In its second-quarter 2026 earnings report, Cango disclosed the latest progress in scaling back its Bitcoin mining business and pivoting toward AI computing power.

Total revenue fell about 50% quarter on quarter, from $102 million in the first quarter to $50.8 million, while the company recorded a net loss from continuing operations of $81.6 million.

Management said the company is shifting its operating focus from expanding computing power to improving unit economics. Its operating loss narrowed by about 68%, from $254.4 million in the first quarter to $80.6 million in the second, while adjusted EBITDA improved from a loss of $154.1 million to a loss of $10.7 million.

Behind the simultaneous decline in revenue and costs, however, was Cango’s decision to retire inefficient mining rigs, reduce its self-mining computing power and move some higher-cost computing power to a revenue-sharing model.

Scaling Back Crypto Mining to Reduce Operating Costs

The main reason for Cango’s second-quarter revenue decline was its reduction in operating computing power. The company continued to retire less energy-efficient S19-series mining rigs and shifted some computing power to a leasing model.

Cango’s total operating computing power stood at 37.01 EH/s at the end of the first quarter, falling to 27.58 EH/s by the end of the second quarter.

Self-mining computing power declined from 27.98 EH/s to 19.84 EH/s, while another 7.74 EH/s was operated under leasing arrangements. As its computing power declined, Cango’s quarterly Bitcoin output fell from 1,266 coins in the first quarter to 656 in the second, while Bitcoin mining revenue dropped from $98.4 million to $47.4 million.

Cango began phasing out S19-series mining rigs at the end of 2025 and deploying the more energy-efficient S21 series. During its first-quarter earnings call, management said S19 and S21 models accounted for roughly 80% and 20%, respectively, of operating mining rigs as of the end of May 2026.

On its second-quarter earnings call, management said S21-series mining rigs now accounted for slightly more than one-third of operating machines, excluding leased computing power. The company is continuing to retire some S19-series rigs at sites with high electricity prices.

The equipment overhaul also generated substantial accounting losses. In the second quarter, Cango recognized a $42.9 million impairment loss on mining rigs and an additional $8.5 million loss on disposals. The combined $51.4 million was one of the main drivers of the quarterly loss.

At some sites with higher electricity costs, Cango moved 7.74 EH/s of computing power to revenue-sharing lease arrangements. Management explained on the earnings call that, under this model, site operators cover electricity, maintenance and operating costs, while the Bitcoin mined is split with Cango according to an agreed ratio.

This arrangement reduces the electricity and operating expenses borne directly by Cango, but it also means that some computing power no longer contributes the full amount of mining revenue that it would under the self-mining model.

Cost metrics improved as a result. Cango’s cash cost per Bitcoin fell about 4.7% quarter on quarter, from $76,928 in the first quarter to $73,313 in the second. Total cost including mining rig depreciation declined from $99,747 to $98,405 per Bitcoin.

Cost of revenue excluding depreciation fell about 49%, from $99.6 million to $50.7 million, while depreciation expenses declined about 42.5%, from $29.4 million to $16.9 million.

Cango’s operating loss narrowed from $254.4 million in the first quarter to $80.6 million in the second. The loss from changes in the fair value of crypto assets also fell from $151.8 million to $4.1 million. Cango also began using Bitcoin hedging instruments to reduce the impact of price volatility on operating cash flow.

These improvements were tied to the smaller operating footprint, changes to the mining rig mix, the leasing model and shifts in Bitcoin prices. The lower costs and narrower losses therefore do not mean that mining revenue has returned to growth.

3 MW AI Business Remains at an Early Stage

As it scales back Bitcoin mining, Cango is expanding into high-performance computing and AI inference through its subsidiary EcoHash.

Founded in 2025, EcoHash is the Cango subsidiary responsible for high-performance computing and AI inference. It uses the power supply and infrastructure at existing mining farms to deploy modular AI computing equipment.

Cango’s company-owned site in Georgia has total capacity of 50 MW. A dedicated AI computing area can support up to 3 MW, with room reserved for future expansion.

According to Cango’s latest announcement on September 3, EcoHash has completed the infrastructure retrofit for the site’s AI computing area. High-density computing containers have been delivered, installed and tested, and the first batch of GPU servers is now powered on and operating.

EcoHash also said it has begun providing commercial GPU computing services using the first batch of servers, with additional GPU equipment still being deployed in phases. The company said its initial and prospective customers include GPU cloud platforms and AI-native cloud infrastructure providers, but did not disclose customer names, contract values, service terms or profit margins.

Cango plans to explore both bare-metal GPU hosting and colocation services, and is operating test nodes in Texas and on the U.S. West Coast. The company is also evaluating other potential sites and the possibility of building its own facilities.

However, the 3 MW AI computing area remains small compared with Cango’s existing crypto mining operation.

Bitcoin mining generated $47.4 million in the second quarter, accounting for about 93% of Cango’s total revenue. Commercial services from the Georgia AI project began only after the quarter ended and were therefore not included in the second-quarter financial results.

The company previously expected to begin recognizing AI-related revenue in the third quarter. Although its September 3 announcement confirmed that commercial GPU services had launched, Cango did not disclose the revenue value of its first contracts or provide full-year guidance for the AI business.

It is therefore too early to determine whether the business can offset declining mining revenue in the near term or improve Cango’s overall profitability.

Cash Reserves and Transition Spending Remain Key Concerns

As of June 30, 2026, Cango held $10.1 million in cash and cash equivalents, up from $7.2 million at the end of the first quarter. Long-term debt owed to related parties stood at $31.2 million, slightly higher than the $30.6 million recorded at the end of the first quarter.

Cango’s long-term related-party debt reached $557.6 million at the end of 2025 before falling sharply to $30.6 million in the first quarter of 2026 through active deleveraging. Although its debt at the end of the second quarter was far below the level at the start of the year, its cash reserves remained limited.

Cango must simultaneously fund the operation of its existing mining business, mining rig upgrades and the expansion of its AI infrastructure. Its future financial position will depend on Bitcoin prices, electricity costs, mining rig efficiency, AI customer acquisition and additional capital expenditure.

Management said on the second-quarter earnings call that it would not set a hard computing power target for the mining business, instead placing greater emphasis on margins and cash flow. This suggests Cango may continue adjusting the balance among self-mining, leasing and equipment retirements based on the operating economics of individual sites.

Meanwhile, the AI business remains at an early stage of commercialization. The Georgia site has begun providing GPU computing services, but Cango has not disclosed its customer count, contract values, equipment utilization or revenue contribution.

If the AI business expands more slowly than expected, or mining rig upgrades fail to reduce costs further, Cango could continue to face cash flow and financing pressure. Conversely, Cango may gradually reduce its dependence on Bitcoin mining revenue if EcoHash can add customers and replicate the Georgia site’s modular deployment model at other locations.

For now, Cango has taken the first step in its transition from a Bitcoin mining company to an AI computing power infrastructure operator. But the initial 3 MW deployment is not yet large enough to prove that the model can become a new primary revenue source. The success of the transition will need to be assessed through third-quarter AI revenue, subsequent customer contracts and further infrastructure expansion.