10q10k10q10k.net

What changed in Soluna Holdings, Inc's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Soluna Holdings, Inc's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+607 added−607 removedSource: 10-K (2025-03-31) vs 10-K (2024-04-01)

Top changes in Soluna Holdings, Inc's 2024 10-K

607 paragraphs added · 607 removed · 190 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

19 edited+78 added−47 removed3 unchanged
Biggest changeWe have a repeatable way to grow our supply of sustainable, low-cost power from renewable energy generators. Our unique behind-the-meter structure allows us to draw power from the power plant or grid, and provide demand response services. This approach allows us to offer a lower cost of power for Bitcoin mining and, in the future AI and other HPC.
Biggest changeOur approach is purpose-built for the energy transition. We specialize in curtailment solutions, working closely with leading renewable energy developers to access underutilized, low-cost power. Our behind-the-meter model allows us to draw energy directly from the plant or the grid, while also providing demand response services—reducing costs and enhancing grid resilience.
Effective November 2, 2021, the Company changed its name from “Mechanical Technology, Incorporated” (or “MTI”) to “Soluna Holdings, Inc.” On October 29, 2021, Soluna Callisto merged into Soluna Computing, Inc. (“SCI”), a private green data center development company. MTI Instruments, Inc., a subsidiary of Soluna Holdings, Inc., was sold on April 11, 2022.
Effective November 2, 2021, the Company changed its name from “Mechanical Technology, Incorporated” (or “MTI”) to “Soluna Holdings, Inc.” On October 29, 2021, Soluna Callisto Holdings, Inc. merged into Soluna Computing, Inc. (“SCI”), a private green data center development company and a subsidiary of SHI. MTI Instruments, Inc., a subsidiary of SHI, was sold on April 11, 2022.
Of these employees, eleven were in finance, nineteen in operations, one in corporate development, six in information technology and engineering, one in human capital, one in power, and one executive. The operations personnel include both individuals directly involved in the strategy of our data centers as well as data center maintenance and supervisory roles.
Of these employees, thirteen were in finance, twenty-two in operations, two in corporate development, six in information technology and engineering, one in sales, one in human capital, one in power, and two executives. The operations personnel include both individuals directly involved in the strategy of our data centers as well as data center maintenance and supervisory roles.
Company History, Information and Organization History Soluna Holdings, Inc., formerly known as Mechanical Technology, Incorporated which was originally incorporated in the State of New York in 1961, reincorporated in the State of Nevada on March 24, 2021, and is headquartered in Albany, New York.
(“SHI”), formerly known as Mechanical Technology, Incorporated, which was originally incorporated in the State of New York in 1961, reincorporated in the State of Nevada on March 24, 2021, and is headquartered in Albany, New York.
Item 1: Business Unless the context requires otherwise in this Annual Report on Form 10-K (“Annual Report”), the terms “SHI,”, “Soluna,” the “Company,” “we,” “us,” and “our” refer to Soluna Holdings, Inc. together with its consolidated subsidiaries, “SCI” refers to Soluna Computing, Inc., formerly known as EcoChain, Inc.
Item 1: Business Unless the context requires otherwise in this Annual Report, the terms “SHI,” “Soluna,” the “Company,” “we,” “us,” and “our” refer to Soluna Holdings, Inc. together with its consolidated subsidiaries, “SDI” refers to Soluna Digital, Inc.
By colocating our data centers with underutilized renewable resources, Soluna aims to reduce the carbon footprint of our data centers and encourage renewable power plant development. An independent study done by REsurety found that Soluna’s data centers are 18% greener than traditional data centers.
We believe the integration of computing and renewable energy is the future of the modern grid. By colocating our data centers with underutilized renewable resources, we aim to reduce the carbon footprint of our data centers and encourage renewable power plant development. An independent study done by REsurety found our data centers are 18% greener than traditional data centers.
We compete with the following publicly-traded Bitcoin mining companies: ● Riot Platforms, Inc. ● Core Scientific, Inc. ● Cipher Mining Inc. ● Hut 8 Mining Corp ● Hive Blockchain Technologies Ltd. ● Bitfarms, Ltd. ● Cleanspark, Inc. ● Iris Energy Limited ● Bit Digital, Inc. ● TeraWulf Inc. ● Greenidge Generation Holdings Inc.
Our proprietary Bitcoin Mining Business competes globally to complete new blocks and earn Bitcoin rewards. We may compete with the following publicly traded Bitcoin mining companies: Riot Platforms, Marathon Digital Holdings, Core Scientific, Cipher Mining, Hut 8 Mining, Hive Blockchain Technologies, Bitfarms, Bitdeer Technologies Group, Cleanspark, IREN, Bit Digital, TeraWulf, and Greenidge Generation Holdings.
We formed a wholly owned subsidiary of SHI on December 31, 2023, Soluna Digital, Inc. (“Soluna Digital”, or “SDI”). Effective December 31, 2023, SCI transferred substantially all of its assets to SHI or its subsidiaries, including SDI. 10 Information and Organization Our website is at http://www.solunacomputing.com .
