Cango, Inc. Q4 FY2024 earnings call

Key Points

• Cango transformed from auto financing to cryptocurrency mining, with significant steps in Bitcoin mining. In November 2024, it acquired Onrack Bitcoin mining machines with an aggregate hash rate of 50 EH for $400 million USD, taking delivery of 32 EH by November 15 and becoming the third-largest Bitcoin miner globally. In November and December 2024, it mined 363.9 and 569.9 Bitcoins respectively.
• For the full year 2024, total revenue was RMB804.5 million, net income was RMB299.8 million.
• Continues to make progress in traditional automotive business, with used car export platform expanding in international markets.

The company has two main segments. In the fourth quarter of 2024, Bitcoin mining revenue was significant, with total net revenue reaching RMB670 million, a year-on-year surge of over 400%. The automotive trading segment had fourth quarter revenue of RMB15 million. For the full year 2024, total revenue was RMB804.5 million, with Bitcoin mining revenues at RMB653 million and automotive trading-related income at RMB151.5 million. The Bitcoin mining segment contributed a large portion to the overall revenue, while the automotive trading segment also had its share.

Forward-Looking Statements

• Target to grow deployed hash rate to approximately 50 EH by the end of Q1 2025.
• Expect to escrow 1,500 used cars in 2025 with a total value of $15 million USD.
• Focus on expanding mining operations, optimizing existing facilities, and exploring sustainable lower-cost energy solutions.

Risks

• Market volatility in cryptocurrency, including price fluctuations of Bitcoin.
• Regulatory changes in the cryptocurrency industry which could impact operations.
• Energy cost fluctuations due to regional variations and changing energy policies.

Q: What are the company's expectations for future growth?

A: On Bitcoin mining, using 32 EH cash-settled hash rates as a basis, forecast annual production of around 6,000 Bitcoins, with plans to expand hash rate in 2025. On traditional auto trading, expect to escrow 1,500 used cars in 2025 with total value of $15 million USD.

Q: Why did the company decide to go into the Bitcoin mining industry?

A: Entered based on positive outlook on Bitcoin's future potential, exploring strategic opportunities for business transformation, and seeing Bitcoin mining as effective for balancing grid loads and utilizing surplus electricity.

Q: What is the hash rate target for 2025 and energy efficiency details?

A: When second acquisition is complete, will be second-largest by computing power. Average energy consumption of mining machines is 21.6 joules per TH. Electricity costs vary by region, with plans to negotiate lower costs and explore cost-effective energy solutions.