Q1 2026 Cango Inc Earnings Call

June 1, 2026

Operator: Hello, and welcome to the Cango Inc. Q1 2026 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mr. Paul Yu, Chief Executive Officer. Please go ahead.

Operator: Hello, and welcome to the Cango Inc. Q1 2026 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mr. Paul Yu, Chief Executive Officer. Please go ahead.

Speaker #1: Hello, and welcome to the Cango Inc. Q4 2026 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Paul Yu, Chief Executive Officer.

Speaker #1: Please go ahead.

Speaker #2: Good morning, everyone, and thank you for joining Cango's Q1 2026 earnings call. First, I will summarize our key financials and operational performance for the quarter.

Paul Yu: Good morning, everyone, and thank you for joining Cango's Q1 2026 Earnings Call. First, I will summarize our key financials and operational performance for the quarter. The Q1 2026 was characterized by industry-wide adjustments. Our results reflect these macro headwinds alongside our ongoing efforts to manage our strategic transition. During Q1, we generated total revenue of $102 million, primarily driven by revenue from our Bitcoin mining business. We reported a net loss from continuing operations of $261.1 million, primarily due to non-cash impairment charges on Bitcoin mining machines and loss from changes in fair value of receivable for Bitcoin collateral, both resulting from the decline in Bitcoin market price. By the end of the quarter, we held 1,025.7 Bitcoin. We reduced our long-term debt to $30.6 million.

Speaker #2: The first quarter of 2026 was characterized by industry-wide adjustments, and our results reflect these macro headwinds alongside our ongoing efforts to manage our strategic transition.

Speaker #2: During Q1, we generated total revenue of $102 million, primarily driven by revenue from our Bitcoin mining business. We reported a net loss from continuing operations of $261.1 million, primarily due to non-cash impairment charges on Bitcoin mining machines and loss from changes in fair value of receivables for Bitcoin collateral, both resulting from the decline in Bitcoin market price.

Speaker #2: By the end of the quarter, we held 1,025.7 Bitcoin, and we reduced our long-term debt to $30.6 million. As of March 31, 2026, Cango's total operational hashrate was 37.01 exahashes per second, comprising 7.8 exahashes per second of self-mining capacity.

Paul Yu: As of 31 March 2026, Cango's total operational hash rate was 37.01 exahash per second, comprising 27.98 exahashes per second of self-mining capacity and 9.02 exahashes per second of hosted hash rate. This operational model prioritizes margin resilience over scale. In Q1, we mined 1,266 Bitcoin. Through disciplined cost management, our average cash cost per Bitcoin mined was $76,928, showing a 9% decrease from Q4 2025. These figures reflect our continuous focus on profitability and operational efficiency as our business model evolves. Following this brief quarterly reveal, I'd like to provide an update on our operational activities during April and May, which offer additional context regarding our strategic direction. Regarding our mining business, our immediate priority is to streamline operations and carefully manage our resources at location. In April, we maintained our focus on cost optimization measures and operational efficiency.

Speaker #2: And 9.02 exahashes per second of hosted hashrate. This operational model prioritizes margin resilience over scale. In Q1, we mined 1,266 Bitcoin. Through disciplined cost management, our average cash cost per Bitcoin mined was $76,928.

Speaker #2: Showing a 9% decrease from Q4 2025, these figures reflect our continued focus on profitability and operational efficiency as our business model evolves. Following this brief quarterly review, I'd like to provide an update on our operational activities during April and May.

Speaker #2: Which offer additional context. Regarding our strategic direction, regarding our mining business, our immediate priority is to streamline operations and carefully manage our resources at location.

Speaker #2: In April, we maintained our focus on cost optimization measures and operational efficiency. Our self-mining operations produced 230.04 Bitcoin for the month, and the average cash cost per coin further decreased. This result stems primarily from our ongoing fleet upgrade.