On March 23, 2021, our common stock commenced trading on the Nasdaq Stock Market LLC (“Nasdaq”). We formed a wholly owned subsidiary of SHI on December 31, 2023, Soluna Digital, Inc. (“Soluna Digital,” or “SDI”). Effective December 31, 2023, SCI transferred substantially all of its assets to SHI or its subsidiaries, including SDI.
On May 3, 2022 SLC committed a $35 million capital pool to finance Soluna data centers including Project Dorothy 1A. ● Navitas West Texas Investments SPV, LLC (“Navitas”), organized by Navitas Global – a private equity firm with less than $150 million of assets under management focused on sustainable Bitcoin Mining.
On May 3, 2022, SLC committed $35 million to finance Soluna’s Project Dorothy 1A (“D1A”). On July 22, 2024, SLC committed an additional $30 million to support the development of D2. ● Navitas West Texas Investments SPV, LLC (“Navitas”) – an investment vehicle organized by Navitas Global, a private equity firm focused on sustainable Bitcoin mining.
A summary of our pipeline, current and anticipated operating locations are as follows (as of December 31, 2023): Project Name Location MW Status Business Model Power Source Sophie Murray, KY 25 Operating Bitcoin Hosting Grid / Hydro Dorothy 1A Silverton, TX 25 Operating Bitcoin Hosting Wind Dorothy 1B Silverton, TX 25 Operating Bitcoin Mining Wind Dorothy 2 Silverton, TX 50 Shovel Ready Bitcoin Hosting Wind Kati Harlington, TX 166 Development Bitcoin Hosting Wind Capital Partners We finance our data center projects through a combination of the sale of public equity and project-level capital partners.
In total, our project pipeline includes approximately 2.6 gigawatts (GW) of renewable energy-powered data center developments. 8 A summary of our pipeline, current and anticipated operating locations are as follows (as of December 31, 2024): Project Name Location MW Status Line of Business Power Source Sophie Murray, KY 25 Operating Bitcoin Hosting Grid / Hydro Dorothy 1A Silverton, TX 25 Operating Bitcoin Hosting Wind Dorothy 1B Silverton, TX 25 Operating Bitcoin Mining Wind Dorothy 2 Silverton, TX 48 In Construction Bitcoin Hosting Wind Grace Silverton, TX 2 Development HPC Wind Kati Harlington, TX 166 Development Bitcoin Hosting / HPC Wind Rosa Snyder, TX 187 Development Bitcoin Hosting / HPC Wind We manage our data center operations using MaestroOS.
This is driven by our flexible design, our MaestroOS software platform, and our location on the grid close to renewable resources.
This is driven by our flexible design, our MaestroOS software platform, and our location on the grid close to renewable resources. We participate in ERCOT emergency demand response programs, which allows the grid to redirect our power allotment back into the market during extreme weather events when needed.
As of December 31, 2023, the Company had two primary project-level partners: ● Spring Lane Capital (“SLC”) – A private venture fund with approximately $350 million of assets under management that focuses on sustainability solutions.
We finance the development and construction of our data centers through a combination of public equity offerings, debt instruments, and partnerships with project-level capital providers. As of December 31, 2024, we had two primary project-level financing partners: ● Spring Lane Capital (“SLC”) – A private venture capital firm with approximately $450 million in assets under management, focused on sustainability-oriented infrastructure.
Certain positions within our organization require industry-specific technical knowledge. We have been successful in attracting and retaining qualified technical personnel for these positions. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, engaging, incentivizing, and integrating our existing and additional employees.
Certain positions within our organization require industry-specific technical knowledge. We have been successful in attracting and retaining qualified technical personnel for these positions. None of our employees are subject to a collective bargaining agreement and we believe our relations with our employees to be positive, as reflected in our low voluntary turnover rate.
The Company has developed a proprietary software system called MaestroOS(™) to enable the automation, management, and operations of critical elements of its data centers. We have a dedicated team that engages in activities to continue to enhance the MaestroOS to drive innovation and growth in its business.
We have a dedicated team that engages in activities to continue to enhance the MaestroOS to drive innovation and growth in its business. MaestroOS incorporates software components licensed to the general public under open-source software licenses. We obtain many components from software developed and released by contributors to independent open-source components of our platform.
In support of this goal, in 2023, we required all employees to complete unconscious bias and harassment training. Compensation and Benefits Our compensation programs are designed to provide incentives to attract, retain, and motivate employees to achieve our long-term goals.
In support of this goal, in 2024, we required all employees to complete unconscious bias and harassment training. Company History, Information and Organization Soluna Holdings, Inc.
Other trademarks, trade names, and service marks used in this Annual Report on Form 10-K are the property of their respective owners. Overview and Recent Developments We are a digital infrastructure company specializing in transforming surplus renewable energy into computing resources.
“SCI” refers to Soluna Computing, Inc., formerly known as EcoChain, Inc., “Soluna Cloud” or “Cloud” refer to Soluna Cloud, Inc., and “SEI” refers to Soluna Energy, Inc. Other trademarks, trade names, and service marks used in this Annual Report are the property of their respective owners.
