Cango Inc. (CANG.US) Has Minted 2,944 Bitcoins Since Entering the Mining Business Last November

Chinese companies are no strangers to the “cattle effect,” which sees everyone rush into the latest hot sector, aiming to get a piece of the action. Cango Inc. (CANG.US)

Key Takeaways:

Cango (CANG.US) reported a 155.5 million yuan operating loss in 1Q25, versus a 74.2 million yuan operating profit a year earlier. Its adjusted EBITDA also fell to 27.6 million yuan from 108.4 million yuan.

The company’s net loss was 207.4 million yuan in the quarter, reversing a 90 million yuan profit.

Cango said its revenue nearly doubled to 1.1 billion yuan in the first quarter of 2025 from 668 million yuan in last year’s fourth quarter.

Cango Inc (CANG.US) is learning that a growing pool of rivals chasing a limited pool of assets ultimately results in smaller slices of the pie, with the recently minted bitcoin miner reporting a widening operating loss and a slowdown in bitcoin output.

Still, the global supply of bitcoin is still more than large enough to keep quite a few people employed, including Cango, which entered the mining business last November in a surprise pivot from its legacy businesses in auto financing and trading. Cango’s latest quarterly results, released on Wednesday, showed how the effects of growing competition are eating into the productivity of its mining operation.

The company also provided some of the most detailed information to date on its global footprint, which includes mining facilities on four continents. Such diversity is part of its asset-light model that Cango believes is one of its most important strengths, giving it the flexibility to quickly add capacity and adjust its business mix by renting space in mining facilities owned by third parties.

While such a strategy carries greater flexibility, it also tends to come with higher costs, especially for electricity, than the self-owned facilities used by many of its rivals. Cango also revealed that it won’t be an active bitcoin trader by selling its assets whenever the market gets wobbly.

Reflecting that, the company revealed it has yet to sell any of the bitcoins it has mined since entering the business late last year, with its bitcoin holdings totaling 2,944.8 at the end of April, according to an announcement earlier this month on its April output.

“Given our strong confidence in the bitcoin’s long-term value appreciation potential, we have adopted a ‘Mine and Hold’ strategy, prioritizing both self-mining and long-term holding,” said Cango CEO Lin Jiayuan in the company’s latest quarterly results.

“Looking ahead, we will continue to consolidate and optimize our existing computing resources to maximize efficiency while actively exploring high-quality M&A opportunities to further scale our operations and deliver long-term value to all stakeholders.”

Cango’s ‘mine and hold’ strategy got one of its biggest tests in the first quarter, as the cryptocurrency’s price stumbled starting in March from previous highs of more than $100,000. The currency fell steadily from there to as low around $76,000 last month, before regaining strength to return to the $100,000 level.

Such volatility will inevitably affect the value of Cango’s bitcoin holdings, and, as a result, its overall performance. The company cited the March sell-off as the primary factor that pushed it into the red on an operating basis during the first quarter, as it reported a 155.5 million yuan ($21.6 million) operating loss for the period. That compares to a 74.2 million yuan operating profit a year earlier.

On the bottom line, the company also reported a net loss of 207.4 million yuan for the quarter, reversing a 90 million yuan profit. Most of the loss was due to unrealized losses related to fair value changes in its bitcoin holdings during the cryptocurrency’s March downturn.

It remained profitable on an adjusted EBITDA basis, though its adjusted EBITDA also fell to 27.6 million yuan in the first quarter from 108.4 million yuan a year earlier.

None of that is really too important for Cango, at least not right now, since the company’s cash and short-term investments have recently surged due to its growing bitcoin holdings. The company said it had 7.7 billion yuan worth of cash and short-term investments at the end of March, or more than triple the 2.5 billion yuan it had just three months earlier.

Its cashflow statement also showed how quickly its bitcoin mining operations generated cash despite the recent downturn in the crypto market. Cango reported strong cash from operating activities of 2.0 billion yuan in the first quarter, up from 638.4 million yuan a year earlier.

The company also reported revenue of 1.1 billion yuan in the first quarter of 2025, nearly double the 668 million yuan it reported in last year’s fourth quarter