expansion. Asset-light model yields all-in cost of $98,636/BTC (cash cost $83,091), with plans to further optimize efficiency and power costs.

Q&A:

• Question from Emerson Zhao (Goldman Sachs): Road map for computing power and capex over the next 12 months; and timing/progress on green energy + storage?
  Response: Near term, optimize the existing 50 EH via efficiency upgrades and selective low-cost site acquisitions with disciplined capex and opportunistic M&A; green energy + storage will advance through global M&A and partner-led pilot projects.

• Question from Pingyue Wu (Citic Securities): Does acquiring sites signal a shift from asset-light to integrated operations, and will you buy more low-cost sites (regions/criteria)?
  Response: Selective site acquisitions enhance the asset-light model by securing cheap, stable power and ops expertise for an AI pivot; priority is U.S. (also Middle East), screening for low electricity cost, capacity/redudancy, and grid stability.

• Question from Joey Chee ([indiscernible] Securities): How will you maintain hashrate share amid miner supply constraints/efficiency limits, and are there U.S. policy risks?
  Response: Leverage asset-light playbook—buy cost-effective secondhand on‑rack miners, retire inefficient units, upgrade rigs, and pursue M&A; U.S. policy risk mitigated via local compliance/legal teams with most states supportive and active regulator engagement.

• Question from William Gregozeski (Greenridge Global): Target cost per BTC exiting the year; and will you repurchase shares vs. prioritize expansion?
  Response: New 50 EH fleet should lower unit costs but rising network hashrate is a headwind; cash prioritizes high‑return expansion/AIDC while buybacks remain an option under a balanced approach.

• Question from Kevin Dede (H.C. Wainright): August effective hashrate was ~44 EH vs 50 EH deployed—how will you close the gap?
  Response: Raise effective rate via miner upgrades and operational optimization while mitigating U.S. summer curtailment, targeting top‑tier (>90%) efficiency.

• Question from Kevin Dede (H.C. Wainright): What’s the single most important takeaway from the June quarter for investors?
  Response: Cango completed its transformation into a top-tier miner—50 EH scale, China exit, >5,000 BTC holdings—with cost optimization the next focus.