Q1 2025 Cango Inc Earnings Call
Speaker Change: Thank you, Jiayuan Lin, Yongyi Zhang, Pingyue Wu, Cango Inc
Speaker Change: Good morning, and evening, everyone. Welcome to Cango Inc's first quarter, 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. This call is also being broadcast live on the company's IR website. Joining us today are Mr. Jiayuan Lin.
Speaker Change: Chief Executive Officer and Mr. Yongyi Zhang, Chief Financial Officer of the company. Following management's prepared remarks, we will conduct the Q&A session.
Before we begin, I refer you...
Speaker Change: to the Safe Harbor Statement in the company's earnings release, which also applies to the conference called today as management, we'll make forward-looking statements.
Speaker Change: With that said, I am now turning the call over to Mr. Jiayuan Lin, CEO of Pango. Please go ahead sir.
Speaker Change: Hello everyone, welcome to the 2025 Q1 earnings call of TanGu.
Speaker Change: Hi, everyone, and welcome to Cango's first quarter, 2025 earnings call.
Speaker Change: In the first quarter of 2025, despite significant changes in the cryptocurrency market, Bitcoin's market dominance was further consolidated. During a period of global economic instability, Bitcoin demonstrated its stability as a hedge asset and its strong risk resistance capabilities.
Speaker Change: In terms of policy, the Trump administration's supportive stance towards the cryptocurrency market undoubtedly created a more favorable regulatory environment for the entire industry.
Speaker Change: The establishment of a Bitcoin strategic reserve and the appointment of key department officials who are friendly towards digital currency are expected to provide a clearer direction and stable expectations for the industry's development.
Speaker Change: In the first quarter of 2025, Bitcoin solidified its dominance despite significant volatility in the cryptocurrency market. A mid-global economic uncertainty, Bitcoin demonstrated strong resilience and stability as a safe haven as asset.
Speaker Change: On a policy front, the Trump administration's supportive stance towards the crypto market as a balticy fostered a more favorable regulatory environment.
Speaker Change: The establishment of a strategic Bitcoin Reserve and pro-digital currency appointments are expected to provide clearer direction and more stable expectations for the industry's future development.
Speaker Change: Since November 2024, Xianggu has entered the Bitcoin mining industry. After months of exploration and operation, we have not only achieved business growth but also brought new development opportunities to the company.
Speaker Change: A Cango enters the Bitcoin mining industry in November 2024. Over the past few months of exploration and operation, Cango has not only achieved business growth but also unlocked new development opportunities.
Thank you very much.
Speaker Change: In the first quarter of 2025, Changgu achieved a total revenue of $145 million, with the Bitcoin mining business contributing $140 million. In terms of profit, the company's gross profit for the first quarter was $13.61 million, and the operating loss was $21.42 million.
Speaker Change: Mainly due to the impact of the price correction at the end of March, the value of the company's Bitcoin holdings decreased. As of the end of the first quarter, the total amount of the company's cash and cash equivalents in short-term investments remained at 317 million USD.
Speaker Change: A stable capital reserve provides support for the next step of business expansion.
Speaker Change: In the first quarter of 2025, Cango reported total revenue of 145 million US dollars, with 144 million contributed by our Bitcoin mining operations.
Speaker Change: Ross' profit for the quota reached 13.61 million US dollars, operating costs stood at 21.42 million.
Speaker Change: Primarily due to decline in Bitcoin prices to the end of March, which led to a decrease in the fair value of the company's Bitcoin holdings.
Speaker Change: As of the end of the quarter, Cango maintain a strong cash position with total cash equivalent and short-term investments amounting to 347 million USD, providing fully support for future business expansion.
Thank you.
Speaker Change: While actively expanding our Bitcoin business, the scale of our existing financial assets has further decreased, and the quality has significantly improved, as of March 31, 2025.
The total outstanding balance of re-lending is approximately 2.6 billion RMB.
Speaker Change: Among them, M1 increased by 2.86%, M3 increased by 1.59%, while the credit risk exposure for actively fully provisioned or fully secured liabilities further reduced to 760 million RMB.
Speaker Change: 30 declined to 760 million RMB, down 30% from 1.08 billion RMB, as of December 31, 2024.