Paul Yu: Our self-mining operations produced 230.04 Bitcoin for the month, with the average cash cost per coin further decreased. This result stems primarily from our ongoing fleet upgrade. Beginning in March, we have been selling less efficient, older generation S19 miners and selectively replacing them with more energy-efficient S21 series machines. As of the end of May, within our self-mining hash rate composition, the contribution ratio between S19 and S21 models is approximately 8 to 2. This operational mix supports our efforts to enhance our overall cost structure. Our objective is to manage our mining segment toward an operational baseline capable of supporting improved cash flow resilience. Currently, some sites have transitioned to a revenue-sharing hosting arrangement.

Speaker #2: Beginning in March, we have been selling less efficient, older-generation S19 miners and selectively replacing them with more energy-efficient S21 series machines. As of the end of May, within our self-mining hashrate composition, the contribution ratio between S19 and S21 models is approximately 8:2.

Speaker #2: This operational mix supports our efforts to enhance our overall cost structure. Our objective is to manage our mining segment toward an operational baseline capable of supporting improved cash flow resilience.

Speaker #2: Currently, some sites have transitioned to a revenue-sharing hosting arrangement. While this arrangement introduces depreciation expenses on our financial statements, from a cash perspective, the hosting structure requires the counterparty to cover direct power costs as well as maintenance and operation expenses.

Paul Yu: While this arrangement introduces depreciation expenses on our financial statements, from a cash perspective, the hosting structure requires the counterparty to cover direct power costs and maintenance and operation expenses, allowing us to participate in revenue-sharing while reducing our direct exposure to site-level operating expenses. This structure helps mitigate operating risk and provides an operational buffer as we optimize our fleet. As our fleet adjustments proceed and stabilize, our strategic intent is to focus our operations primarily on disciplined self-mining while managing an orderly exit from less efficient hardware or higher-cost sites. As of 30 April, through a diversified footprint across 26 active mining sites globally, we operated a total hash rate of 31.58 exahashes per second, comprising 20.43 exahashes per second in self-mining capacity and 11.15 exahashes per second in hosted capacity.

Speaker #2: Allowing us to participate in revenue sharing while reducing our direct exposure to site-level operating expenses. This structure helps mitigate operating risk and provides an operational buffer as we optimize our fleet.

Speaker #2: As our fleet adjustments proceed and stabilize, our strategic intent is to focus our operations primarily on disciplined self-mining, while managing an orderly exit from older, less efficient hardware or higher-cost sites.

Speaker #2: As of April 30, through a diversified footprint across 26 active mining sites globally, we operated a total hashrate of 31.58 exahashes per second, comprising 20.43 exahashes per second in self-mining capacity and 11.15 exahashes per second in hosted capacity.

Paul Yu: This current hash rate structure helps mitigate operational risk, supporting our ability to manage market volatility, and execute our fleet upgrade strategy. Next, turning to our AI infrastructure initiatives. The objective of EcoHash is to leverage Cango's power access and mining operational expertise to develop standardized compute solutions. We are continuing to advance our milestones. Pilot evaluation, site retrofitting, and hardware installation at our Georgia location have progressed significantly, and testing for modular high-density compute units is underway. Our objective with this modular design is to evaluate whether modular development can reduce cost and improve operational efficiency relative to traditional data center infrastructure. Operational model. This framework is intended to allow us to utilize existing operational assets to address market demand, aiming to service more and medium-sized enterprise efficiently. Based approach. Our multi-stage strategy begins with an entry to GPU compute capacity leasing.

Speaker #2: This current hashrate structure helps mitigate operational risk, supporting our ability to manage market volatility and execute our fleet upgrade strategy. Next, turning to our AI infrastructure initiatives.

Speaker #2: The objective of EcoHash is to leverage Cango's power access and mining operational expertise to develop standardized compute solutions. We are continuing to advance our milestones.

Speaker #2: Pilot evaluation: Site retrofitting and hardware installation at our Georgia location have progressed significantly, and testing for modular high-density compute units is underway. Our objective with this modular design is to evaluate whether modular development can reduce costs and improve operational efficiency relative to traditional data center infrastructure.

