Cango Inc.

Before 2024, Cangu primarily focused on the automotive trading service industry, building a platform that connects key market participants such as dealers, original equipment manufacturers, financial institutions, and car buyers. It offers a range of services to optimize the car trading process, including providing dealers with car procurement, logistics, and warehousing support, as well as assisting car buyers in completing the car purchasing process. At the same time, it also provides car financing services for buyers, helping them obtain financing from financial institutions, and offers automotive aftermarket services, such as assisting in the sale of insurance products from insurance brokerage companies or insurance companies. In November 2024, CanGu keenly captured the development opportunities in the digital currency sector and resolutely laid out its "big cake" (Bitcoin) mining business, embarking on a path of strategic transformation. The company spent $400 million to acquire a batch of "big cake" mining machines with a total computing power of 50 EH. As of November 15, it has successfully deployed 32 EH of computing power, becoming the third largest "big cake" miner in the world. Thus, the company's business model has shifted to focus primarily on Bitcoin mining while retaining its online international used car export business.

In the cryptocurrency business, Cangu's profits mainly come from Bitcoin mining. With the successful deployment of a large number of mining machines, the company participates in the accounting process of the Bitcoin network through computing power, successfully mining Bitcoin to generate revenue. The Q4 2024 financial report shows that the "big cake" mining business achieved revenue of 653 million yuan, accounting for as much as 97.8% of total revenue, becoming a key factor driving the significant growth of the company's revenue. From a traditional business perspective, if the used car export business is profitable, it may come from the price difference in vehicle transactions, that is, buying low and selling high to gain profit; or by providing value-added services to both parties in the transaction, such as vehicle inspection, logistics arrangement, etc., and charging service fees. However, based on currently available information, the cryptocurrency mining business dominates the profit share.

The profits generated from Bitcoin mining have led to a significant leap in the financial performance of Cangu. The net profit for the entire year of 2024 is nearly 300 million yuan, marking a substantial turnaround from a loss of 37.9 million yuan in 2023, highlighting the strong profitability of this business and its positive impact on the company's financial condition. This profit model also provides strong support for the company's strategic transformation. As the credit risk exposure related to automotive businesses gradually decreases, the company has more resources and energy to invest in the expansion and optimization of its cryptocurrency mining business, exploring the "energy + computing power" strategic layout, further enhancing its competitiveness in the digital currency field.

Affected cryptocurrencies and methods The Bitcoin mining business of Cangu has a direct impact on BTC (Bitcoin). The large investment in computing power has increased the total computing power of the Bitcoin network, which to some extent enhances the security and stability of the Bitcoin network. At the same time, as the company mines more Bitcoin and puts it into the market, it will to some extent affect the market circulation of Bitcoin. If the price of Bitcoin rises, the value of the Bitcoin held and mined by the company increases, leading to higher profits, which may attract more investors' attention to the Bitcoin mining industry, indirectly increasing market demand for Bitcoin; conversely, if the price of Bitcoin falls, the company's profits may be impacted, but it may also prompt the company to further optimize mining costs and improve operational efficiency.