Cango: Progress And Setbacks All At The Same Time

Summary The latest report from CANG came with a huge loss, but it was the price CANG had to pay to strengthen its future as a Bitcoin miner. The balance sheet continues to get stronger despite the loss thanks to Bitcoin, and it is likely to get stronger with all the recent moves by CANG.

The stock was rallying after the Q2 FY2025 report, but the rally was snuffed out by reports the U. S.

is looking into CANG. Bitcoin prices remain strong, and CANG continues to increase the number of Bitcoins it produces, which is why I am bullish on CANG with a buy rating.

Cango ( CANG ), a Bitcoin miner, suffered a rather sudden setback that snuffed out the rally that followed in the wake of the release of the Q2 FY2025 report on September 4. While the report was not perfect, as it included some not-so-desirable developments, the market nonetheless gave the report a thumbs up because it approved of all the moves CANG made as it continues to transition towards a pure-play Bitcoin miner, a journey that started only last November, which sent the stock soaring.

However, calls within the U. S.

Congress to investigate CANG not only put a halt to the rally, but it could continue to weigh on the stock in the short term due to the element of uncertainty it creates. Why will be covered next.

A rally in the making gets snuffed out A previous article from last June mentioned how CANG had been adversely affected by the decline in Bitcoin prices earlier in the year, but this relationship showed how it works both ways because the stock benefited as soon as Bitcoin prices reversed course to move higher. In the end, the article concluded there was reason to believe CANG had what it took to move even higher in the long run, which is why I chose to rate CANG a buy in the article.

Source: Thinkorswim app The chart above shows how the stock is still not far from where it was when the aforementioned article was published because of the mostly sideways action in recent months. This does not mean, however, there were no attempts to trade higher because there were, which includes the latest attempt following the release of the Q2 FY2025 report on September 4.

CANG was able to gain a quick 16. 3% in the two trading days following the report, only to give it all back in the last few days to send CANG back to square one.

CANG gets caught in U. S.

-China tensions CANG lost 11. 8% on September 9 after gaining 9.

1% the day before when reports surfaced that a member of the U. S.

House of Representatives asked the U. S.

Department of the Treasury to investigate Bitmain, a leading manufacturer of crypto mining machines, and CANG. The latter has been expanding its U.

S. presence, which includes the August acquisition of a 50-megawatt Bitcoin mining facility in Georgia, so a possible CFIUS probe could have repercussions for CANG.

Source: Thinkorswim app The potential investigation that may be launched against CANG creates a level of uncertainty the bulls would probably like to do without because it is impossible to determine the evolution of this investigation. This latest headwind, on top of earlier tensions between the U.

S. and China, seems to have weighed on CANG since April, which coincided with the escalation in trade tensions between the U.

S. and China following “Liberation Day.

” This has likely contributed to the widening in the correlation between Bitcoin and CANG since the former does not have to deal with some of these issues like the latter does. However, while it’s important not to dismiss the potential impact on CANG, especially since it raises an element of uncertainty potential buyers of CANG have to deal with as they ponder whether or not they ought to put money into CANG, it’s also important to note that it is far from certain what, if any, adverse consequences will be imposed on CANG as a result of the investigation, assuming there is an investigation in the first place.

The Committee on Foreign Investment in the U. S.

, or CFIUS, has the power to force companies to divest of assets in the U. S.

, which could be relevant to CANG with its recent acquisition, but it is also worth mentioning that CANG does not rely solely on the U. S.

since it has a presence in other locations. If CANG were to be limited in the U.

S. in terms of the presence it can have, CANG could always shift to other locations as a miner of Bitcoin, which does not require a presence in a specific geographic location.

CANG has upped its bets on crypto CANG made a decisive move by entering the market for crypto in November 2024. Before this, CANG was known for its auto business in China, but this changed with CANG transforming itself into a miner of Bitcoin.

In fact, CANG upped its bets with recent transactions, including by disposing of its China business to turn itself into a more pure-play Bitcoin miner, a move that will net CANG $351. 8M in cash over several quarters.

CANG then increased its total aggregate hash rate in June with an additional 18 Exahash per second, or EH/s, to a total of 50 EH/s, up from the original 32 EH/s it started out with last November. The transaction was completed on June 27, or a few days before the end of Q2 FY2025, and the impact can therefore be seen in the latest report from CANG.