Speaker #2: Operational model. This framework is intended to allow us to utilize existing operational assets to address market demand, aiming to serve more and medium-sized enterprises efficiently.

Speaker #2: Based approach. Our multi-stage strategy begins with an entry into GPU compute capacity leasing. Over the long term, we plan to evaluate ecosystem integration through the EcoLink management platform.

Paul Yu: Over the long term, we plan to evaluate ecosystem integration through EcoLink Orchestration Platform with the objective of developing an AI compute network. We have taken a disciplined approach to improve our capital structure and balance sheet position. Through active treasury and debt management, we have reduced our Bitcoin-backed loan balance to approximate, say, $30.6 million. Concurrently, our remaining Bitcoin reserve stands at 1,057.46 Bitcoin as of 20 April, reflecting our strategic priority to lower leverage and reserve balance sheet stability. Our strategic alignment and partnerships support our ongoing operational focus. In Q1, our chairman and a board director made an investment of $65 million in the company through entities they control. Furthermore, we established a strategic collaboration with DL Group, a Hong Kong-listed company, which includes a $10 million convertible note and a strategic operation MOU, which complements our commitment to AI infrastructure opportunities.

Speaker #2: With the objective of developing an AI compute network, we have taken a disciplined approach to improve our capital structure and balance sheet position. Through active treasury and debt management, we have reduced our Bitcoin-backed loan balance to approximately $30.6 million.

Speaker #2: Concurrently, our remaining Bitcoin reserves stand at 1,057.46 Bitcoin as of April 20, reflecting our strategic priority to lower leverage and maintain balance sheet stability.

Speaker #2: Our strategic alignment and partnerships support our ongoing operational focus. In Q1, our Chairman and a Board Director made an investment of $65 million in the company through entities they control.

Speaker #2: Furthermore, we established a strategic collaboration with DL Group, a Hong Kong-listed company, which includes a $10 million convertible note and a strategic operation MOU.

Speaker #2: Which complements our commitment to AI infrastructure opportunities. As we look to the remainder of 2026, we have closely monitored the evolving dynamics between global AI compute demand and power infrastructure capacity.

Paul Yu: As we look to the remainder of 2026, we have closely monitoring the evolving dynamics between global AI compute demand and power infrastructure capacity. Within this market environment, our operational priorities are twofold. First, to continue optimization of cost efficiency of our mining business. Second, to methodically advance the evaluation of EcoHash and continue the technical testing of our pilot project. We will continue to approach our strategy with a focus on capital discipline, aiming to leverage our existing infrastructure assets to support long-term stability and shareholder value. That concludes my remarks. I will now turn the call over to our CFO, Simon, for a detailed financial reveal. Thank you.

Speaker #2: Within this marketing environment, our operational priorities are twofold: first, to continue optimizing the cost efficiency of our mining business, and second, to meet the methodically advanced evaluation of EcoHash and conduct continuous technical testing of our pilot project.

Speaker #2: We will continue to approach our strategy with a focus on capital discipline, aiming to leverage our existing infrastructure assets to support long-term stability and shareholder value.

Speaker #2: That concludes my remarks. I will now turn the call over to our CFO, Simon, for a detailed financial review. Thank you.

Speaker #1: Thanks, Paul. Hello, everyone, and welcome to our first quarter earnings call. Before I start to review our financials, please note that, unless otherwise stated, all amounts discussed are in US dollars.

Simon Tang: Thanks, Paul. Hello, everyone, and welcome to our Q1 earnings call. Before I start to review our financials, please note that unless otherwise stated, all amounts discussed are in US dollars. Total revenues in Q1 was $102 million. Revenues during the quarter from the Bitcoin mining business was $98.4 million, with a total of 1,266.1 bitcoins mined during the period. The average cost to mine Bitcoin, excluding depreciation of mining machines, was $76,928 per bitcoin, with all-in cost of $99,747 per bitcoin. Compared to Q4 2025, total revenue decreased by approximately 43%. This decline primarily reflects our proactive reduction in operational hash rate as we began to phase out older and less efficient S19 series mining machines, and temporarily transition some capacity to a leasing model that Paul discussed just now.