Dr. Jiayuan Lin, Yongyi Zhang, Yongyi Zhang, Pingyue Wu,
Speaker Change: Our mining machines are distributed in countries and regions such as North America, South America, the Middle East, and Africa. Through global deployment, we are able to achieve optimal resource allocation.
Among the existing rack-mounted machines, nearly 90% are S19XP water-cooled models.
In addition, the delivery of an additional 18EH of computing power is being planned and is expected to be completed by July 31. After the delivery is completed, our computing power scale will increase to 51EH.
Speaker Change: Till now, we have heard a total computing power of 32 x dashes per second.
Speaker Change: Accounting for approximately 4% of the global average perpetuate in Q1.
Speaker Change: Our mining machines that deployed across North America, South America and the Middle East and Africa, a globally diversified setup that enabled us to optimize resource allocation.
Speaker Change: Nearly 90% of our currency operational miners are water-cooled S19XP models. In addition, the delivery of an additional 18XR hash is a second of computing power that is programming as planned and is expected to be completed by July 31st.
Once finalized, our total hash rate capacity will reach 50.
Thank you.
Thank you. Thank you.
Speaker Change: Since starting the Bitcoin mining business, we have consistently focused on improving various operational metrics.
In the first quarter, the company's coin production reached 1,541 units.
Speaker Change: As of the end of April , the company's total cryptocurrency holdings amounted to $2,944.8, ranking 14th in the global list of publicly traded companies by Bitcoin holdings.
Speaker Change: In the first quarter, our average effective calculation per month exceeded 30 pages.
Speaker Change: The shareholding per EH coin production reaches 16.6, ranking among the top three in the market. In terms of energy consumption, the average energy efficiency in the first quarter is 21.6 GHz.
Yongyi Zhang, Jiayuan Lin
Speaker Change: We mined a total of 1,541 big coins. At the end of April , our total big coin holding reached 2,944.8 coins, ranking 14 globally among publicly listed companies and fit among listed mining firms.
Placing us among the top three publicly listed mining companies.
Speaker Change: In addition, we in terms of energy efficiency, our average power efficiency for Lakota was 21.6 due per terror hash with efficiency of 21.5 for much.
Speaker Change: Looking ahead to 2025, we will steadfastly deepen our involvement in the Bitcoin mining industry. We are confident in the stability of Bitcoin's supply and its long-term value growth, and therefore we will adopt a strategy of self-production and freedom.
Speaker Change: As we move into 2025, we remain Sunday committed to deepening our focus on the Bitcoin mining business.
Speaker Change: We have a strong confidence in the stability of Bitcoin's supply and its long-term value appreciation potential. As such, we will adopt a mine and hold strategy, prioritizing both self-mining and long-term
In the future, we will focus on integrating and optimizing existing computational resources.
To maximize its utilization efficiency and continuously focus on merger and acquisition opportunities
Speaker Change: Actively seeking high-quality targets to further expand computing power scale. We believe that scale advantages can bring us broader business expansion opportunities, attract top talent to join, and enhance market competitiveness and industry recognition.
Speaker Change: At the same time, we will actively pursue MMA opportunities, seeking high quality targets to further skill up our operations.
Speaker Change: We believe that greater skill will unlock broader growth output opportunities, attract top talent and enhance both our market competitiveness and industry recognition.
In addition, in the traditional automotive business, we continue to focus on the operation of the lightweight, asset-light used car export website AutoKango.
Speaker Change: Since the launch of AutoCandle, the website has attracted over 2.37 million visits, and the number of website users has exceeded 290,000.
AutoPango carries over 480,000 used cars HKU
Covering over 68,000 vehicle models
Through this platform, we hope to build a confidence portal for the domestic used car market and overseas buyers, assisting overseas buyers in accessing China's excellent used car resources.
Speaker Change: In the future, TanGu will continue to deepen its integration into overseas markets and further optimize the functionality of AutoPango to better serve customers.
Speaker Change: On our traditional automotive business, we remain focused on lean and satellite operations for our use car export platform AutoCango. Since its launch, the platform has attracted over 2.37 million visits and more than 290,000 registered users.