Environmental There are increasing concerns about the quantity of non-renewable energy used by data centers, especially those used for Bitcoin Mining and increasingly Generative AI. We believe the integration of computing and renewable energy is the future of the modern grid.
Open-source licenses grant licensees broad permissions to use, copy, modify and redistribute those open-source components of our platform. As a result, open-source development and licensing practices can limit the value of our software copyright assets. Environmental There are increasing concerns about the quantity of carbon-intensive energy used by data centers, especially those used for Bitcoin Mining and increasingly Generative AI.
“Risk Factors” of this Annual Report. Human Capital Resources As of March 7, 2024, we had 40 employees, including 34 full-time employees, 2 part-time employees, 1 intern, 1 temporary employee and 2 full-time consultants.
For additional information on regulatory risks, see the section titled “Risk Factors” in this Annual Report. 13 Human Capital Resources As of December 31, 2024, we had forty-eight (48) employees, including forty-seven (47) full-time employees and one full-time consultant.
The first, granted (Patent # US20230013746A1) in 2023, focuses on the layout of modular data center buildings on a site, crucial for thermal efficiency. The second patent application is for local co-optimization of power generation supply with demand generated by a data center, detailing a method involving independently metered load co-location with power generation.
Among other things, concepts in these patents/patent applications generally relate to modular architecture, cooling technology, data center control, simulation, variable power consumption and local co-optimization of power generation supply with demand. Specifically, the two issued patents (US11,974,415 and US12,250,794) focus on the layout of modular data center buildings on a site, which is crucial for thermal efficiency.
Removed
Our modular data centers can co-locate with wind, solar, or hydroelectric power plants and support compute intensive applications including Bitcoin Mining, Generative AI, and Scientific Computing. This pioneering approach to data centers helps energize a greener grid while delivering cost-effective and sustainable computing solutions. Our mission is to make renewable energy a global superpower using computing as a catalyst.
Added
Overview Our mission is to make renewable energy a global superpower using computing as a catalyst. We develop and operate digital infrastructure that taps into a growing global opportunity: the convergence of renewable energy and High-Performance Computing (HPC). We call this model Renewable Computing™ . Across the world, vast amounts of clean energy go to waste due to curtailment.
Removed
SHI through its subsidiaries operates across several business divisions: ● Bitcoin Mining [current] – we collaborate with project-level financial partners to mine Bitcoin at our proprietary data centers. ● Bitcoin Hosting [current] – we offer data hosting services at our proprietary data centers to prominent Bitcoin Mining companies. ● Demand Response Services [current] – we utilize our data centers to deliver demand response services to grid operators.
Added
At the same time, there is a critical shortage of power for energy-intensive infrastructure like AI, HPC, and Bitcoin mining. Renewable Computing™ bridges this gap—unlocking stranded renewable energy and turning it into scalable computing power. We build, own or co-own, and operate data centers co-located with wind, solar, and hydroelectric plants.
Removed
In addition to the services listed above, the Company plans to operate in the following business division: ● AI Cloud Services [future] – we plan to utilize our data centers to provide specialized AI Cloud and colocation services to companies seeking to train large language models, tune existing AI models, and deploy advanced AI-powered applications for the enterprise.
Added
Our modular and scalable design supports high-throughput, batchable applications such as AI, Bitcoin, and—soon—HPC workloads. These facilities are managed by MaestroOS™ , our proprietary operating system (“MaestroOS”), which continuously analyzes signals like local power pricing, weather, grid demand, and market conditions to optimize performance and economics. This intelligent orchestration enables long-term asset monetization and attractive returns on invested capital.
Removed
Operations and Project Pipeline We currently operate 75 MW of facilities across two locations. We have another 216 MW of facilities in development or near shovel ready in the United States. In addition, we have a 2 GW long term pipeline of renewable-energy powered projects.
Added
A key strategic advantage is our model of co-locating data centers directly with renewable power generation assets. By building behind the meter, we are able to bypass long interconnection queues and source electricity directly from the generation site.
Removed
On May 9, 2023, we formed a strategic partnership with Navitas to mine Bitcoin at Project Dorothy 1B. 6 Distinctives We are a leading curtailment solutions provider. Our brand is now synonymous with curtailment solutions. We have relationships with the industry’s leading renewable energy developers and have a growing pipeline of projects with access to low-cost power resources.
Added
This structure not only improves power economics, but also accelerates time-to-market—an increasingly important factor for companies with large, time-sensitive computing workloads such as AI and HPC. With a repeatable strategy and a growing pipeline of projects, we are scaling a new category of digital infrastructure—one that energizes the grid, lowers computing costs, and advances a more sustainable future.
Removed
We are an infrastructure company. We build, own or jointly own, and operate our data centers and related power infrastructure. Our proprietary design is modular, scalable, and designed to run computing-intensive, batchable applications beyond Bitcoin Mining. We manage our data centers using MaestroOS(™), our proprietary data center operating system.