Speaker #1: Total revenues in the first quarter were $102 million. Revenues during the quarter from the Bitcoin mining business were $98.4 million, with a total of 1,266.1 Bitcoins mined during the period.

Speaker #1: The average cost to mine Bitcoin, excluding depreciation of mining machines, was $76,928 per Bitcoin, with the all-in cost at $99,747 per Bitcoin. Compared to the fourth quarter of 2025, total revenue decreased by approximately 43%.

Speaker #1: This decline primarily reflects our proactive reduction in operational hash rate, as we began to phase out older and less efficient S19-series mining machines and temporarily transitioned some capacity to a leasing model that Paul discussed just now.

Speaker #1: While this adjustment has reduced top-line mining revenues, it has also contributed to the flow profile. Some of these efforts remain ongoing in the second quarter as we speak.

Simon Tang: While this adjustment has reduced top-line mining revenue, it has also contributed to lower operating costs and improved cash flow profile, and some of these efforts remain ongoing in Q2 as we speak. Now, let's move on to our costs and expenses. Cost of revenue, excluding depreciation in Q1, was $99.6 million, down from $155.3 million in Q4, driven by lower electricity and hosting expenses following the hash rate reductions. Depreciation in Q1 was $29.4 million. General and administrative expenses, including related parties, totaled $7.2 million. There was an impairment loss from mining machines in Q1 of $49 million and a loss on disposal of mining machines in Q1 of $20.3 million. Loss from changes in fair value of receivable for Bitcoin collateral was $151.8 million, compared to $171.4 million in Q4.

Speaker #1: Now, let's move on to our cost and expenses. Cost of revenue excluding depreciation in the first quarter was $99.6 million, down from $155.3 million in the fourth quarter.

Speaker #1: Driven by lower electricity and hosting expenses following the hash rate reduction. Depreciation in the first quarter was $29.4 million. General and administrative expenses, including related parties, totaled $7.2 million.

Speaker #1: There was an impairment loss from mining machines in the first quarter of $49 million, and a loss on disposal of mining machines in the first quarter of $20.3 million.

Speaker #1: Loss from changes in fair value of receivable for Bitcoin collateral was $151.8 million, compared to $171.4 million in the fourth quarter. This non-cash loss was primarily driven by the decline in Bitcoin price during the quarter, as we started off the quarter with over 7,500 Bitcoins.

Simon Tang: This non-cash loss was primarily driven by the decline in Bitcoin price during the quarter, as we started off the quarter with over 7,500 bitcoins. Operating loss for the quarter was $254.4 million, with a net loss from continuing operations of $261.1 million. On a non-GAAP basis, adjusted EBITDA was a loss of $154.1 million, of which there was a $151.8 million impact from the loss from changes in fair value of receivable for Bitcoin collaterals. Moving on to our balance sheet. As of 31 March, we had cash and cash equivalents of $7.2 million, down from $41.2 million at year-end, mainly due to debt repayments and operational activity. That said, our balance sheet also includes cryptocurrencies of $7.9 million as well as receivables for Bitcoin collaterals of $68.2 million. In terms of operational assets, we carried our mining machines at a net value of $130.8 million.

Speaker #1: Operating loss for the quarter was $255.4 million, with a net loss from continuing operations of $261.1 million. On a non-GAAP basis, adjusted EBITDA was a loss of $154.1 million.

Speaker #1: Of which, there was a $151.8 million impact from the loss due to changes in the fair value of receivables for Bitcoin collaterals. Moving on to our balance sheet, as of March 31, we had cash and cash equivalents of $7.2 million, down from $41.2 million at year-end.