The acquisition of additional mining machines resulted in a large non-cash impairment loss, which, together with the charges associated with the earlier divestiture of CANG’s China-based business, resulted in a net loss in the most recent or Q2 FY2025 report. The Q2 FY2025 report shows how CANG is all-in on Bitcoin CANG incurred a net loss of RMB2.

1B, or $295. 4M, on revenue of RMB1.

0B, or $139. 8M, in Q2 FY2025, which includes an impairment loss from mining machines of RMB1.

84B, or $256. 9M.

Of the $295. 4M net loss attributable to shareholders, $180.

15M was from continuing operations, and the remaining $115. 23M was due to discontinued operations.

Per ADS, CANG lost $2. 76, including $1.

68 from continuing operations and $1. 08 from discontinued operations.

In terms of adjusted EBITDA, which leaves out items like the impairment loss, CANG earned RMB710. 1M, or $99.

1M, in Q2 FY2025, up from RMB27. 6M, or $3.

8M, in Q1 FY2025. The big net loss left its mark on the balance sheet, including a reduction in the amount of cash and cash equivalents from $346.

67M at the end of Q1 FY2025 to $117. 79M at the end of Q2 FY2025.

Nevertheless, the balance sheet got stronger overall, with total assets reaching $1,123. 07M in Q2 FY2025, up from $972.

21M in the preceding Q1 FY2025, partially offset by total liabilities of $466. 16M in Q2 FY2025, up from $439.

28M in Q1 FY2025. Source: Thinkorswim app This improvement would not have happened without the cash proceeds from the divestiture of the China-based unit, but also a more than doubling in the value of the Bitcoin holdings on the balance sheet, which rose to $416.

73M in Q2 FY2025, up from $201. 83M in Q1 FY2025.

This increase was in turn the result of an increase in the price of Bitcoin during the quarter, as shown in the chart above, which resulted in a gain of $79. 18M in the value of Bitcoin collateral in Q2 FY2025, but also because of an increase in the number of Bitcoins CANG holds.

CANG produced 1,404. 4 Bitcoins during Q2 FY2025 to end with a total of 3,879.

2 Bitcoins produced since it started mining in November 2024. The average cost to mine, which excludes depreciation of mining machines, was $83,091 per Bitcoin and all-in costs of $98,636 per Bitcoin.

Note that these stats are worse than in Q1 FY2025, when CANG produced 1,541 Bitcoins at an average cost to mine of $70,602. Both developments are undesirable, which is why CANG seems to have been looking for cheaper energy to reduce the cost of Bitcoin mining, which is where the Georgia facility comes in, and by upping its aggregate hash rate, as it did recently with the increase of 18 EH/s to a total of 50 EH/s.

Why there is reason to be bullish despite short-term uncertainty CANG is dealing with headwinds, but the bulls have a few cards up their sleeves. The balance sheet continues to improve, for instance, as shown earlier.

CANG is actually valued at less than book value, with a book value of $656. 91M and total assets of $1,123.

07M and total liabilities of $466. 16M as of Q2 FY2025, which converts to a book value of $6.

33 per ADS since the total number of ADS/ADRs is 103,839K. This is above CANG’s current market cap of $476M after the ADS closed at $4.

58 on September 11, which means CANG is available at less than book value with a price-to-book of 0. 72x.

In addition, with all the recent moves, CANG has greatly increased its ability to mine more Bitcoins. CANG’s aggregate hash rate of 50 EH/s is substantially more than the 32 EH/s CANG could use in the first half of FY2025, which means CANG should be able to produce more Bitcoins in the second half.

The change is already making an impact, with CANG reporting it produced 650. 5 Bitcoins in July and another 663.

7 Bitcoins in August, up from 450 Bitcoins produced in June, or the last month before more mining machines were acquired. This implies CANG has a total of 5,193.

4 Bitcoins as of the end of August 2025, up from 3,879. 2 Bitcoins at the end of Q2 FY2025.

Combine this increase in the number of Bitcoins with the rise in Bitcoin prices, which are currently higher than where they were during the June quarter, and then CANG’s Bitcoin holdings could be worth an estimated $601. 8M, assuming a price of $115,815 per Bitcoin as of September 11.

In comparison, Bitcoin holdings were worth $201. 83M in Q1 FY2025 and $416.

