Original | Odaily Planet Daily (@OdailyChina)

Author | Wenser (@wenser 2010)

Thanks to multi-billion dollar orders from internet giants like Microsoft, Google, and Amazon, recent stock prices of crypto mining companies such as IREN and Cipher have surged. However, unlike traditional mining companies that are pivoting towards AI data centers, one of the top three crypto mining companies globally has chosen to steadfastly maintain its crypto mining business while quietly laying out energy services. This company is the protagonist of our discussion today—“new crypto mining company” Cango Inc. (灿谷).

On the occasion of the one-year anniversary of Cango's business transformation, Odaily Planet Daily once again conducted an in-depth interview lasting nearly 2 hours with Cango's spokesperson Juliet Ye. This interview not only provided insights into Cango's past business transformation opportunities and current business composition but also explored some of Cango's future development plans and industry judgments on crypto trends. Below are the specific contents, with some edits made for the sake of fluency.

Note: The interviewer is Odaily Planet Daily reporter Wenser, and the interviewee is Cango's PR & IR (Investor Relations) Director Juliet Ye.

Q1: What is Juliet Ye's story with Cango and what is the current team composition at Cango?

A: I joined the company on the eve of its IPO in 2018, when Cango was a leading player in the traditional automotive finance industry. I had previously worked at The Wall Street Journal for 5 years, then moved to a media PR company, and ultimately chose to join Cango to embark on a new chapter in my career. It is worth mentioning that although Cango officially transitioned into the BTC mining industry only last November and is a “new face” in the crypto mining circle, it is actually a mature company that has been established for 15 years (founded in 2010) and has been listed on the US stock market for over 7 years (listed in 2018).

After the transformation, Cango divested its traditional automotive finance services, and the team size has been streamlined from a peak of 4,000 to around 100 globally, adopting a more “small but beautiful” organizational structure, primarily consisting of a Bitcoin mining operations team and back-office support departments of the listed company.

Q2: Has Cango's crypto transformation been completed?

A: There is no doubt that we have transformed into a fully-fledged BTC mining company, with two landmark events to support this:

First, on the business level. In May of this year, Cango completely sold off its traditional automotive finance-related business in the Chinese market. Currently, we have no business operations in China, and our main business is overseas BTC mining.

Second, on the organizational level. In July of this year, a new management team, including CEO Peng Yu, took office. The core team possesses rich operational and investment experience in the digital currency industry. The transition to a Bitcoin mining company is a starting point rather than an endpoint for Cango; we are heading towards a grander direction—to become a comprehensive energy service solution provider.

Q3: What prompted Cango's transformation into BTC mining?

A: The transformation stemmed from the keen insights of Cango's founding team. After going public in 2018, the Chinese automotive market experienced its first negative growth; coupled with the pandemic, the overall consumer market continued to shrink.

The original management team realized that transformation was imperative. In the following years, Cango explored the new car and used car trading sectors but failed to find a suitable second growth curve.

The key turning point was Cango's investment in Li Auto.

In 2018, against a backdrop of skepticism, Cango invested in Li Auto; by 2022, Cango completed the capital recovery of the Li Auto investment project, achieving over 6 times returns. This not only provided Cango with sufficient capital for transformation but also inspired the team to explore the new energy sector.

In 2023, during an energy project inspection in the Middle East, the original management team fortuitously came into contact with Bitcoin mining business and confirmed it as an entry point for further engagement in the new energy field. Ultimately, leveraging years of industry accumulation and risk assessment, Cango went “ALL IN” on the transformation with $500 million in hand, resulting in today’s globally top three crypto mining company—Cango.

While it may seem to outsiders that Cango is a newcomer in the BTC industry, in reality, “change” is embedded in Cango's DNA, and every step of Cango's transformation is a choice based on past accumulations.

Q4: Many crypto mining companies are transitioning to AI data/power centers; what is Cango's view on this? Are there any corresponding plans for the future?

A: Our intuitive feeling is that the hot topics in the crypto market iterate very quickly, which is different from Cango's current pace. For us, completing a business transformation within one year while maintaining stable operations across various businesses is already a significant achievement.

Of course, we have also noticed that many traditional mining companies have seen their stocks repriced due to the benefits of the HPC (High-Performance Computing) concept. However, for Cango, the principle has always been to prioritize business first, focusing on long-term healthy development without blindly chasing conceptual dividends.

Therefore, while ensuring a solid footing in the BTC mining field, we will explore the feasibility of expanding into areas like AI HPC data centers through small experimental projects.

At this stage, BTC mining remains Cango's foundation, and we are also actively working on new business layouts, including small-scale pilot projects in energy and AI HPC, which are currently in the gradual advancement and validation stage. We look forward to officially reporting to everyone soon.

Cango's vision is to create a dynamic and efficient computing power platform that enables on-demand switching between BTC mining and AI inference, maximizing the use of energy and infrastructure.

Q5: What are Cango's competitive advantages (or moats) in the BTC mining field?

A: First, the business divestiture is thorough. After selling off the Chinese business in May, Cango has completely bid farewell to the traditional automotive finance industry and is now focused on BTC mining, which can be described as starting light.

Second, the team is efficient and lean. The organization has been streamlined from thousands to around 100 people, resulting in a significant improvement in organizational efficiency, adapting to the pace of the crypto industry.