Speaker #1: Mainly due to debt repayments and operational activities. That said, our balance sheet also includes cryptocurrencies of $7.9 million, as well as receivables for Bitcoin collateral of $68.2 million.

Speaker #1: In terms of operational assets, we carried our mining machines at a net value of $130.8 million. On the liability side, we had $30.6 million in long-term debt, which is significantly lower than the $557.6 million recorded as of year-end.

Simon Tang: On the liability side, we had $30.6 million in long-term debt, which is significantly lower than the $557.6 million recorded as of year-end. The substantial reduction in both the receivable for Bitcoin collaterals and the associated long-term debt reflect our proactive deleveraging efforts during the quarter. By selling a portion of our Bitcoin holdings and using the proceeds to repay related party loans, we have meaningfully strengthened the balance sheet and also reduced our interest expenses. This concludes our prepared remarks. Operator, we are now ready to take questions.

Speaker #1: The substantial reduction in both the receivable for Bitcoin collaterals and the associated long-term debt reflects our proactive deleveraging efforts during the quarter. By selling a portion of our Bitcoin holdings and using the proceeds to repay related party loans, we have meaningfully strengthened the balance sheet and also reduced our interest expenses.

Speaker #1: This concludes our prepared remarks. The operator will now be ready to take questions.

Speaker #2: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone phone.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Your first question comes from Qingyi Lu from CITIC Securities. Please go ahead.

Speaker #2: If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Your first question comes from Ping Yiwu from CITIC Securities.

Speaker #2: Please go ahead.

Speaker #3: Good morning, and thank you very much for taking my question. I'm Ping Yiwu from CITIC Securities. My first question is: the company's cash cost per coin declined in the first quarter compared with the fourth quarter of last year, and management also mentioned further optimization in April.

Qingyi Lu: Good morning, and thank you management team for taking my question. I'm Qingyi Lu from CITIC Securities. My first question is, the company's cash cost per coin declined in Q1 compared with Q1 of last year. Management also mentioned further optimization in April. What were the main drivers behind the cost reduction? Is there still room for further cost improvements going forward? Also my second question is, management team mentioned that the 2026 strategy is efficiency over scale. In April, total operating hash rate was 31.55 exahash per second, including 11.50 exahash per second of leased hash rate. Will the hash rate continue to decline over the next few months? Could you explain in more detail how the leasing model works and its specific impact on the financial statement? Thank you.

Pingyue Wu: Good morning, and thank you management team for taking my question. I'm Qingyi Lu from CITIC Securities. My first question is, the company's cash cost per coin declined in Q1 compared with Q1 of last year. Management also mentioned further optimization in April. What were the main drivers behind the cost reduction? Is there still room for further cost improvements going forward? Also my second question is, management team mentioned that the 2026 strategy is efficiency over scale. In April, total operating hash rate was 31.55 exahash per second, including 11.50 exahash per second of leased hash rate. Will the hash rate continue to decline over the next few months? Could you explain in more detail how the leasing model works and its specific impact on the financial statement? Thank you.

Speaker #3: What were the main drivers behind the cost reduction? Is there still room for further cost improvements going forward? And also, my second question is: the management team mentioned that the 2026 strategy is efficiency over scale. In April, total operating hash rate was 31.55 after hash per second, including 11.50 after hash per second of leased hash rate.

Speaker #3: Will the hash rate continue to decline over the next few months? Could you explain in more detail how the leasing model works and its specific impact on the financial statements?

Speaker #3: Thank you.

Speaker #4: Regarding your first question, the cost reduction was mainly driven by two factors. First, we proactively phased out part of our higher energy consumption S19 series mining machines and gradually replaced them with more energy-efficient S21 series models.

