Earnings Call Transcript - CANG Q4 2025

Operator, Operator

Good evening, and welcome to the Cango Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. 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.

Paul Yu (Peng Yu), Chief Executive Officer

Thank you. Hello, everyone, and welcome to Cango's Fourth Quarter and Full Year 2025 Earnings Call. 2025 marks a landmark year in our company's history, our first year of transformation since pivoting to Bitcoin mining in November 2024. It was a year of accelerated execution, and we accomplished several critical objectives. First, asset restructuring and global deployment: through a series of transactions, we relocated our assets from the traditional auto finance business to our Bitcoin mining operations within six months. This helped us build a global distributed mining network. Second, leadership and management alignment with our new strategy: we have strengthened our board and management team with seasoned industry professionals. They have both deep expertise and established networks in digital assets and infrastructure which has sharpened our competitive edge in the sector. Third, listing structure optimization: during the year, we transitioned from an ADR listing to a direct stock listing. This move lays a solid foundation for us to access a broader range of capital market tools, reach a broader base of investors and reduce holding costs for existing shareholders. Operationally, 2025 showed clear execution discipline despite significant market volatility in the second half of the year. We maintained professional standards across core metrics, including hashrate scale, Bitcoin production and miner uptime. In the fourth quarter of 2025, we recorded total revenue of $179 million and produced 1,718.3 Bitcoin. For the full year, total revenue reached $688 million, with Bitcoin production totaling 6,595.6. As economies of scale took hold we achieved strong revenue growth and posted positive EBITDA for the full year. The net loss attributable to shareholders for 2025 was $622 million, mainly due to the following factors: First, some nonrecurring transformation costs. This includes a one-time book loss of around $169 million from discontinued operations, then a further loss of $257 million came from impairment loss from mining equipment and the company acquired and settled in equity triggered by us by the significant appreciation in Cango's share price between selling and delivery. Second, towards the end of the fourth quarter, the price of Bitcoin and other cryptocurrencies declined sharply, driven by external macroeconomic factors and geopolitical tensions. This resulted in a fair value loss of $96.5 million on our Bitcoin holdings and an additional impairment provision of $81 million on mining machines as a result of the downward price impact on their fair value. In the early stages of our transformation, constrained by our CapEx capabilities, we adopted a colocation model to rapidly secure a large share of the Bitcoin network hashrate. We quickly built a hashrate of 50 exahash per second, capturing approximately 4% to 5% of the global network. However, competition intensified globally and our cash cost per Bitcoin mined approached a high of $84,000 in the fourth quarter of 2025. Recognizing further price pressure heading into 2026, we took prudent actions: we reduced debt exposure, recovered liquidity and began phasing out inefficient capacity. These steps have strengthened our balance sheet and enhanced operational efficiency as we enter the new year. In February 2026, we strategically sold 4,451 Bitcoin from inventory and used the proceeds to repay loans, reducing our overall debt. We then completed a $10.5 million capital injection from shareholders. Additionally, we signed agreements with Armada Network Limited and Fortune Peak Limited for new funding totaling around $65 million. We expect these steps to progressively strengthen our capital base and mitigate potential market volatility risks going forward. On the operation side, we are optimizing our operations by phasing out older high-energy-consuming mining machines. We are also gradually moving our computing power to regions with lower electricity prices. While this will lead to a contraction in our total hashrate scale in the short term, it will effectively improve the energy efficiency of our overall fleet, lower cost per coin and enhance our resilience against drastic market fluctuations. Finally, many of you have asked about our AI business transformation. Our efforts to reduce existing debt, strengthen equity capital and optimize Bitcoin operations have created the necessary flexibility to make progress on AI. On that note, we have officially established EcoHash, a wholly owned subsidiary based in Texas, dedicated to high-performance computing and AI inference, leveraging our accumulated experience in large-scale deployment and management of distributed computing infrastructure as well as our broadly partnered global energy network of Bitcoin mining sites. We will launch standardized modular AI computing nodes aiming to provide highly flexible and cost-effective solutions for long-tail AI inference demand. As of today, we are making steady progress on feasibility studies and preparatory work. Let me share a few updates on the infrastructure front: we have initiated the first phase retrofit of our owned LN site in Georgia, USA, for standardized AI node deployment. On the product side, our containerized GPU computing solutions also reached the deliverable stage. Our objective is to leverage our existing accessible skilled energy network to provide flexible and intelligent computing power to support the digital economy. In 2025, we demonstrated the speed of our transformation. In 2026, we will demonstrate our resilience and our ability to adapt and evolve. While the current macroeconomic environment presents challenges, it also presents a long-term opportunity. The logic behind our decisions is clear: proactive adjustment, disciplined execution and commitment to the AI era. With that, I will turn the call to Michael Zhang, our Chief Financial Officer, to take you through the financials in more detail.

