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- Cango’s bitcoin mining ran 30% below capacity in February.
- Hashrate decline and low bitcoin prices squeezed profitability.
- Aggressive BTC sales were used to reduce loans.
According to the report, Cango Bitcoin mining operations fell short in February. The company ran at just 34.55 EH/s, despite having 50 EH/s of deployed capacity. This represents roughly 30% underutilization. The lower output reflected temporary downtime caused by fleet optimization and relocation.
Cango is upgrading equipment, renegotiating hosting agreements, and moving rigs to areas with lower power costs. The slowdown highlights the growing pressure on miners as the industry’s economics worsen.
Operating large fleets without owning data centers exposes companies to the costs of hosting. When mining revenue dips, these costs can quickly reduce profitability. Cango produced 454.83 BTC in February and held 3,313.4 BTC on its balance sheet by month-end.
Cango Faces Declining Bitcoin-Mining Profits
However, the profitability of mining has significantly declined. The hash price, an important measure of the mining revenue generated per unit of computing power per day, is now below $40 per PH/s per day. For the most part of February, the hash price was in the low $30s. Cango’s fleet hash cost is traditionally at $40 per PH/s.
The company rapidly increased its mining activities in the past year through the purchase of Antminer S19 XP mining rigs from Bitmain. The rigs were then used at Bitmain facilities through colocation agreements. This strategy, although efficient in terms of growth, resulted in Cango facing increased hosting expenses when the company’s revenues were at break-even points.
The low hash price and high mining costs resulted in low mining efficiencies in February. This is a common challenge facing the mining industry, whereby profitability is heavily dependent on electricity and uptime expenses.
Cango Sells Thousands of Bitcoin to Reduce Debt
February also saw considerable financial moves made by Cango. In the midst of a selloff in the early part of the month, the company sold large volumes of its bitcoin reserves to reduce outstanding loans. In a matter of one weekend, the company sold 4,451 BTC, or 60% of its reserves at the time.
For the month, the company sold a total of 4,616 BTC, which is over 10 times the amount it produced in the month of February. Cango’s actions are similar to those of a miner, which is a common strategy in the bitcoin mining industry.
The operations, the reduced margins, and the financial moves made by the company are a testament to the challenges faced by bitcoin mining operations. Cango and other similar operations are in a period where the margins are tight, and the operations are being adjusted to reduce costs and ensure the survival of the operations.
Also Read: Bitcoin Price Outlook: Why $60K Support and $82K Resistance Now Control the Market