Paul Yu: Regarding your first question, the cost reduction was mainly driven by two factors. First, we proactively phased out part of our higher energy consumption S19 series mining machines and gradually replaced them with more energy-efficient S21 series models. Second, we continued to migrate hash rate to regions with lower power costs, including developing next-generation miners in locations such as Paraguay and Oman. At the same time, we temporarily adopted a revenue-sharing model at certain higher-cost mining sites, which effectively reduced power costs. Looking ahead, we intend to leverage our ongoing fleet upgrades and as some of our hosting contracts expire, we will strive to optimize our hosting arrangements to lower power costs.

Speaker #4: Second, we continued to migrate hash rate to regions with lower power costs, including developing next-generation miners in locations such as Paraguay and Oman. At the same time, we temporarily adopted a revenue-sharing model at certain higher-cost mining sites, which effectively reduced power costs.

Speaker #4: Looking ahead, we intend to leverage our ongoing fleet upgrades, and as some of our hosting contracts expire, we will strive to optimize our hosting arrangements to lower power costs.

Speaker #5: And I'll take your second question. With regard to the hash rate, we're not setting a hard hash rate target. Instead, we're really focusing on margin and cash flow KPIs for the mining business for now.

Simon Tang: I'll take your second question. With regards to the hash rate, we're not setting a hard hash rate target. Instead, we're really focusing on margin and cash flow KPIs for the mining business for now. We do, and we are continuing to retire older S19 series machines in certain higher power cost sites. During this period, our total hash rate may experience modest fluctuations in the short term. At the same time, we are selectively deploying more energy-efficient S21 machines. This process has helped us reduce cash cost per coin and improve the resilience of our mining fleet in general.

Speaker #5: We do, and we are continuing to retire older S19 series machines in certain higher power cost sites. So during this period, our total hash rate may experience modest fluctuations in the short term.

Speaker #5: At the same time, we are selectively deploying more energy-efficient S21 machines. This process has helped us reduce cash cost per coin and improve the resilience of our mining fleet in general.

Speaker #5: And as for your question regarding our leasing model, we reiterate that it is a temporary arrangement. Especially with some of the higher-cost sites, where the arrangement, instead of paying for power costs on a consumption basis, the Bitcoin mines will go to the site owner, who will share mining revenue with us based on agreed ratios.

Simon Tang: As for your question regarding our leasing model, we reiterate that it is a temporary arrangement, especially with some of the higher-cost sites where the arrangement, instead of paying for power cost on a consumption basis, the Bitcoin mines will go to site owner who will share mining revenue with us based on the agreed ratios. Thereby, the power cost and maintenance and operation fees are borne by the site owner. From a cash flow perspective, this leasing model ensures that we do not mine at a loss purely as a result of the higher cost. This is in line with our core strategy to protect cash flow. Currently, the lease hash rate is mainly deployed in certain parts of America, but this may change once the respective mining hosting contract expires.

Speaker #5: And thereby, the power cost and maintenance and operation fees are absorbed by the site owner. From a cash flow perspective, this leasing model ensures that we do not mine at a loss, purely as a result of the higher cost.

Speaker #5: And this is our core strategy, to protect in line with our core strategy to protect cash flow. And currently, the leased hash rate is mainly deployed in certain parts of America.

Speaker #5: But this may change once the relevant, once the respective mining hosting contract expires. So, we'll enter into new contracts or, alternatively, we may move the machines to alternative sites.

Simon Tang: We'll enter into new contract, or alternatively, we may move the machines to alternative sites.

Speaker #3: Thank you. I have no further questions.

Qingyi Lu: Thank you. I have no further questions.

Pingyue Wu: Thank you. I have no further questions.

Speaker #2: Thank you. Once again, to ask a question, please press star one. Your next question comes from Marco Zheng from Geelong Huey Research. Please go ahead.

Operator: Thank you. Once again, to ask a question, please press star one. Your next question comes from Marco Zhang from Zhonghua Research. Please go ahead.

Speaker #6: Hi, this is Marco from Geelong Huey Research. Thanks for taking my question. I have three questions here. My first question is regarding your Bitcoin business.