Added
We operate across multiple business lines and generate revenue from four primary sources, as described below: ● Bitcoin Mining Business – We mine Bitcoin through proprietary operations and joint ventures located at our data centers. ● Bitcoin Hosting Business – We provide hosting services to third-party Bitcoin mining customers at our data centers. ● High Performance Computing (HPC) Business – We offer colocation and hosting services for companies seeking to train large language models (LLMs), fine-tune existing artificial intelligence models, and deploy other compute-intensive AI or HPC workloads. ● Demand Response Business – We leverage our data center infrastructure to provide demand response services to grid operators. 6 In 2024, our execution strategy was centered around four key initiatives: 1.
Removed
MaestroOS reads a multitude of signals, including: local power costs, weather, Bitcoin metrics, and grid signals to optimize the operations of our facilities around the country. This allows us to monetize these facilities over a long period of time with a high return on invested capital. Strategic Focus In 2023, we executed on the following four-pronged strategy; 1.
Added
Project Optimization – Enhancing the profitability, operational efficiency, and customer mix of our operating data centers, while improving overall customer satisfaction. 2. Pipeline Expansion – Increasing the number of curtailment assessments completed with power partners, advancing more projects to shovel-ready status, and executing additional project term sheets. 3.
Removed
Energize Project Dorothy – We shifted our flagship data center from construction to operations. We energized and optimized 50MW (Dorothy 1A and Dorothy 1B). We partnered with Navitas to establish a new proprietary Bitcoin mining operation. We sold an 85% membership interest in Dorothy 1A to SLC to raise capital.
Added
Launch AI – Initiating the entry into the AI market, by starting project development activities focused on supporting artificial intelligence workloads, and the formation of strategic partnerships with major HPC original equipment manufacturers. 4. Capital Formation – Pursuing financing opportunities to support key growth initiatives, including Project Dorothy 2 (“D2”) and Project Kati.
Removed
We filled Dorothy 1A with 25 MW of strategic hosting partners. 2. Cash Flow and Process Optimization – We shifted our business from primarily proprietary Bitcoin mining to mostly Bitcoin hosting. We signed 50 MW of hosting at Dorothy and Sophie. Toward the end of 2023 we replaced under-performing deals at Sophie with more profitable contracts.
Added
Lines of Business Bitcoin Mining Business We engage in proprietary Bitcoin mining, a process that verifies transactions and secures the Bitcoin blockchain. This process involves the use of specialized computing equipment to solve complex cryptographic algorithms.
Removed
We implemented cost cutting measures to achieve positive cash flow from operations in the second half of 2023. We implemented a new ERP system to improve efficiency and help scale our financial operations. We grew our operating cash position by approximately $5.2 million from $1.2 million as of December 31, 2022 to $6.4 million as of December 31, 2023. 3.
Added
Miners compete to solve these algorithms; the first to do so is awarded a predetermined number of newly issued Bitcoins (the “Block Reward”) and any transaction fees associated with that block. We participate in one or more mining pools—collaborative networks of miners who combine computing power to improve the probability of earning rewards.
Removed
Expand Flagship – We advanced the process of getting the next 50 MW of our Dorothy data center - Dorothy 2 - developed in 2024 through project-level partnerships. Dorothy 2 cleared the ERCOT modeling process early in the first quarter of 2024. 4.
Added
Block Rewards earned by the pool are distributed among participants based on each member’s proportional contribution. This model helps reduce revenue volatility compared to solo mining operations. Our mining operations are energy-intensive and require significant computational resources. We operate data centers equipped with both proprietary and third-party hardware and software.
Removed
Grow Pipeline – We signed a term sheet for a new 166 MW data center called Project Kati that will be integrated with a 300 MW wind farm that has surplus energy from increased curtailments. We worked throughout 2023 to advance the project through the ERCOT planning process.
Added
Our proprietary data center operating system, MaestroOS , is used to optimize performance, manage power consumption, and increase operational efficiency. Revenue from Bitcoin mining consists of Block Rewards and transaction fees and is recognized upon receipt in accordance with applicable accounting guidance. Upon receipt, all digital assets are promptly converted into U.S. dollars through the Coinbase cryptocurrency exchange.
Removed
Competition The Company competes with Bitcoin mining companies, Bitcoin hosting companies, and in the future specialized AI cloud or hosting companies. Bitcoin miners compete globally, ranging from individuals to large data centers. This competition drives innovation in hardware, software, and power strategies. Miners often join pools for stability. The mining industry is decentralized and highly competitive.
Added
The profitability of this business is affected by several variables, including the market price of Bitcoin, global network hash rate, mining difficulty, electricity and infrastructure costs, and mining pool fees. In addition, Bitcoin undergoes a periodic “halving” event approximately every four years, reducing the Block Reward and potentially impacting future revenue.
Removed
Bitcoin Hosting is also competitive, with customers seeking reliable, low-cost electricity and capable operating teams.