Speaker Change: Today, AutoCango has more than 480,000 used car distance, covering over 68,000 unique models.
Speaker Change: AutoCango aims to connect China's youth car market with overseas buyers, making it easier for international customers to access high-quality vehicle infantry from China.
Speaker Change: Looking ahead, Cango will continue to strengthen its global presence and enhance auto-cango's platform of capabilities to deliver an even better experience for all users.
Jiayuan Lin, Yongyi Zhang, Pingyue Wu,
Now, I will hand over the time to our CFO , Zhang Yongyi, to share with everyone our financial performance for the first quarter and the entire year of 2025.
Speaker Change: I'd like to hand over the call to our CFO , Mr. Yongyi Zhang, to share our financial highlights for the first quarter of 2025.
Speaker Change: Thanks, Jiayuan. Hello, everyone, and welcome to our first quarter, 2025 earnings call.
Speaker Change: Before I started to review all financials, please go back unless otherwise stated, all number in INV terms and all percentage comparisons on the year-over-year basis.
Speaker Change: Total revenue in the first quarter of 2025 was 1.1 billion compared with 64.4 million in the same period of 2024. The significant year-over-year increase was primary children by the Bitcoin mining business launched in November 2024.
Speaker Change: Revenue from Bitcoin mining business in the first quarter of 2025 was $1 billion with a total of $1,541 Bitcoin mine in the first quarter of 2025
Speaker Change: The average cost to mine Bitcoin excluding depreciation of mining machine was US $70,602.1 per coin
Speaker Change: Revenue from automotive trading related income in the first quarter of 2025 was 7.6 million compared with $16.4.4 million in the same period in 2024
Speaker Change: Cost of revenue in the first quarter 2025 increased to 955.1 million from 29.1 million in the same period of 2024. The year-over-year increase was primary driven by the cost of Bitcoin mining business.
Speaker Change: Sales and Marketing Expansion in the first quarter decreased to 0.4 million from 3.5 million in the same period of 2024.
Speaker Change: General and Administrative Expansed in the first quarter, increased to 92.5 million from 37.9 million in the same period, 2024.
Speaker Change: Research and development sponsored in the first quarter equates to 0.3 million from 1.1 million in the same period, 2000 to 24.
Speaker Change: Net gain on contingent risk assurance liability in the first quarter of 2025 was 5.3 million compared with 15 million in the same period of 2024
Speaker Change: Net recovery on provision for credit losses in the first quarter of 2025 was 28.7 million compared with 66.3 million in the same period of 2024
Speaker Change: We recorded 155.5 million in loss from operation in the first quarter of 2025, compared with income from operations of 74.2 million in the same period of 2024.
Speaker Change: Net Laws in the first quarter of 2025 was 207.3 million adjusted EBITDA in the first quarter of 2025 was 27.6 million.
Speaker Change: We move on to our balance sheet as of March 31st, 2025. The company had a cash and a cash equivalent of 2.5 billion compared with 1.3 billion as of December 31st, 2024.
Speaker Change: As of March 31st, 2025, the company had a short-term investment of 5.2 million compared with 1.2 billion as of December 31st, 2024.
Speaker Change: Looking ahead to the rest of 2025, we are on track to grow our deployed hatch rate to approximately 50 EHs before the end of July .
Speaker Change: This concludes our prepared remarks. Operators, we are now ready to take questions.
Dr. Jiayuan Lin, Yongyi Zhang, Pingyue Wu,
He will now begin the question and answer session.
Speaker Change: You ask a question, you may press star, then one on a touch-tone phone. If you are using a speaker phone, please take up your hand step before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question please press star and then too
The First.
Speaker Change: Question comes from Emerson Dow with Goldman Sachs. Please go ahead.
Thank you.
Speaker Change: Thank you to the management, this is Emerson from Gaoshen, I have two questions.
Speaker Change: The first question is how does the management view the current trends in the cryptocurrency market? The second question is how does the company plan to address the challenges brought by the global increase in computing power and the rise in mining difficulty?
Thank you.
