Is Bitcoin Mining Still Worth It, As Competition Heats Up And Costs Rise?
The auto trader-turned-bitcoin miner has minted 2,944.8 bitcoins since entering the business last November, but has yet to sell any of those despite recent market volatility
Key Takeaways:
- Cango owned 2,944.8 bitcoins at the end of April, as its costs for producing the cryptocurrency rise due to growing competition from new and existing miners
- The bitcoin miner expects to install 18 EH of new capacity by the end of July, bringing its global total to 50 EH spread across four continents
Chinese companies are no strangers to the “cattle effect,” which sees everyone rush into the latest hot sector, aiming to get a piece of the action. Cango Inc. (CANG.US) is learning that lesson now, as the recently minted bitcoin miner discovers that a growing pool of rivals chasing a limited pool of assets ultimately results in falling returns.
Still, the global supply of bitcoin is still more than large enough to keep quite a few people employed, including Cango, which entered the mining business last November in a surprise pivot away from its legacy businesses in auto financing and trading. Cango’s latest quarterly results, released on Wednesday, showed how the effects of growing competition are eating into the productivity of its mining operation.
The company also provided some of the most detailed information to date on its global footprint, which includes mining facilities on four continents. Such diversity is part of its asset-light model that Cango believes is one of its most important strengths, giving it the flexibility to quickly add capacity and adjust its business mix by renting space in mining facilities owned by third parties. While such a strategy carries greater flexibility, it also tends to come with higher costs, especially for electricity, than the self-owned facilities used by many of its rivals.
Cango also revealed that it won’t be an active bitcoin trader by selling its assets whenever the market gets wobbly. Reflecting that, the company revealed it has yet to sell any of the bitcoins it has mined since entering the business late last year, with its bitcoin holdings totaling …
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