Added
For the year ended December 31, 2024, our Bitcoin Mining Business represented approximately 45% of total revenue. 7 Bitcoin Hosting Business We provide colocation and hosting services for third-party Bitcoin mining customers at our data centers. Customers lease space based on their power requirements. Our current customer base includes several large-scale (“Hyperscale”) Bitcoin miners.
Removed
Note: some of these mining companies may be customers of our Bitcoin Hosting division. Our differentiation is our power pipeline and our Distinctives as noted above.
Added
Contracts typically range from 12 to 24 months in duration. We offer two primary commercial structures: 1. Fixed-Fee Model – Customers pay a fixed fee based on the volume of energy consumed. 2. Profit-Share Model – Customers pay a share of the profits from their mining activity, with power costs passed through.
Removed
As we further develop our data center business, we will compete for HPC applications that large traditional data centers (such as Amazon Web Services, Google Cloud Platform, and Microsoft Azure), are not suited to compete for due to their higher power and other infrastructure costs. 7 Intellectual Property Soluna has filed eight provisional patent applications with the U.S.
Added
In 2024, our Bitcoin Hosting Business accounted for approximately 50% of total revenue. Revenue in this business was concentrated among a small number of customers. One customer accounted for 56% of hosting revenue and 28% of total revenue in 2024. This customer terminated its agreement during the fourth quarter of 2024.
Removed
Patent and Trade Market Office for technologies related to their Modular Data Center (“MDC”) concept, covering modular architecture, cooling technology, simulations, and overall data center control. These patents also include aspects like variable power consumption and local co-optimization of power generation supply with demand. Additionally, Soluna has filed two utility patent applications.
Added
As of March 2025, we replaced 100% of the lost hosting capacity with minimal operational disruption. High Performance Computing (HPC) Business In June 2024, we began providing GPU-as-a-Service in partnership with Hewlett Packard Enterprise Company (“HPE”), offering GPU resources to startups, enterprises, and GPU marketplaces for a fee.
Removed
While there is no guarantee of patent approval or competitive advantage, enforcing patents can be resource intensive. Soluna also holds a registered trademark for its Company name, Soluna. Soluna will continue to rely on its rapid innovation and relentless implementation to compete well, leveraging its strategic relationships, operating experience and technical know-how.
Added
As further described in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report, in March 2025, we terminated our agreement with HPE. We are currently developing new infrastructure projects intended to support AI and HPC workloads.
Removed
REsurety used Local Marginal Emissions data and analysis for the report. 1 Beginning in December 2023, we began participating in an ERCOT emergency demand response program which allows the grid to redirect our power allotment back into the market during extreme weather events when needed.
Added
These efforts include engagement with potential joint venture partners, conducting site and feasibility studies, securing access to power and land, and performing other early-stage development activities. Our first planned AI/HPC colocation project is Project Kati , which is in advanced development. Additional projects, including the announced Project Rosa , are also in progress.
Removed
Our MaestroOS technology makes this flexible behavior possible and has already performed well during ERCOT testing of the demand response system. 1 The Carbon Footprint of Project Dorothy: An LME Analysis - Soluna (solunacomputing.com) 8 Existing or Probable Governmental Regulations Regulatory Cryptocurrency mining is largely an unregulated activity at both the state and federal level.
Added
For the year ended December 31, 2024, we generated minimal revenue from our HPC Business. Demand Response Business We provide demand response services to grid operators and utilities by leveraging our data centers as dispatchable energy resources. In select states where we operate, our data centers are enrolled in ancillary services programs that support grid reliability.
Removed
We anticipate that cryptocurrency mining will face increased regulation in the near and long-term. We cannot predict how future regulations may affect our business or operations. State regulation of cryptocurrency mining is important with respect to where we conduct our mining operations. Our Dorothy Project is located in the State of Texas.
Added
Under these programs, we commit to reducing a facility’s power consumption to a predetermined level when called upon by the grid operator. In return, we receive compensation for maintaining this dispatch capability, provided we meet specific performance criteria. For example, to qualify for compensation in a given period—typically monthly—the data center must meet minimum uptime and availability requirements.
Removed
To the extent that there is any state regulation, Texas is one of the most favorable regulatory environments for cryptocurrency miners.
Added
For the year ended December 31, 2024, our Demand Response Business represented approximately 6% of total revenue. Operations and Project Pipeline As of December 31, 2024, we operate approximately 75 MW of capacity across two active sites located in Murray, Kentucky and Silverton, Texas.
Removed
The effect of any regulatory change by the federal, state, local or foreign governments or any self-regulatory agencies on the Company is impossible to predict, but such change could be substantial and may have a material adverse effect on the Company’s business, financial condition, and results of operations.
Added
An additional 48 MW is under construction at our D2 project site, and as of December 31, 2024, we had over 403 MW of facilities in advanced development or near shovel-ready status.
Removed
For example, in November 2022, the State of New York enacted a law prohibiting new proof-of-work mining activities that use power generated from carbon inputs.
Added
MaestroOS continuously monitors and analyzes a variety of real-time signals, including local electricity prices, weather conditions, Bitcoin market metrics, and grid demand signals, to optimize facility performance. In addition, MaestroOS is used to coordinate and execute our participation in demand response programs.