Michael Zhang (Yongyi Zhang), Chief Financial Officer

Thanks, Paul. Hello, everyone, and welcome to our fourth quarter and full year 2025 earnings call. Before I start to review our financials, please note that unless otherwise stated, all amounts discussed are in U.S. dollars. Total revenue in the fourth quarter was $179.5 million; for the full year, revenue reached $688.1 million. Revenue during the quarter from the Bitcoin mining business was $172.4 million, with a total of 1,718.3 Bitcoin mined during the period. The average cost to mine Bitcoin excluding depreciation of mining machines was $84,552 per coin with all-in cost of $106,251 per coin. For the full year, revenue from the Bitcoin mining business was $675.5 million with a total of 6,594.6 Bitcoin mined during the year. The average cost to mine Bitcoin, excluding depreciation of mining machines, was $79,707 per coin with all-in cost at $97,172 per coin. Revenue from our automobile trading business was $4.8 million in the fourth quarter and $9.8 million for the full year. Now let's move on to our costs and expenses. Cost of revenue exclusive of depreciation in the fourth quarter was $155.3 million and $543.3 million for the full year. Depreciation in the fourth quarter was $38.1 million and $116.6 million for the full year. General and administrative expenses in the fourth quarter were $9.9 million and $28.9 million for the full year. Impairment loss from mining machines in the fourth quarter was $81.4 million and $338.3 million for the full year. Loss from change in fair value of receivables for Bitcoin collateral in the fourth quarter was $171.4 million and $96.5 million for the full year. Operating loss for the quarter was $276.6 million with a net loss from continuing operations of $285 million in the fourth quarter. For the full year, the operating loss was $437.1 million and net loss from continuing operations was $452.8 million. On a non-GAAP basis, adjusted EBITDA for the full year was $24.5 million. Moving on to our balance sheet: as of December 31, 2025, we had cash and cash equivalents of $41.2 million. Our balance sheet also includes $663 million of receivables for Bitcoin collateral. In terms of operational assets, we carry mining machines at a net value of $248.7 million after depreciation. On the liability side, we had $557.6 million in long-term debt. Together, these figures represent a core component of our financial structure as we closed the fourth quarter of 2025. This concludes our prepared remarks. Operator, we are now ready to take questions.

Operator, Operator

Your first question today comes from Pingyue Wu with Citic Securities.

Pingyue Wu, Analyst — Citic Securities

This is Pingyue Wu from Citic Securities. And my first question is: the company recently launched EcoHash, a subsidiary focused on HPC and AI inference compute service. How does EcoHash position itself in a highly competitive AI compute market? What is the core logic behind our approach compared with traditional data centers? My second question is: the company sold more than half of its Bitcoin holdings in February 2026 and this appears to be a notable shift from the mining hold strategy highlighted in the third quarter. What drives this decision?

Paul Yu (Peng Yu), Chief Executive Officer

Thank you for your question. EcoHash is now designed not to replace traditional hyperscale data centers across the board, but to focus on targeted opportunities within specific segments of the AI compute market. Hyperscale facilities are built for large-scale centralized model training workloads. Those projects require significant upfront capital and construction timelines that can span several years. By contrast, our initial focus is on AI inference and generative AI workloads. These use cases have distributed demand and are sensitive to latency. They often require flexible deployment of compute nodes closer to end users rather than relying solely on massive centralized facilities. Our approach centers on resource reuse and modular design. Notably, we can leverage our global energy network connected to our existing Bitcoin mining sites. From this base, we are deploying standardized and modular AI compute nodes that can be deployed much faster than traditional data center infrastructure. This model shortens timelines, lowers upfront construction costs and delivers compute capacity more efficiently. For now, EcoHash remains in an early phase of model validation and technical integration. We are taking a measured approach; our primary objective is to explore how we can fully leverage our existing energy infrastructure to participate in the rapidly growing AI inference market with a model that is asset-light, quick to deploy and able to deliver stronger capital efficiency.

Michael Zhang (Yongyi Zhang), Chief Financial Officer

Thank you for your questions. We understand investors are watching this shift very closely. From a financial management perspective, our shift from a pure Bitcoin accumulation strategy towards more strategic monetization reflects our focus on maintaining balance sheet strength in the current market environment. Given the heightened volatility in Bitcoin prices since late in the fourth quarter and into early 2026, we made a decision in February to monetize a portion of our Bitcoin holdings. The objective was to reduce financial leverage and further optimize our balance sheet, ensuring that the company remains well positioned to navigate potential continued market volatility. It is also worth noting that we are seeing a broader shift across the mining industry. In a cyclical environment with increasing volatility, maintaining excessive exposure to a single asset can introduce unnecessary balance sheet risk. As a result, a more balanced approach between long-term asset exposure and financial stability is becoming increasingly common across the sector. At the same time, the company is entering a critical phase in validating the diversification of our computing power business. We see AI computing as an important long-term growth driver. By making this strategic adjustment, we are also creating greater financial and operational flexibility to support continued development and scaling of our AI-related initiatives. Thank you.

