Cango Inc.

and good evening, everyone. Welcome to Cango, Inc.' 's second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. This call is also being broadcast live on the company's IR website and is being recorded. Joining us today are Mr. Paul Yu, Chief Executive Officer, and Mr. Michael Zong, Chief Financial Officer of the company. Following management's prepared remarks, we will conduct a question and answer session. Before we begin, I refer you to the safe harbor statement and the company's earnings release, which also applies to the conference call today, as management will make forward-looking statements. With that said, I will now turn the call over to Mr. Paul Yu, CEO of Kango. Please go ahead, sir.

Thank you. Good afternoon, and thank you for joining Kango's second quarter. 2025 earnings call. Today marks an important milestone as we report our first quarter following Congo's strategic transformation. This isn't just another quarterly update. It showcases our complete transformation into a leading Bitcoin mining company. In just nine months, we've scaled to 50x of computing power, placing us firmly among the world top miners. As part of this transformation, we recently completed a governance and leadership restructuring, onboarding a senior management team with deep expertise across digital asset infrastructure, finance, and energy investments. This leadership team gave us the right mix of skills to hit the ground running and execute our next phase of growth. I'm optimistic about what we can achieve together as we enter a new chapter in the journey. Today, I will walk you through how our strategic execution has fundamentally repositioned us to lead the industry over the long term. Let me start with our financials, where we generated 1 billion RMB in total revenue in the second quarter of 2025, with equal money contributing 989.4 million RMB of that amount. However, you can see we incurred a net loss which reflects two accounting adjustments that temporarily mask our operational strength. and should be built as essential investments in our foundation for the future. First, our clean exit from China. We completed the $352 million divestiture of our legacy China asset in May, which resulted in one-off loss from discontinued operations. As a part of the acquisition of mining equipment last November, we purchased 18 exahash of mining capacity, so a share-based payment. By the time the equipment was delivered in June, our stock price had nearly doubled, triggering a non-hash accounting adjustment in accordance with applicable fair value accounting standards. These were strategic decisions we took into consideration to rapidly build competitive skill and sharpen our focus. The important story is what lies beneath. Excluding this one of adjustments, adjusted EBITDA for the quarter was 710.1 million RMB. clear evidence of the underlying strength of our Bitcoin mining business. Now, let me reveal the progress we've made in the transformative quarter. We've already achieved one of the industry's largest scale at 50 exahash, representing approximately 6% of the global network's hash rate as of June 30th, 2025. July's Bitcoin production reached 650.5 BTC of 44.4% or approximately 200 BTC increase from June, primarily driven by the full deployment of the 50 exahash mining equipment since end of June. In addition, in August, We strategically acquired a 50 megawatt mining site in Georgia, a move that will reduce power costs and enhance operational stability and lay the groundwork for future expansion. We maintain a four-trade balance sheet with $118 million in cash-on-cash equivalents as of June 30th. provide an ample capital to fund our strategic expansion. Our asset life strategy provides a distinct advantage. By acquiring plug and play mining rigs with minimal upfront capital, we are able to scale more quickly and cost effectively than vertically integrated competitors. Although this model resulted in higher cash costs per BTC of $83,091 during the quarter, our all-in cost remained competitive at $98,636 per BTC. This is primarily due to significantly reduced depreciation expenses from low equipment acquisition costs, which offset elevated power expenses. As a result, our capital efficiency supports a solid return on capital employed and ensure resilience across market cycles without burden of heavy equipment financing. Additionally, our geographic diversified footprint across North and South America, Middle East, and Africa helps mitigate regional risks while sustaining industry-leading efficiency. Our roadmap forward is clear and purposeful. In the near term, we will maximize value from our 50 exahash of mining capacity by implementing efficiency upgrades and replicating the low-cost operational model of our Georgia site Looking to the mid-term, we plan to pilot new renewable energy storage projects aimed at achieving near zero-cost mining operations while simultaneously retrofitting select facilities to support HPC applications. Over the long term, we are ultimately building a dynamic computing platform that intelligently balances Bitcoin mining and AI workloads, all powered by our expanding energy expertise. This quarter's results reflect a company making bold and strategic moves. We have accepted temporary accounting adjustments to secure lasting competitive advantages, namely meaningful skill, cost-effective infrastructure, and a focused commitment on pure play, high value computing. With this strong foundation firmly in place and a clear path to compounding value, I will never be more confident in Kendall's future. Before I turn the call to Michael Johns, our CFO, to take you through our financial results for the quarter in more detail, Let me quickly reveal our legacy business. We remain focused on lean asset light operations for our used car export platform, AutoCandle. Since its launch, our platform has attracted over 6 million visits and surpassed 456,000 registered users. It now hosts more than 8,000 100,000 vehicles listing with 70,000 different models on offer, connecting China's used car market with international buyers seeking quality inventory. We continue to see steady growth opportunities in this segment in the future. With that, I will turn the call to Michael.

Thanks, Paul. Hello, everyone, and welcome to our second quarter 2025 earnings call. Before I started to review our financials, please note that unless otherwise stated, all numbers are in RMB terms. Total revenues in the second quarter of 2025 were $1 billion. Revenue from the Bitcoin mining business in the second quarter of 2025 was $989.4 million, with a total of 1,404.4 bitcoins mined in the second quarter of 2025. The average cost to mine bitcoins including depreciation of mining machines, was $83,091 per coin, with owing costs at $98,636 per coin during the quarter. Revenue from automobile trading income was $12.4 million in the second quarter of 2025. Now let's move on to our costs and expenses during the quarter. Cost of revenue exclusive of depreciation and amortization in the second quarter of 2025 was $836.9 million. Depreciation and amortization in the second quarter of 2025 was $156.4 million. General and administrative expenses in the second quarter was $21.7 million. Due to one-off loss from discontinued operations and non-cash impairment loss, we recorded an operating loss of $1.3 billion and a net loss of $2.1 billion in the second quarter of 2025 respectively. Excluding the impairment loss and the one-off loss from this continued operation, we recorded adjusted EBITDA of $710.1 billion in the second quarter of 2025 compared with $5.4 billion in the same period of last year. Moving on to our balance sheet, As of June 30, 2025, we had cash and cash equivalents of $843.8 million. Starting with our second quarter 2025 results, we intend to change the reporting currency of our consolidated financial statement from IMB to U.S. dollars, reflecting the profile of our revenue and profit after divestiture of our China asset in May 2025. The change is expected to be effective from the company's results for the third quarter of 2025, which will be reported in US dollars. This concludes our prepared remarks. Operator, we are now ready to take questions.