Pingyue Wu

Pingyue Wu asked Cango to elaborate on the financial benefits of converting short-term debt to long-term debt and to disclose the current cost of debt. She also sought management's perspective on the risk of AI CapEx entering bubble territory, given Cango's recent entry into the AI infrastructure space.

Answer

CFO Michael Zhang explained that optimizing the debt maturity profile enhances balance sheet stability and reduces financial risk, with borrowing costs expected to remain in the 7%-8% annualized range. CEO Paul Yu acknowledged market reassessment of AI investments but highlighted Cango's lighter asset, distributed edge-oriented approach, and dynamic capital efficiency management to mitigate risks.

Pingyue Wu asked Cango to elaborate on the financial benefits of converting short-term debt into long-term debt and to disclose the current cost of debt. Additionally, he questioned Cango's perspective on the risk of AI CapEx entering 'bubble territory,' given the company's recent entry into the AI infrastructure space.

Answer

CFO Michael Zhang explained that optimizing the debt maturity profile enhances balance sheet stability and reduces financial risk by aligning the capital structure with the strategy of building Bitcoin reserves. He noted that borrowing costs are expected to remain stable in the 7%-8% annualized range. CEO Paul Yu acknowledged market reassessment of AI investments but highlighted Cango's lighter asset and leverage structure, distributed edge-oriented operating footprint, and dynamic adjustment approach to mitigate risks.

Pingyue Wu questioned if Cango's acquisition of mining sites signifies a shift towards an integrated operation, departing from its previously stated light asset model. She also asked about plans to acquire more low-electricity-cost mining sites, prioritizing regions like South America and the Middle East, and the screening criteria used.

Answer

CEO Paul Yu clarified that acquiring mining sites offers strategic benefits beyond cost reduction, including stable energy supply, operational expertise, and a foundation for AI data center transformation, without altering the capital-led strategy. He stated that Cango will continue to monitor M&A opportunities for energy projects, prioritizing the U.S. and the Middle East based on low-cost electricity, sufficient capacity, power redundancy, and regional grid stability.

Pingyue Wu of CITIC Securities Company asked if Cango's acquisition of mining sites signifies a shift from its light asset model towards integrated operations, and inquired about future plans for acquiring more low-electricity-cost mining sites, prioritizing regions like South America and the Middle East, along with the specific screening criteria.

Answer

CEO Peng Yu clarified that selective site acquisition enhances operational efficiency and paves the way for green energy and AI transformation, not altering their asset-led strategy. He detailed three strategic benefits (stable energy, operational expertise, AI foundation) and three screening criteria (low-cost electricity, sufficient capacity, grid stability), prioritizing the U.S. currently, with the Middle East also under consideration.