Jiayuan Lin, Yongyi Zhang
Speaker Change: Thank you, management. I have Amazon from Goldman Sachs. I have two questions. The first question is that what is your view on the trends in the cryptocurrency market so far, and the second question is how is the company going to respond to increasing challenges brought about by increasing computing power around the world as well as increasing mining difficulty?
Dr. Jiayuan Lin, Yongyi Zhang, Pingyue Wu,
Unknown Executive, Jiayuan Lin,
Speaker Change: Trends in the Cryptocurrency Market
Speaker Change: The current cryptocurrency market is full of opportunities and challenges. We believe that with technological advancements and market maturation, cryptocurrencies will play an increasingly important role. We will closely monitor market dynamics and adjust our strategies flexibly to better seize market opportunities.
Speaker Change: Thank you, Emma, for your questions. So the current cryptocurrency market presents both opportunities and challenges. We believe that as technology advances and the market continues to mature, cryptocurrencies will play an increasingly important role. We will closely monitor market development and flexibility adjust our strategies to better see emerging opportunities.
Jiayuan Lin, Yongyi Zhang,
Dr. Jiayuan Lin, Yongyi Zhang,
Speaker Change: Regarding your second question, it is about the challenges brought by the growth of global computing power and the increase in difficulty.
Speaker Change: On one hand, we will continuously optimize the efficiency of our existing mining operations to ensure the high output of mining machines. On the other hand, we will complete the delivery of the second batch of 18EH computing power as soon as possible and continue to look for opportunities for subsequent computing power acquisitions to enhance overall output capacity.
Speaker Change: And at the same time, we are working to expedite the delivery of our seven batch of computing power, totaling 18XR hash is a seven and continue to monitor further acquisition opportunities to further enhance our off-road production capacity.
Dr. Jiayuan Lin, Yongyi Zhang, Pingyue Wu,
Xie Xie
Joy Chai: And the next question comes from Joy Chai with Barding Securities. Please go ahead.
Joy Chai: Thank you to the management for accepting my questions. I am Chen Mengting from Guojin Securities. I mainly have three questions to ask. Firstly, the first question is that we have observed a noticeable slowdown in the company's data for April . I would like to ask the management why such a change has occurred. The second question is whether the increase in electricity costs will put pressure on the company, and I wonder what plans the company has to address this issue. The third question might be a bit broader.
Speaker Change: Because we have seen that the company has undergone quite a few changes over the past year, we would like to further consult with the management about the company's main strategic direction for the future. These are the three main questions. Thank you.
Speaker Change: And my third question is a more general question regarding the future strategy of the company because we have seen quite a lot of changes in the company over the past year and so could you be and give us more details on your future strategic direction.
Thank you.
Okay, regarding your first question
There has been a decline in the company's taxes and data.
Speaker Change: In April , we produced a total of 470 bitcoins, a month-on-month decrease of 11.3% compared to March. This was mainly due to the global hash rate reaching the second largest increase in history.
Speaker Change: Moreover, the mining difficulty has increased by 8% compared to March. On the other hand, we are still maintaining a high level of mining efficiency, with the deployed hash rate consistently at 32 EH.
Speaker Change: The average operational hash rate in the first quarter was 31 EH with an efficiency of 93.8%, which is basically the same as the previous quarter.
Speaker Change: in the first quarter, our average operational hash rate was about 30 and the efficiency was 93.8% relative is stable compared to the previous quarter.
Unknown Executive, Jiayuan Lin,
Thank you.
Thank you.
Thank you.
Speaker Change: Regarding the second question, the increase in electricity costs: the current company's electricity costs are at a relatively high level.
Speaker Change: The main reason lies in the adoption of the hosting model, which leads to a certain premium in the electricity procurement process. However, it is important to emphasize that this model allows us to avoid the heavy asset investment required for building our own facilities and the cost of a large-scale operational team.
Speaker Change: Thereby significantly reducing capital expenditures and operations on the infrastructure and operational side.
Speaker Change: To continuously optimize the company's cost structure, the company has initiated a global energy strategy layout.
Speaker Change: On one hand, conduct a detailed cost analysis of the existing custody agreements.
Explore a corner of space
Speaker Change: On the other hand, a special team is being formed to conduct field research in energy-negative regions such as the Middle East and Australia. The focus is on exploring the potential for cooperation on low-cost clean energy projects such as solar transmission and natural gas, with the aim of achieving cost reduction through a diversified energy supply system.