Operator, Operator

Your next question comes from Ming Zeng with China Securities.

Ming Zeng, Analyst — China Securities

This is Ming Zeng from China Securities, and thanks for this opportunity. I have two questions. First, we noticed that the company's leverage ratio remained relatively high at the end of this reporting period, and Bitcoin prices have been volatile and remain weak. How will the company fund the development of its AI business? You mentioned the $10.5 million capital injection from the controlling shareholders and USD 16.5 million equity financing arrangement; how will the funds be allocated between managing the existing business and your AI initiatives in 2026? Second, regarding the development of AI compute network, what is the expected timeline over the next year and when could this begin to contribute revenue? That's my question.

Michael Zhang (Yongyi Zhang), Chief Financial Officer

I will take your first question. We have taken proactive steps to strengthen our balance sheet, as I just mentioned. We recently sold 4,451 Bitcoin from inventory and used the proceeds to partially repay outstanding loans. This reduced our overall financial leverage and increased flexibility as we advance our AI initiatives. At the same time, we completed the closing of our USD 10.1 million capital injection and entered into agreements with Armada Network Limited and Fortune Peak Limited for an additional USD 65 million equity investment. Once this new round of financing is completed, the company's leverage ratio will decline further, resulting in a stronger balance sheet that better supports the development of our AI business. For the AI segment, we intend to follow a disciplined and phased investment strategy. Phase 1 is product and business model validation. During this stage, we will rely primarily on internal capital. We will conduct pilot infrastructure upgrades and deploy compute products at our own LN mining site. Phase 2 begins once the model is validated; we plan to establish several backbone nodes in collaboration with selected partner mining facilities. In these cases, infrastructure upgrades will be carried out jointly with site operators and project-level structured financing such as GPU-backed financing may be used to support expansion. Phase 3 occurs as the compute network gradually forms and begins generating stable operating cash flow. At that point, we expect to use a flexible mix of equity and debt financing to fund the next stage of growth.

Paul Yu (Peng Yu), Chief Executive Officer

Regarding the AI timeline, our approach to the AI business remains measured and pragmatic. The initiative is still in the early stages, so our near-term focus is on validating the commercial models and evaluating unit economics given where we are in the pilot phase. It would be premature to issue a specific revenue forecast at this time. Currently, our most tangible progress is taking place at our self-operated LN mining site in Georgia. We are conducting a small-scale pilot project to deploy the first batch of standardized AI compute nodes there. This will allow us to validate the technical architecture and gather operational data. The broader 1.2 gigawatt energy network that we can access serves as a long-term strategic resource pool; however, this represents a medium- to long-term capacity option. It is not necessarily a commitment to immediate large-scale capital expenditure. For now, we are focused on gradually validating the model through the Georgia pilot while ensuring that overall liquidity and financial stability remain intact. Thank you.

Operator, Operator

Your next question comes from Marco Zhang with Gelonghui Research.

Marco Zhang, Analyst — Gelonghui Research

This is Marco from Gelonghui. Congrats on your successful transformation last year. I have two questions. First, you increased your hashrate from 32 exahash per second to 50 in 2025. Do you have specific hashrate expansion targets for 2026? Second, for our modeling purposes, looking ahead from your perspective, how should investors evaluate Cango's valuation framework in 2026 and beyond? Should the company be viewed primarily as a mining company or as an AI infrastructure provider?

Paul Yu (Peng Yu), Chief Executive Officer

For 2026, our focus is efficiency rather than scale. Our goal is to maintain healthy cash flow and strong risk resilience across market cycles. In 2025, we produced approximately 6,600 BTC and expanded the strength of our existing operational footprint. For 2026, we will implement a prioritized efficiency strategy. This starts with systematically phasing out older, high energy consumption mining rigs. We will also gradually relocate some of our hashrate to regions with more competitive electricity pricing. This optimization may result in a temporary reduction in total hashrate in the near term. However, it will greatly improve fleet-wide energy efficiency, lower cost per Bitcoin mined and strengthen our resilience during periods of volatility. Our objective is to build a more resilient compute portfolio by phasing out inefficient capacity and freeing up liquidity. Strengthening our balance sheet also preserves capital resources that may later support our ongoing AI transition. Thank you. Thank you for your question. Bitcoin mining remains our foundation, while AI represents our incremental growth engine. Over time, we believe investors may increasingly evaluate our performance through metrics such as revenue per megawatt—whether we are deploying power into Bitcoin mining or AI compute. The underlying principle is the same: converting energy into economic value. We will allocate resources towards whichever segment delivers stronger returns. In that sense, Cango is evolving into a flexible compute platform; we can dynamically allocate energy-backed compute capacity across different markets based on return potential.