Marco Zhang: Hi. This is Marco from Zhonghua Research. Thanks for taking my question. I have three questions here. My first question is regarding your Bitcoin business. You sold 2,000 Bitcoin in Q1 and currently hold approximately 1,057 Bitcoins. Will the company continue to sell Bitcoin going forward? Has the company's long-term holding strategy changed?

Speaker #6: You sold 2,000 Bitcoin in Q1 and currently hold approximately 1,057 Bitcoins. Will the company continue to sell Bitcoin going forward? Has the company's long-term holding strategy changed?

Speaker #4: Our BDC treasury strategy has shifted from mine and hold to a more dynamic, balanced approach. Given the current level of market volatility, we place greater emphasis on liquidity and balance sheet strength.

Paul Yu: Our BTC treasury strategy has shifted from buy and hold to a more dynamic, balanced approach. Given the current level of market volatility, we place greater emphasis on liquidity and balance sheet strength. The BTC sale in Q1 was mainly used to reduce BTC-backed loans, and the outstanding loan balance has now declined to approximately $30.6 million as of the end of Q1. Going forward, we will adjust flexibly based on market price, operational needs, and debt levels, while we maintain a positive long-term view on Bitcoin. Our treasury decisions will align with our overall capital allocation strategy. Thank you.

Speaker #4: The BDC sale in Q1 was mainly used to reduce BDC-backed loans, and the outstanding loan balance has now declined to approximately $30.6 million.

Speaker #4: As of the end of the first quarter, going forward, we will adjust flexibility based on market price, operational needs, and debt levels. Will we maintain a positive long-term view on Bitcoin?

Speaker #4: Our treasury decisions will align with our overall capital allocation strategy. Thank you.

Speaker #6: Got it. So, we understand that the company's AI business will be carried out through Echo Hash. Could you share an update on the LN pilot mentioned previously?

Marco Zhang: Got it. We understand that the company's AI business will be carried out through EcoHash. Could you share an update on the Ellenwood pilot mentioned previously? Are there any specific commercialization milestones for 2026, and when could it start contributing revenue?

Speaker #6: Are there any specific commercialization milestones for 2026, and when could it start contributing revenue? Yeah.

Simon Tang: Yeah, sure. The Ellenwood site is currently our only fully self-owned infrastructure asset, with 50MW of grid-connected capacity, and the power contract is in place till 2029. In terms of the progress of the construction and renovation, that in itself is now close to completion. We've placed orders for standardized compute containers, which are arriving in phases and will be ready for installation and testing very soon. We plan to activate a portion of the park asset at this site for this purpose, and at the same time, this site is expected to serve as a real-world production environment showroom. What that means is that the containers are of different specifications, and we expect to evaluate and showcase the different specifications. There are air-cooled containers, liquid-cooled, as well as hybrid containers for different environmental conditions.

Speaker #5: Yeah, sure. So, the LN site is currently our only fully self-owned infrastructure asset, with 50 megawatts of grid-connected capacity. The power contract is in place until 2029.

Speaker #5: And in terms of the progress of the construction and renovation, that in itself is now close to completion. And we've placed orders for standardized compute containers, which are arriving in phases.

Speaker #5: And we'll be ready for installation and testing very soon. We plan to activate a portion of the power capacity of this site for this purpose.

Speaker #5: And at the same time, this site is expected to serve as a real-world production environment showroom. What that means is that the containers are of different specifications.

Speaker #5: And we expect to evaluate and showcase the different specifications. There are air-cooled containers, liquid-cooled, as well as hybrid containers for different environmental conditions. This allows us to assess the conversion, deployment, and operating performance of the compute loads in an actual site environment.