Speaker Change: This is a work of fiction. Any resemblance to anyone, living or dead, is coincidental and unintentional.
Speaker Change: is primarily due to the premium associated with Power Procurement under the hosted Operation Model. However, it is important to know that this model allows us to avoid a heavy capital investment and large staffing costs required for building and operating our own mining facilities. As a result, we have significantly reduced the capital expenditures and operating costs on the infrastructure and operations funds.
Speaker Change: To continuously refine our cost structure, the company has launched a global energy strategy. On one hand, we are conducting detailed cost analysis of existing hosting agreements.
Speaker Change: On the other hand, we have formed a dedicated team to carry out on-site researches in energy rich regions such as the Middle East and Australia with a focus on evaluating the feasibility of partnerships in low cost clean energy projects including solar and natural [inaudible]
Speaker Change: Through a specified energy supply system, we aim to reduce cost and enhanced operational efficiencies.
关于您第三个问题就是公司的未来战略
We will continue to focus on optimizing mining operations.
Xi Ka-wa Kwa Shok
Speaker Change: Explore new market opportunities while strengthening relationships with partners to jointly promote.
Speaker Change: Promoting the development of the industry, we will also continue to seek sustainable and more cost-effective energy sources.
Speaker Change: And on your third question, our future strategic direction, we will remain focused on optimizing our mining operations in healthy efficiency and exploring new market opportunities. At the same time, we will strengthen our partnerships to jointly drive industry advancements.
Speaker Change: and we will also continue to proactively pursue sustainable and more cost-efficient energy sources.
Yongyi Zhang, Jiayuan Lin
Xie Xie. Thank you.
Dr. Jiayuan Lin, Yongyi Zhang,
I am going to question from Jiayuan with...
How long see? Research, please go ahead.
Jas Sun: Thank you to the management for accepting my question. I have three questions to ask. The first question is, since the Bitcoin mining business contributes 99% of the most revenue, does it face the risk of having a relatively single income structure, and how do you balance business diversification?
Speaker Change: The second question is whether to consider using derivatives to hedge against the volatility of supply value in the case of operating losses.
Thank you.
Speaker Change: Thank you for taking my questions. I have three questions. The first question is that, well, the Bitcoin mining business actually accounted for 99% of your quarterly revenue. So, do you see any concentration risk in terms of your revenue stream and how much do I add? Or diversify your business lines?
So do you consider using the relatives to hatch against?
Speaker Change: in your fair value. My third question is regarding cash flow. In fact, those are interested in cash flow positions. So my question is, do you have any plan in the future for equity, financing or other financing plans?
Dr. Jiayuan Lin, Yongyi Zhang,
Thank you.
Speaker Change: Regarding the contribution of the Bitcoin mining business, we believe that despite the contribution of the Bitcoin mining business
Speaker Change: It takes up most of our revenue, but we believe that focusing on the mining business at the current stage aligns with the company's strategy. At the same time, we are also confident in the used car export business. We will focus on the operation of the lightweight, asset-light used car export website, AutoPango.
Speaker Change: In the future, we will gradually explore other business opportunities based on market conditions to achieve business diversification. At the same time, we will also optimize our mining business to ensure its stable growth.
Speaker Change: On your first question, well the majority of our revenue currency comes from Bitcoin mining. We believe that focusing on money at this stage is aligned with our overall strategy, meanwhile we remain confident in the potential of our use car export business and will concentrate on operating auto-cango our SLI platform for use car exports.
Speaker Change: Looking ahead, we plan to gradually explore additional business opportunities based on market conditions to diversify our operations. At the same time, we will continue to refine our mining business to ensure its stable and sustainable growth.
Dr. Jiayuan Lin, Yongyi Zhang, Yongyi Zhang,
Transcription by CastingWords
Speaker Change: The operating loss for this quarter was mainly affected by the decline in currency prices in March. We believe that the volatility in Bitcoin prices is more of a short-term impact. We are optimistic about the long-term value of Bitcoin.
In addition, we are introducing risk management tools in phases.
