Tencent Indirectly Exposed to Bitcoin via 15.6% Stake in Cango’s Mining Pivot

Chinese technology giant Tencent has reported a 15.6% stake in Cango, an automobile financing platform that has recently pivoted into Bitcoin mining, making it the third-largest public Bitcoin mining firm

According to a Schedule 13G amendment filed on Monday, Tencent holds 21.17 million shares of Cango as of December 31, 2024, representing 15.6% of the company’s outstanding shares. Cango’s market capitalization stood at $505 million as of Tuesday while Tencent is worth $500 billion.

While it is known that Tencent became a major investor in Cango before its 2018 IPO, the company has not disclosed any material changes to its position in Cango since the end of 2021. The filing on Monday confirms Tencent’s indirect exposure to Bitcoin and Bitcoin mining, following Cango’s recent pivot into the sector.

Cango’s stock price surged by 300% after announcing in mid-November that it had acquired 32 EH/s of energized hashrate from Bitmain for $400 million, signaling a bold move into Bitcoin mining. However, after hitting a 52-week high of $9.66 in December, Cango’s stock dropped by half to $4.84, though it remains up more than 300% year-over-year.

According to Tencent’s previous Schedule 13G filing, the company held 25.2 million shares of Cango at the end of 2021, representing an 11.6% stake. Despite reducing its holding by 4 million shares, Tencent’s ownership percentage rose to 15.6% due to Cango’s share repurchase programs and shrinking outstanding shares.

It is unclear whether Tencent sold shares after Cango’s pivot into Bitcoin mining, participated in the company’s buyback programs, or a mix of both. Given that Tencent did not report any material changes in 2022 or 2023 and Cango only repurchased about 2 million shares in 2024, it is plausible that Tencent offloaded part of its stake during the recent rally.

Cango went public on the NYSE in 2018, raising $44 million at a $1.56 billion valuation. Tencent and Chinese ride-hailing giant DiDi were among its key strategic investors. Before the IPO, Tencent held 30 million shares of Cango.

Cango’s core business has declined sharply in recent years, reporting just $3.8 million in revenue for the third quarter of 2024. However, following its Bitcoin mining expansion, the company mined 1,472 BTC since November and still holds all of it as of January 30, worth approximately $140 million at current prices.

It remains to be seen how Cango will report hosting fees and other operational costs paid to Bitmain, which is expected to manage a fleet of Antminer S19XP miners.