Cango Inc.

Good evening and welcome to the Cango Inc. fourth quarter and full year 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mr. Paul Yu, Chief Executive Officer. Please go ahead.

Thank you. Hello everyone and welcome to Kangol's fourth quarter and full year 2025 earnings call. 2025 marks a landmark year in our company's history. Our first year of transformation since pivoting to Bitcoin mining in November 2024. It was a year of accelerated execution and we accomplished several critical objectives. First, asset restructuring and global deployment through a series of transactions. We relocated our asset from traditional auto finance business to our Bitcoin mining operations within six months. This helped us build a global distributed mining network. Second, leadership and management to align with our new strategy we have strengthened our board and management team with seasoned industry professionals. They have brought deep expertise and established networks in both digital assets and infrastructure, which has sharpened our competitive edge in the sector. Third, listing structure optimization. During the year, we transitioned from an ADR listing to a direct stock listing. This move lays a solid foundation for us to access a broader range of capital market tools, reach a broader base of investors, and reduce holding costs for existing shareholders. Operationally, 2025 showed a clear execution discipline despite significant market volatility in the second half of the year. We maintained professional standards across core metrics, including hash rate scale, Bitcoin production, and miner uptime. In the fourth quarter of 2025, we recorded total revenue of 179 million and produced 1,718.3 Bitcoin. For the full year, total revenue reached $688 million, with Bitcoin production totaling $6,595.6. As the economy of scale took hold, we achieved strong revenue growth and posted positive EBITDA for the full year. The net loss attributable to shareholders for 2025 was $622 million, mainly due to the following factors. First, some non-recurring transformation costs. This includes a one-time book loss of around $169 million from discontinued operations. Then a further loss of $257 million came from impairment loss. from mining equipment and the company acquired and settled in FT triggered by us by the significant appreciation in Congo's share price between sending and delivery. Second, towards the end of fourth quarter, the price of Bitcoin and other cryptocurrencies declined sharply, driven by external macroeconomic factors. and geopolitical tensions. This resulted in a fair value loss of 96.5 million on our Bitcoin holdings and an additional impairment provision of 81 million on mining machines as a result of the downward price impact on their fair value. In the early stages of our transformation, by our CapEx capabilities. We adopted a collocation model to rapidly secure a large share of the Bitcoin network hash rate. We quickly built a hash rate of 50 extra hash per second, capturing approximately four to five of the global network. However, competition intensified globally. and our cash cost per Bitcoin mined approached a high of 84,000 in the fourth quarter, 2025. Recognizing further price pressure, we're heading into 2026. We took prudent action. We reduced debt exposure, recovered liquidity, and began phasing out in efficient capacity. These steps have strengthened our balance sheet and enhanced operational efficiency as we enter the new year. In February 2026, we strategically sold 4,451 Bitcoin from inventory and used the proceeds to repay loans, reducing our overall debt. We then completed 10.5 million capital injection from shareholders. Additionally, we signed agreement with Armada New Network Limited and Fortune Peak Limited for new funding around totaling 65 million. We expect these steps to progressively strengthen our FTA base and mitigate potential market volatility risks going forward. On the operation side, we are optimizing our operations by phasing out older high energy consuming mining machines. We're also gradually moving our computing power to regions with lower electricity price. Well, this will lead to a contraction in our total head rate scale in the short term. It will effectively improve the energy efficiency of our overall fleet, lower cost per coin, and enhancing our resilience against drastic market fluctuations. Finally, many of you have asked about our AI business transformation, our efforts to reduce existing debt, strengthen equity capital, and optimize Bitcoin mining operations have created the necessary flexibility to really make progress on AI. On that note, we have officially established EcoHash, a wholly owned subsidiary based in Texas dedicated to high performance computing and AI inference. leveraging our accumulated experience in large-scale deployment and management of distributed computing infrastructure, as well as our broadly partnered globally energy network of Bitcoin mining sites. We will launch standardized modular AI computing nodes, aiming to provide highly flexible and cost-effective solutions for long-term AI inference demand. As of today, we are making steady progress on feasibility studies and preparatory work. Let me share a few updates. On the infrastructure front, we have initiated the first phase retrofit of our own LN site in Georgia, USA for standardized AI nodes deployment. On the product side, our containerized GPU computing solutions also reached the leverage deliverable stage. Our objective is to leveraging our existing accessible skilled energy network to provide flexible and intelligent computing power to support the digital economy. In 2025, we demonstrated the speed of our transformation. In 2026, we will demonstrate our resilience and our ability to adapt and evolve. While the current microeconomic environment presents challenges, we also see long-term opportunity. The logic behind our decisions is clear. Proactive adjustment, disciplined execution, and commitment to the AI era. With that, I will turn the call to Michael Zhang, our chief financial officer, to take you through the financials in more detail.

Thanks, Paul. Hello, everyone, and welcome to our fourth quarter and four-year 2025 earnings call. Before I started to review our financials, please note that unless otherwise stated, all amounts discussed are in U.S. dollars. Total revenue in the first quarter was $179.5 million. For the four-year, revenue reached $688.1 million. Revenue during the quarter from the Bitcoin mining business was $172.4 million, with a total of 1,718.3 Bitcoins mined during the period. The average cost to mine Bitcoin excluding depreciation of mining machine was $84,552 per coin, with owing cost of 106,251 per coin. For the full year, revenue from the Bitcoin mining business was 675.5 million with a total of 6,594.6 Bitcoins mined during the year. The average cost to mine Bitcoin excluding depreciation of mining machine was 79,707 per coin with owing cost at 7,272 per coin. Revenue from our automobile trading business was 4.8 million in the fourth quarter and 9.8 million for the four year. Now let's move on to our cost and expenses. Cost of revenue exclusive of depreciation in the first quarter was 155.3 million and 543.3 million for the four year. Depreciation in the fourth quarter was $38.1 million and $116.6 million for the four-year. General and administrative expenses in the fourth quarter was $9.9 million and $28.9 million for the four-year. Impairment loss from mining machines in the fourth quarter was $81.4 million and $338.3 million for the four-year. loss from changing fair value of receivable for bitcoin collateral in the fourth quarter was 171.4 million and 96.5 million for the full year operating loss for the for the quarter was 276.6 million with a net loss from continuing operations of 285 million in the fourth quarter for the full year the operating loss was $437.1 million, and net loss from continuing operation was $452.8 million. On a non-GAAP basis, adjusted EBITDA for the full year was $24.5 million. Moving on to our balance sheet, as of December 31, 2025, we had cash and cash equivalents of $41.2 million. Our balance sheet also includes $663 million of receivables, or Bitcoin collateral. In terms of operational assets, we carry out mining machine at a net value of $248.7 million of depreciation. On the liability side, we had $557.6 million in long-term debts. Together, these figures represent a core component of our financial structure as we close the fourth quarter of 2025. This concludes our prepared remarks. Operator, we are now ready to take questions.