Removed
While the Company does not currently operate in New York, there is no guarantee that future regulation or adverse action will not take place and interpretation of existing regulations in a manner adverse to our business is possible.
Added
On May 9, 2023, we entered into a strategic partnership with Navitas to support mining operations at Project Dorothy 1B (“D1B”). Project Dorothy During 2023, we transitioned our flagship data center Project Dorothy from construction to operations. This data center is co-located with Briscoe Wind Farm (“Briscoe”), a 150 MW wind power generation facility in Silverton, Texas.
Removed
In January 2024, a decade after initial applications were filed, the SEC approved a series of spot Bitcoin exchange-traded funds, which have received billions of dollars of in-flows. In February 2024, the U.S.
Added
The project comprises three phases, D1A, and D1B, each 25 MW facilities, and D2 (48 MW). Project Dorothy 1A D1A is focused on Bitcoin Hosting for some of the industry’s hyperscale miners. There are approximately 7,800 Bitcoin miners installed at D1A, which as of December 31, 2024, resulted in a hashrate of approximately 1.01 EH/s.
Removed
Energy Information Administration (the “EIA”) commenced a six-month survey among participants in the U.S. cryptocurrency mining industry to collect data to track and analyze the electricity consumption by such industry participants.
Added
From May 2023 through December 31, 2023, D1A consumed over 11,900 MWh of Curtailed Energy and achieved a PUE of 1.03. For the year ended December 31, 2024, D1A consumed over 45,700 MWh of Curtailed Energy and achieved a PUE of 1.01. 9 D1A was constructed in partnership with SLC, a leading venture capital firm focused on sustainability solutions.
Removed
The EIA’s analysis will focus on how the energy demand for cryptocurrency mining is evolving, identify geographic areas of high growth, and quantify the sources of electricity used to meet cryptocurrency mining demand.
Added
SLC owns approximately 85% of the Class B Membership Units of D1A, while we own 15% of the Class B Membership Units of D1A and own 100% of the Class A Membership Units of D1A. After SLC achieves an 18% Internal Rate of Return hurdle, Soluna retains 50% of the profits on D1A.
Removed
It is unclear what, if any, regulatory policy changes may result following the collection and analysis of the data obtained through the EIA’s survey , if it proceeds . If regulators seek to curb electricity consumption by cryptocurrency mining operations in the future our business could be adversely affected. As of February 23, 2024, the U.S.
Added
Project Dorothy 1B D1B is focused on proprietary Bitcoin Mining. There are approximately 7,700 Bitmain Antminer S19s, S19j Pro and S19j Pro+ machines installed, resulting in an installed hashrate of 817 PH/s. From July 2023 through December 31, 2023, D1B consumed over 10,600 MWh of Curtailed Energy and achieved a PUE of 1.03.
Removed
Department of Energy (the agency governing the EIA) agreed to temporarily suspend this survey following a lawsuit by a cryptocurrency association and B itcoin mining company. The Company will closely monitor the outcome of this and other regulatory developments concerning cryptocurrency mining, as to the potential effects on our business.
Added
For the year ended December 31, 2024, D1B consumed over 44,500 MWh of Curtailed Energy and achieved a PUE of 1.01. D1B is co-owned by Navitas, which owns approximately 49% of D1B, while we own the remaining 51%. In November 2023, we completed registration of Project Dorothy in one of the ERCOT’s Demand Response Services (“DRS”) programs.
Removed
As the regulatory and legal environment evolves, we may become subject to new laws, such as further regulation by the SEC and other agencies, which may affect our mining and other activities. For additional discussion regarding our belief about the potential risks that existing and future regulation pose to our business, see Part I, Item 1A.

… 64 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

84 edited+232 added−192 removed37 unchanged
Biggest changeWe intend to continue constructing modular data centers in addition to our Dorothy Facility, which potentially exposes us to significant risks we may otherwise not be exposed to, including risks related to, among other sources: construction delays; lack of availability of parts and/or labor, increased prices as a result, in part to inflation, and delays for data center equipment; labor disputes and work stoppages, including interruptions in work due to unanticipated environmental issues and geological problems; delays related to permitting and approvals to open from public agencies and utility companies; and delays in site readiness leading to our failure to meet commitments made in connection with such expansion.
Biggest changeOur strategic growth initiatives may require construction, expansion or conversion of associated power facilities, which may expose us to significant risks that we may otherwise not be exposed to, including risks related to: construction delays; lack of availability of parts and/or labor; increased prices as a result, in part, of inflation, and delays for data center equipment; labor disputes and work stoppages, including interruptions in work due to pandemics or other public health crises; unanticipated environmental issues and geological problems; delays related to permitting and approvals to commence operations from public agencies and utility companies; delays in site readiness leading to our failure to meet commitments made in connection with such expansion; and delay or halts related to evaluations of strategic growth initiatives. 20 All construction-related projects depend on the skill, experience, and attentiveness of our personnel throughout the design and construction process.
