It seems like at the end of last year, a Chinese company called Cango bought 50 Eh/s and very quickly became the largest Publicly Traded Bitcoin Mining Company, usually called PubCos.
I somehow missed the news when they came out, but thanks to @k00b's latest post on stacker news (#882188) I was able to revisit it, and boy oh boy let me tell you, this smells funny!
Before we start, I recommend everyone read the article in question and get familiarized with the situation.
According to the article:
"One major difference between Cango and other mining heavyweights is that Cango isn’t operating its own mining fleet right now. With machines spread out around the world — including in the U.S., Canada, Paraguay and Ethiopia — Cango is still relying heavily on Bitmain for facilities and infrastructure, and to make sure the sites run smoothly."
The first thing to point out is the fact that nobody just up and buys 50 EH/s of ASIC, even when you are partnering with an experienced team like Bitmain's. When someone does such a erratic and extreme move, there's more to it than meets the eye.
The first clue to this comes from cross-referencing two datapoints, the market cap and cash on hand.
Currently, the company has a 600m USD, but back check the stock's yahoo page, we can see that the company had a Market Capitalization of 160M USD at the end of September 2023. Of course, that's more than a year earlier, but looking at the 5y chart, shows that the price basically stayed flat for a year. Furthermore, in the last One Year period, the stock has increased by 300% (4x), and 160M by 4 is very close to 600M.
We can also see that the price did have some run up before the announcement of Nov 6th, 2024. This indicates insider trading, but regardless, we can safely say that the company had a sub 200M USD.
So now the question is: How does a 160m USD MCap with a flat stock for more than a year have 256M USD in cash, plus the market's approval for a 30% dillution of the shareholders?
From the article:
"Cango paid $256 million in cash for the first 32 EH/s worth of computing power, which it purchased from bitcoin mining machine manufacturer Bitmain. It will be issuing $144 million worth of shares for the remaining 18 EH/s, which it is acquiring from Golden TechGen — a firm owned by former Bitmain (CFO) Max Hua — as well as other undisclosed mining machine sellers. Once the transaction is settled, Golden TechGen and these other sellers will end up owning approximately 37.8% of Cango."
Well, this in part explains the insider trading of the stock before the Nov 6th announcement. And it also shows that there are more things going behind the scenes than they let on.
Before we end, I would like to point remind the audience that the CCP basically controls any and all of its publicly traded companies by having at least one Party member in each Board of Directors. And such a big pivot would definitely have gone through the Board.
Thus, with all of these curious events, and taking into account that all PubCos in China have some sort of control from the party, plus the fact this was such a sudden and violent pivot, I think that the conclusion writes itself.
The CCP is back in the Mining business.
May the Hash be with you!