7M in Q2 FY2025, and there is still one month left in Q3 FY2025. CANG produced 2,945.

4 Bitcoins in the first half, and based on recent production numbers, CANG could conceivably produce roughly 7,000+ Bitcoins in all of 2025. Add this to the 933.

8 Bitcoins mined in the last two months of 2024, and CANG could have an estimated 8,000 Bitcoins, or close to it, by the end of 2025. It depends on what the Bitcoin price is, but these 8,000 Bitcoins could be worth $926.

5M on the balance sheet in the Q4 FY2025 report, or almost double the current market cap of $476M. In theory, the stock could double in value based on the projected value of the Bitcoins CANG is likely to accumulate in the near future, depending on the price of Bitcoin.

Is there reason to be bullish on Bitcoin? There are many factors that come into play when it comes to determining where Bitcoin is going, and there are no guarantees Bitcoin will continue to do as well as it has done recently.

Bitcoins, for instance, are getting more scarce, which means that mining Bitcoin is becoming more computationally intensive, which is reflected in higher energy requirements and overall costs. In general, if something in demand is getting more scarce, it should become more valuable.

However, the main reason why Bitcoin is likely to continue to do well in the short to medium term is because of the overall geopolitical environment the world finds itself in. There are many aspects to this issue, which include the increasing reluctance of certain foreign governments to put their nation’s wealth in U.

S. bonds, yet it is no coincidence that the rise of Bitcoin in the last two decades coincided with the trillions of liquidity injected by central banks/governments around the world following the financial crisis in 2008/2009.

This liquidity made its way to asset classes, like equities, but also crypto. While some have no problem putting everything into U.

S. equities, others want to limit their exposure to any single asset class, which is where Bitcoin comes in.

If the day comes when large amounts of liquidity are removed, then Bitcoin could be in trouble, as that would reduce the need for alternative asset classes. But there is little indication governments intend to remove all the excess liquidity of the past decades.

If anything, more and not less liquidity is likely because a reduction of liquidity is very likely to result in economic problems, especially in the U. S.

, which politicians have a vested interest to avoid. If liquidity is here to stay, most asset classes should do well, as the liquidity will push up the value of assets, and that includes Bitcoin.

Investor takeaways Up until April, CANG and Bitcoin traded in close correlation, which is not that surprising with CANG being a miner of Bitcoin. This close relationship has gotten more loose in recent months, and the prime culprit for this seems to be the increased level of U.

S. -China tensions.

The recent call for an investigation of CANG in the U. S.

is one more example of this. This could affect CANG in a way that Bitcoin does not have to be concerned about.

CANG, or its stock to be more exact, has underperformed relative to Bitcoin, which should be seen against this backdrop. However, while there are certainly headwinds to take note of, CANG is also making good progress if one looks at it as a Bitcoin play.

CANG has made a number of moves to strengthen its position as a Bitcoin miner, which did result in a large net loss in the recent Q2 FY2025 report, but they also pave the way for CANG to produce more Bitcoins at a faster pace. CANG took a hit in the short term, but the moves should pay off in the long run.

CANG is steadily increasing the number of Bitcoins it has on the books, which will only increase with the recent increase in aggregate hash rate to 50 EH/s. By the end of FY2025, CANG could have a total of around 8,000 Bitcoins, which, at current Bitcoin prices, would be worth double CANG’s current market cap.

This could push the ADS past $10 a share, provided other headwinds like Congressional investigations do not intervene. It does depend on the direction of Bitcoin prices, and there are no guarantees Bitcoin will continue to move up.

If Bitcoin prices drop, which has happened before, the value of the Bitcoin holdings CANG has on the balance sheet will go down as well. On the other hand, if Bitcoin prices rise, something that has happened more often than not, the opposite applies.

In this case, CANG’s market cap could go substantially higher. Bulls may have to contend with headwinds stemming from geopolitical tensions between the U.

S. and China, which could constrain the ability of the stock to move higher in the short term, as the uncertainty of what could happen due to a Congressional investigation may scare away potential investors from CANG, but I am bullish on CANG with the state of the balance sheet, both in its current form and its projected state.

It’s true the stock has struggled in the last several months to do anything more than move sideways, but as long as the number of Bitcoins CANG has on the balance sheet continues to go up and the price of Bitcoin stays strong, there is reason to be confident that long CANG will turn out to be a winning play in the long run.