Mergers or consolidations could reduce further the number of our customers and potential customers and make us more dependent on a more limited number of customers. If our customers merge with or are acquired by other entities that are not our customers, they may discontinue or reduce the use of our data centers in the future.
Mergers or consolidations could further reduce the number of our customers and potential customers and make us more dependent on a more limited number of customers. If our customers merge with or are acquired by other entities that are not our customers, they may discontinue or reduce the use of our data centers in the future.
Furthermore, we and many other Bitcoin miners are dependent on the accuracy of the mining pool operator’s recordkeeping to accurately record the total processing power provided to the pool for a given Bitcoin mining application in order to assess the proportion of that total processing power we provided.
Furthermore, we and many other Bitcoin miners are dependent on the accuracy of the mining pool operator’s recordkeeping to accurately record the total processing power provided to the mining pool for a given Bitcoin mining application in order to assess the proportion of that total processing power we provided.
While we have internal methods of tracking both our power provided and the total used by the pool, the mining pool operator uses its own recordkeeping to determine our proportion of a given reward.
While we have internal methods of tracking both our power provided and the total used by the mining pool, the mining pool operator uses its own recordkeeping to determine our proportion of a given reward.
We and other miners have little means of recourse against the mining pool operator if we determine that the proportion of the reward that the mining pool operator pays out to us is incorrect, other than leaving the pool.
We and other miners have little means of recourse against the mining pool operator if we determine that the proportion of the reward that the mining pool operator pays out to us is incorrect, other than leaving the mining pool.
Long- and short-term power prices may fluctuate substantially due to a variety of factors outside of our control, including, but not limited to: ● increases and decreases in generation capacity; ● changes in power transmission or fuel transportation capacity constraints or inefficiencies; ● volatile weather conditions, particularly unusually hot or mild summers or unusually cold or warm winters; ● technological shifts resulting in changes in the demand for power or in patterns of power usage, including the potential development of demand-side management tools, expansion and technological advancements in power storage capability and the development of new fuels or new technologies for the production or storage of power; ● federal and state power, market and environmental regulation and legislation; and ● changes in capacity prices and capacity markets.
Long- and short-term power prices may fluctuate substantially due to a variety of factors outside of our control, including, but not limited to: ● increases and decreases in generation capacity; 29 ● changes in power transmission or fuel transportation capacity constraints or inefficiencies; ● volatile weather conditions, particularly unusually hot or mild summers or unusually cold or warm winters; ● technological shifts resulting in changes in the demand for power or in patterns of power usage, including the potential development of demand-side management tools, expansion and technological advancements in power storage capability and the development of new fuels or new technologies for the production or storage of power; ● federal and state power, market and environmental regulation and legislation; and ● changes in capacity prices and capacity markets.
The potential impact on our business is currently magnified because we are currently operating only a single mine. Our reliance on a third-party mining pool service provider for our mining revenue payouts may have a negative impact on our operations. The same may be true in the case of our hosted customers.
The potential impact on our business is currently magnified because we are currently operating only a single mine. 27 Our reliance on a third-party mining pool service provider for our mining revenue payouts may have a negative impact on our operations. The same may be true in the case of our hosted customers.
The emergence of risks of which we were unaware or are unable to manage could have a material adverse effect on our business, prospects, financial condition and results of operations. The Company’s officers and directors are indemnified against certain conduct that may prove costly to defend.
The emergence of risks of which we were unaware or are unable to manage could have a material adverse effect on our business, financial condition, results of operations and prospects, Our officers and directors are indemnified against certain conduct that may prove costly to defend.
Consequently, subject to the applicable provisions of the NRS and to certain limited exceptions in the Articles of Incorporation and Bylaws, the Company’s officers and directors will not be liable to the Company or to its stockholders for monetary damages resulting from their conduct as an officer or director.
Consequently, subject to the applicable provisions of the NRS and to certain limited exceptions in the Articles and Bylaws, the Company’s officers and directors will not be liable to the Company or to its stockholders for monetary damages resulting from their conduct as an officer or director.
Such circumstances would have a material adverse effect on our ability to continue as a going concern or to pursue our new strategy at all, which would have a material adverse effect on our business, prospects or operations as well as and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account and harm our investors. 27 If we are not able to comply with the applicable continued listing requirements or standards of Nasdaq, Nasdaq could delist our common stock or Series A Preferred Stock or broker-dealers may be discouraged from effecting transactions in shares of our securities.
Such circumstances would have a material adverse effect on our ability to continue as a going concern or to pursue our new strategy at all, which would have a material adverse effect on our business, operations and prospects, as well as potentially on the value of any cryptocurrencies we hold or expect to acquire for our own account, and harm our investors 39 If we are not able to comply with the applicable continued listing requirements or standards of Nasdaq, Nasdaq could delist our common stock or Series A Preferred Stock or broker-dealers may be discouraged from effecting transactions in shares of our securities.
Should a designer, general contractor, significant subcontractor or key supplier experience financial problems or other problems during the design or construction process, we could experience significant delays, increased costs to complete the project and/or other negative impacts to our expected returns.