Simon Tang: This allows us to assess the conversion, deployment, and operating performance of the compute nodes in an actual site environment. This project in itself is a proof-of-concept stepping stone towards scale commercialization initiatives. Once this model is ready and proven, we'll evaluate opportunities to replicate this model at other suitable sites as well, whether it be sites from our hosting partners. From the perspective of the overall AI project build-out, we have not set any specific revenue target at this point, but revenue generation will start in H2 of this year. Our top priority at the moment is to complete the technical validation of this pilot, and we're in the process of ordering a small number of servers at the moment. If the validation results meet expectations, we will begin to work with partners to deploy more compute nodes.

Speaker #5: So, this project in itself is a proof-of-concept stepping stone towards scaled commercialization initiatives. And once this model is ready and proven, we'll evaluate opportunities to replicate this model at other suitable sites as well.

Speaker #5: Whether it be sites from our hosting partners, and from the perspective of the overall AI project build-out, we have not set any specific revenue target at this point.

Speaker #5: But revenue generation will start in the second half of this year. Our top priority at the moment is to complete the technical validation of this pilot.

Speaker #5: And we're in the process of ordering a small number of servers at the moment. If the validation results meet expectations, we'll begin to work with partners to deploy more compute nodes.

Speaker #5: AI compute services take time to move from the pilot stage to scale, but we'll update the market in a timely manner once there's substantial progress.

Simon Tang: AI compute services take time to move from pilot stage to scale, but we'll update the market in a timely manner once there's substantial progress. Thank you.

Speaker #5: Thank you.

Speaker #6: Got it. And how about the CapEx? So, how much CapEx will be required for the Echo Hash pilot and future expansion? And how do you plan to fund it?

Marco Zhang: Got it. How about the CapEx? How much CapEx will be required for the EcoHash pilot and future expansion, and how do you plan to fund it?

Speaker #5: We're actually doing this in phases. So, the thing about our business model on this side is that it's modularized. In terms of the containers, we have the flexibility of doing it per container.

Simon Tang: We're actually doing this in phases. The thing about our business model on this side is that it's modularized. In terms of the containers, we have the flexibility of doing it per container. In terms of the CapEx, we're being very prudent at the moment. In the first model validation phase, we'll mainly use our own capital right now, so we've deployed our own capital for the site renovation. The Georgia pilot leverages the existing site infrastructure and the power, and the retrofit cost is relatively limited. The bulk of the project CapEx itself will be for the purchases of the servers, which we're in the process of doing right now.

Speaker #5: So, in terms of CapEx, we're being very prudent at the moment. In the first model validation phase, we will mainly use our own capital right now.

Speaker #5: So, we've deployed our own capital for the site renovation. The Georgia pilot leverages the existing site infrastructure and power, right? And the retrofit cost is relatively limited.

Speaker #5: The bulk of the project CapEx itself will be for the purchase of servers, which we're in the process of doing right now. In the future, we do hope that we'll be able to use other types of financing, whether it's GPU-backed financing or using a financial lease model.

Simon Tang: In the future, we do hope that we'll be able to use other types of financing, whether it's BTC-backed financing or using a financial lease model, rather than just purely rely on our own capital. Obviously, we are open to and hope to establish other strategic partnerships as well, so that we can do it together with other partners.

Speaker #5: Rather than just purely rely on our own capital. And obviously, we are open to and hope to establish other strategic partnerships as well, so that we can do it together with other partners.

Speaker #6: Got it. Thanks. I have no more questions here.

Marco Zhang: Got it. Thanks. Yeah, I have no more questions here.

Speaker #7: Thank you. There are no further questions at this time. I will now hand the conference back to management for any closing remarks.

Operator: Thank you. There are no further questions at this time. I'll now hand the conference back to management for any closing remarks.

Speaker #5: Nope, we don't have any other closing remarks. Thanks a lot.

Simon Tang: No, we don't have any other closing remarks.

Operator: Thank you.

Simon Tang: Thanks a lot.

Speaker #7: Thank you. That does conclude our conference for today. Thank you for attending today's presentation. You may now disconnect.

Operator: Thank you. That does conclude our conference for today. Thank you for attending today's presentation. You may now disconnect.

Simon Tang: Thank you.