Third, the operational management team is professional. We have now built our own operational team to conduct remote monitoring of mining sites and mining operations, preparing for long-term transformation. Our goal is not merely to compete on BTC mining hash rate but to achieve the highest operational efficiency while maintaining a leading global hash rate.

https://bitcoinminingstock.io/hashrate

From our past data performance, it is evident that the current operational team's professionalism has begun to show results: In July (the first month reaching 50EH/s hash rate operation), our hash rate online rate was only 81%; in August, this figure improved to 87%; in the recently released October operational report, our hash rate efficiency has reached 92%, placing us at an industry-leading level.

Fourth, the operational logic. Cango adopts a dual-leverage model of “only mining, not selling + BTC collateralized lending,” incurring monthly interest expenses rather than full electricity costs, resulting in higher capital efficiency and lower operational costs.

Q6: Considering the above information, Cango's stock price seems slightly undervalued; what might be the reasons? What are the future financing plans?

A: From the stock price performance, Cango has indeed lagged behind other traditional mining companies recently, which is both a proactive choice by Cango and some objective reasons. Nevertheless, despite this, Cango's stock price has maintained an increase of over 20% in the past year.

Stock price on November 5

On the proactive choice side, as a company rooted in the real economy, Cango focuses more on solidifying its business fundamentals and only discloses information to the market when all preparations are in place; rather than telling a story first to boost the stock price and then passively cashing in.

On the objective side, unlike other established mining companies, Cango entered the crypto industry as a newcomer and challenger, and due to our frequent expansion actions, the outside world inevitably scrutinizes us. However, after observing our consistent production, continuous accumulation, and ongoing communication with the outside world—actions that reflect “promise made, promise kept”—the market's attitude is gradually changing. But a good trust relationship takes time, and we are patient and confident. As a company that respects market rules, Cango can promise not to use any unconventional means to inflate the stock price; all transactions and performances in the market are the most authentic market reactions. What we can do is ensure the stable operation of our foundational business while gradually implementing energy and AI-related projects, allowing the market to see progress and thus build confidence.

As for specific financing plans, since our BTC mining business adheres to a “light model,” it does not require large-scale financing, as the leverage operation is already sufficient; however, to achieve the second step of development mentioned earlier, namely the development of energy and AI projects, we plan to seek financing from the capital market.

We have already initiated the corresponding financing preparations, and based on our progress in energy and AI projects, we will choose the right time to open financing to the market. The specific financing methods will comprehensively consider various factors, prioritizing the interests of the company and shareholders.

Q7: Recently, some DAT treasury companies have gradually fallen into a deadlock, with mNAV consistently below 1; what might be the main reasons? What insights or plans does Cango have regarding balancing market value and BTC holding value? As a single business company focused on BTC mining, how does Cango enhance its risk resistance?

A: Personally, I believe that the core reason lies in the fact that some DAT companies have not focused on creating intrinsic value. Some followers—whose original businesses have no relation to cryptocurrencies and will not generate substantial ties in the future—find it difficult to create sustained value.

In contrast, Cango is not a purely DAT company but a “crypto production reserve enterprise”—mining BTC and storing it in reserves.

Our core advantage lies in the efficient use of computing power, efficient allocation, and cost optimization. As BTC mining capacity is released, Cango's market value will gradually align with its intrinsic asset value.

In balancing market value and holding value, Cango, which primarily engages in mining, can achieve “holding without selling” while improving the efficiency of infrastructure utilization, thereby stabilizing data revenue performance and reasonably managing market expectations.

In simple terms, the Bitcoin mined by Cango during this cycle is hoped to become the original capital for the next cycle, as we believe in the long-term appreciation value of Bitcoin. Based on this reality, we currently do not engage in any other active management of our Bitcoin reserves.

As for enhancing risk resistance, we still firmly believe in BTC's “digital gold” attribute, which serves as a more stable value anchor. Regarding other cryptocurrencies and gold reserves, they are not currently a focus for Cango, which has just completed its transformation. Of course, we do not rule out the possibility of considering measures to enhance risk resistance and increase returns when our balance sheet becomes more flexible in the future, but there are indeed no such arrangements at this stage.

From a business logic perspective, Cango recognizes BTC as the highest quality price target at present. We believe it can bring continuous returns to the listed company. This is our first step, and future expansions into the energy and AI HPC fields will also be built upon this solid foundation.

Q8: After one year of transformation, are there any interesting experiences you can share with readers?

A: Based on my personal experience, the most interesting thing has been that people I established connections with in the automotive industry have started to inquire about developments in the crypto industry. The industry has undergone a tremendous change from traditional automotive finance to crypto mining, yet it has become a window to understand the crypto industry.

This has also led us to a new observation—there exists a certain “perspective gap” between the “inside” and “outside” of the cryptocurrency industry.

For a long time, the crypto industry has had a certain self-enclosed rejection, always feeling like it hovers outside the mainstream.

However, there is no inherent separation between TradFi and DeFi; it is merely that people originally did not understand each other well.

Cango's unique value lies in this—we possess both the industry accumulation and experience of the traditional sector, as well as our own gains and lessons during the transformation period, along with our own thoughts and persistence for the future. On one hand, we can provide our perspectives and reference information to enterprises and professionals in the traditional industry; on the other hand, we are also indirectly sharing dynamic information about the cryptocurrency market and the entire industry with the outside world and the traditional sector.

Thus, it is evident that the future will certainly be a combination of TradeFi (traditional finance) and DeFi, and the integration between the two is a positive one, rather than a separation or isolation. This is impossible; it must be a fluid state.

Breaking down that non-existent “Berlin Wall” may be our greatest mission.

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