Operator, Operator

Your next question comes from Kevin Dede with HC Wainwright.

Kevin Dede, Analyst — HC Wainwright

I'd like to quiz you a little bit more, Paul, please, on detail behind your AI pilot in Georgia. How long do you think it will take you to validate the model? And do you think you might be able to turn to live market revenue sometime within this calendar year?

Simon Tang (Ming Yeung Tang), Chief Investment Officer

Hi, Kevin, this is Simon Tang, Chief Investment Officer. I'll step in and take this question. In terms of the AI pilot in Georgia, because this is going to be a modular containerized solution, it should be relatively quick. We anticipate that from breaking ground to overall coming on stream, it should take somewhere between four to six months, and this is a relatively conservative estimate. Secondly, to answer your second question, in terms of revenue generation within this year, yes, we do anticipate that there is going to be some revenue generated from this business model this year.

Kevin Dede, Analyst — HC Wainwright

Okay. Simon, as you look at optimizing the Bitcoin mining fleet, how much of your 50 exahash would you classify as inefficient? And how much capital do you think you'll be able to allocate toward replacing the fleet versus investment in AI infrastructure?

Simon Tang (Ming Yeung Tang), Chief Investment Officer

When we talk about inefficiency, it's a function of both the mining machine model as well as the power price that we have in place for that particular site. It's difficult to quantify holistically at the moment how much of the fleet we would classify as inefficient. Overall, in terms of the general direction of this business, as Paul and Michael have alluded to earlier, we're looking at a variety of ways to increase the economics and outcome of this business: whether it be swapping some of these machines for newer models, moving them to more cost-efficient sites or renegotiating contracts that are expiring or being renegotiated. In terms of capital allocation for this effort, new capital investment is going to be more geared toward the AI side. So on the mining machine side, currently we do not have any significant plans for allocating more investment into procuring new machines.

Kevin Dede, Analyst — HC Wainwright

The auto business seemed to pick up nicely in the fourth quarter. Could you help me understand whether there was seasonality there? How would you expect 2026 to progress? Do you think you'll see overall lifting in revenue there? And please give us some indication of where you are on profitability in that business.

Michael Zhang (Yongyi Zhang), Chief Financial Officer

Thank you, Kevin, for your question. Yes, we see quick development in our overseas automobile trading business overall, and we do expect growth in the coming year. However, since we are allocating the majority of our capital to AI initiatives, we do not expect to allocate further major capital into the auto trading segment. Therefore, growth in that business will be more organic. Performance will also be related to the demand side, including geopolitical factors and energy price volatility. Given these variables, it is difficult to provide a clear forecast for the automobile trading business's financial performance next year.

Kevin Dede, Analyst — HC Wainwright

Paul, I'd like to offer my congratulations. It's remarkable how quickly you're able to transform the company, and I have no doubt you'll be able to work out challenges addressing HPC and AI. Congratulations on all the progress and good luck in the future.

Michael Zhang (Yongyi Zhang), Chief Financial Officer

Thank you, Kevin. Thank you for your time.

Operator, Operator

Your next question comes from William Gregozeski with Greenridge Global.

William Gregozeski, Analyst — Greenridge Global

I just wanted to ask about how much of the Georgia facility is being allocated to the Phase 1 pilot? And are you able to give some kind of rough sense as to how much money is being spent on that Phase 1 pilot?

Juliet Ye, Head of AI Infrastructure

Hi Bill, this is Juliet. Thank you for your question. With regard to the LN site, we are currently starting the retrofitting work for the site. We are adopting a modular approach and do not expect to convert a major amount of hashrate or megawatts into AI at this stage. This pilot is intended to be a showcase. We expect to allocate one to two megawatts to demonstrate the possibilities using our existing infrastructure. In terms of CapEx, we've been running demo projects and, as discussed in previous calls, we are thinking of a ballpark of around $20 million for one megawatt, including GPUs. This is still in the process of feasibility study; we will disclose more details and numbers when we have the LN site ready, probably later this year, as Simon mentioned. For the retrofitting work, it might take around four to six months on a conservative basis. I hope that answers your question.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over for any closing remarks.

Paul Yu (Peng Yu), Chief Executive Officer

Thank you for joining us. We're good. Thank you very much. Thank you, everyone, for joining our earnings call today.

Operator, Operator

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.