Speaker Change: In the short term, we are signing medium to long-term contracts with power suppliers to lock in electricity prices and reduce cost pressures. At the same time, we are actively seeking low-cost energy power stations.
Speaker Change: In the medium to long term, we are also studying the feasibility of relevant risk management tools.
Speaker Change: Choose carefully to prevent contributions
In addition, we are introducing risk management tools in phases.
Speaker Change: to lock in electricity prices and reduce cost pressures. And at the same time, we are actively seeking low cost renewable energy sources.
Speaker Change: Looking ahead, we are also exploring the visibility of more relevant risk management tools and will adopt them properly to mitigate no potential risks.
Thank you.
Speaker Change: Given the current low debt-to-equity ratio, we still have room to increase our liabilities. We will prioritize debt financing over equity financing.
Speaker Change: Regarding cash flow, we currently have sufficient liquidity to support mining operations at 32 extra cash per second, including a 400 million USD annual credit facility provided by our partners. Given our relatively low debt to equity ratio, we still have ample room to take on additional leverage. As such, we plan to prioritize death financing over equity financing.
Thank you.
Thank you.
Speaker Change: And the next question comes from Michael Donovan with H.C. Wayne Rape.
Speaker Change: Hello, thank you for taking my question. This is Michael Dahman from Kevin D.D's team.
Michael Donovan: You mentioned July , so when can we expect the 18 access to be online at the end of July ? Or is there anything that would hold this up? And then my second question is around your Bitcoin HODL strategy that you mentioned on the call.
Michael Donovan: Do you have any plans to use your Bitcoin in terms of lending or have any plans to earn yield on the Bitcoin? Thank you.
Michael Donovan: Thank you very much, I have two questions. The first question is still about the previously mentioned addition of 18 EH of computing power. Could you provide more detailed information about the progress of this transaction? Has it been finalized? You also mentioned earlier that it might be completed in July , so when exactly will this 18 EH of computing power be in place? Will it be by the end of July ? Is there any possibility that other factors might hinder the timely delivery of this 18 EH of computing power? The second question is?
Michael Donovan: We mentioned earlier in this speech that your strategy for Bitcoin mining is mining plus long-term holding. Have you considered using Bitcoin as a lending tool, or have you considered adopting other methods to gain more profits from Bitcoin?
Michael Donovan: Can we have our CFO answer this question on site?
Speaker Change: Thank you for your questions and we'll hand over your questions to our CEO , Yongyi Zhang.
It can be completed by the end of July , as of now.
Yongyi Zhang: We have actually reached an agreement on the main terms of this agreement. It's just that some corresponding details still need to be finalized.
Speaker Change: Thank you for your questions. So on your first question, only 18 years due, actually we expect to complete the to close the deal by the end of the July because we have already reached agreement on the main 10th.
An offer for such a transaction of domestic PRC business
Speaker Change: Therefore, we should expect to hold the shareholders' meeting to review this PRC transaction this Friday.
Speaker Change: Therefore, we expect that after the shareholders' meeting, once the entire transaction, I mean the PRC transaction, is completed, our amendments to the 18-page transaction agreement will also be completed accordingly.
Speaker Change: To be more specific about a 10-some-conditions revisions, actually in April , you know, we received some of our requests on our domestic or PRC due, so that's why we need to make some revisions to the 18-year-to-do-term-some-conditions.
our Plant Revision to the 18th EHDU [inaudible]
Speaker Change: As for your second question, our strategy is still primarily focused on mining and land hoarding as our main approach.
This is the secret of the Tang Dynasty.
I'm not sure. We'll have to consider it.
Speaker Change: We have seven questions. Yes, our strategy is the minor hold. So right now, our focus is still on increasing our big points coding.
Speaker Change: However, when our holdings reach a certain size, then we will definitely consider taking on some transactions to improve, to earn more use on Bitcoin. Thank you.
Jiayuan Lin, Yongyi Zhang, Pingyue Wu,
Speaker Change: And that concludes our question in the introduction. Thank you. Once again for joining King of Earth's quarter, 2025 earnings conference called today. Have a great day.
Speaker Change: Unknown Executive, Jiayuan Lin, Yongyi Zhang