Shares of Cango Inc. (NYSE: CANG) have experienced notable upward momentum, continuing their rally into the morning session. The stock rose 17.39% in pre-market trading to $3.47, building upon a 6.09% increase from the previous session, where it closed at $2.96. This surge follows the announcement of the company’s new crypto mining initiative.
Strategic Crypto Mining Expansion
Cango Inc. has entered into agreements to acquire a substantial number of on-rack crypto mining machines, with a combined hashrate of 50 Exahash per second (EH). The total value of this purchase is approximately $400 million. The primary vendor in this transaction is Bitmain Technologies Georgia Limited and Bitmain Development Limited, a prominent digital currency mining server manufacturer. CANG has agreed to purchase mining equipment from Bitmain for $256 million, representing a hashrate of 32EH.
Additional Purchases and Share Issuance
In addition to its deal with Bitmain, Cango has made arrangements to acquire further mining equipment from Golden TechGen Limited (GT) and other sellers, adding another 18EH of mining capacity. The total value of this portion of the purchase is $144 million, which CANG will pay through the issuance of approximately 145.7 million Class A ordinary shares. As a result of this transaction, GT is expected to hold up to 20% of its total outstanding shares, while the other sellers will collectively own 37.8%.
Operational and Strategic Plans Moving Forward
The newly acquired mining machines are currently operational in various data centers, primarily located in the United States, with some in other countries outside China. Cango plans to continue hosting these machines in existing facilities and to engage Bitmain’s affiliate for maintenance and operational services.
Despite these new ventures, Cango will continue to invest in its core business operations, particularly in its used car platforms. If the crypto mining acquisition is completed, CANG expects crypto mining to generate a significant portion of its revenue, potentially overshadowing its existing business until it achieves substantial growth outside of China.
