Cango: From Transition to Traction

Results in Line with Market Expectations. In 2Q25, Cango reported total revenues of US$140 million, with the Bitcoin mining business generating US$138 million. Adjusted EBITDA for the quarter was US$99.1 million, while the GAAP net loss attributable to Cango's shareholders was US$295 million. This net loss was primarily due to non-operational factors, which are viewed as the “growing pains” of the company’s transformation. The loss stemmed from two one-off items: 1) A non-cash impairment loss related to the revaluation of 18EH mining machines, caused by a rise in stock price; 2) A one-off loss of US$82.6 million due to the disposal of Chinese assets, based on third-party valuation. Both items are part of Cango’s long-term strategic investments. As of 2Q25, Cango maintained $118 million in cash and cash equivalents, ensuring strong liquidity for future business expansion, strategic investments, and to manage market fluctuations.

Rapid Growth and Strong Operational Performance. Impressive Transformation: Within just 9 months of its transformation, Cango has emerged as one of the world’s second-largest bitcoin mining companies by hash rate, reaching 50 EH/s in Q2 (representing 6% of global mining capacity). Mining revenue for Q2 was RMB 989 million, accounting for over 98% of total revenue. Operational Excellence: From July to August, Cango saw a significant increase in mining machine uptime. The company reported an adjusted EBITDA of RMB 710 million, with bitcoin mining costs per unit at approximately US$98,000 (below market price), showcasing a competitive cost advantage over its peers. In August, Cango also acquired a 50 MW U.S. mining facility, laying the groundwork for future capacity expansion.

Clear Strategic Path and Promising Future: 1) Short-Term Strategy: Cango aims to: Maximize the potential of its 50 EH/s mining capacity, enhancing operational efficiency through improved maintenance practices and advanced mining machine upgrades. 2) Focus on cost control, particularly through the acquisition of low-cost mining sites, which will further reduce electricity costs and solidify Cango’s competitive edge. 3) Expand its green energy and energy storage business, which will not only reduce mining-related electricity expenses but also generate diversified income through green electricity sales or self-consumption. 4) Long-Term Vision: Cango is positioning itself for a transition from a pure bitcoin mining business to an “Energy + HPC (High-Performance Computing)” platform. The company has already planned an HPC pilot, expected to launch in the first half of 2026, which will position Cango at the intersection of AI-driven mining capacity and energy collaboration.

Attractive Valuation with Re-Rating Potential. Cango’s shares are currently trading at US$5.50 per ADS, with a market capitalization of US$1,002 million. We forecast revenues of US$609 million and US$850 million for CY2025 and CY2026, respectively. This equates to price-to-sales (P/S) multiples of 1.6x and 1.2x, significantly below the peer group averages of 6.9x and 4.8x. With Cango’s exit from its China-based operations and the removal of associated regulatory risks, we expect the current valuation discount to narrow. This should enable Cango’s multiples to re-rate closer to peers like Marathon Digital (MARA), Riot Platforms (RIOT), and Core Scientific (CORZ).