Should a designer, general contractor, subcontractor or key supplier experience financial difficulties or other problems during the design or construction process, we could experience significant delays, increased costs to complete the project and/or other negative impacts to our expected returns.
Our Company’s policy prohibits any transactions with such SDN individuals, but we may not be adequately capable of determining the ultimate identity of the individual with whom we transact with respect to selling cryptocurrency assets.
Our policy prohibits any transactions with such SDN individuals, but we may not be adequately capable of determining the ultimate identity of the individual with whom we transact with respect to selling cryptocurrency assets.
Our Articles of Incorporation and Bylaws generally provide broad indemnification to our officers and directors against judgments, fines, amounts paid in settlement and expenses, including attorneys’ fees actually incurred in connection with most actions or proceedings to which they are or are threatened to be made a party that relates to their service as an officer or director, except as limited as set forth therein.
Our Articles and Bylaws generally provide broad indemnification to our officers and directors against judgments, fines, amounts paid in settlement and expenses, including attorneys’ fees actually incurred in connection with most actions or proceedings to which they are or are threatened to be made a party that relates to their service as an officer or director, except as limited as set forth therein.
While the banking authorities in the United States do not prohibit banks from providing banking services to cryptocurrency-related businesses such as the Company, the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency have issued directives to banks in the United relating to their crypto-asset risks and as a result a significant number of banks have determined to limit such activities.
While the banking authorities in the United States do not prohibit banks from providing banking services to cryptocurrency-related businesses such us, the Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency have issued directives to banks in the United States relating to their crypto-asset risks and as a result a significant number of banks have determined to limit such activities.
In such case, our business may be severely disrupted, and we may incur additional expenses to recruit and retain new officers or other key personnel. In addition, if any of our executives or key personnel joins a competitor or forms a competing company, we may lose customers.
In such cases, our business may be severely disrupted, and we may incur additional expenses to recruit and retain new officers or other key personnel. In addition, if any of our executives or key personnel joins a competitor or forms a competing company, we may lose customers.
Any disruptions or changes our present relationship with the landlord for the Dorothy Facility could disrupt our business and our results of operations negatively. 19 Our properties may experience damages, including damages that are not covered by insurance.
Any disruptions or changes in our present relationship with the landlord for the Dorothy Facility could disrupt our business and our results of operations negatively. Our properties may experience damages, including damages that are not covered by insurance.
Our continued ability to compete effectively depends on our ability to attract, among others, new technology developers and to retain and motivate our existing contractors. If one or more of our executive officers or other key personnel are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all.
Our continued ability to compete effectively depends on our ability to attract, among others, new technology developers and to retain and motivate our existing contractors. If one or more of our key personnel are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all.
Further, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties as a result of any regulatory enforcement actions, all of which could harm our reputation and affect the value of our securities. Security breaches could result in a loss of our cryptocurrencies.
Further, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties as a result of any regulatory enforcement actions, all of which could harm our reputation and affect the value of our securities. 24 Security breaches and irreversible transactions could result in the loss of our cryptocurrencies.
In addition, the Nevada Revised Statutes (the “NRS”) provides that no director or officer is individually liable for damages as a result of an act or failure to act in his or her capacity as a director or officer except if (i) the presumption that such director or officer acted in good faith, on an informed basis and with a view to the interests of the Company is rebutted, and (ii) it is proven that such director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer, and such breach involved intentional misconduct, fraud or a knowing violation of law.
In addition, the NRS provides that no director or officer is individually liable for damages as a result of an act or failure to act in his or her capacity as a director or officer except if (i) the presumption that such director or officer acted in good faith, on an informed basis and with a view to the interests of the Company is rebutted, and (ii) it is proven that such director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer, and such breach involved intentional misconduct, fraud or a knowing violation of law.
Toporek acting alone, and/or many of the Company’s officers and directors acting together, may have the ability to exert significant control over the Company’s decisions and control the management and affairs of the Company, and also to determine the outcome of matters submitted to stockholders for approval, including the election or removal of a director, and any merger, consolidation or sale of all or substantially all of the Company’s assets.
As a result, many of the Company’s officers and directors acting together, may have the ability to exert significant control over the Company’s decisions and control the management and affairs of the Company, and also to determine the outcome of matters submitted to stockholders for approval, including the election or removal of a director, and any merger, consolidation, or sale of all or substantially all of the Company’s assets.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a shareholder.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder.
In addition, the Company’s directors and executive officers have the right to acquire additional shares of our Common Stock by exercising their equity awards under our equity compensation plans, which could increase their voting percentage significantly. As a result, Mr.
In addition, the Company’s directors and executive officers have the right to acquire additional shares of our common stock by exercising their equity awards under our equity compensation plans, which could increase their voting percentage significantly.
The market price of our securities could be subject to wide fluctuations in response to a broad and diverse range of factors, including those described elsewhere in this “Risk Factors” section as well as the following: ● announcements by us regarding liquidity, significant acquisitions, equity investments and divestitures, addition or loss of significant customers and contracts, capital expenditure commitments and litigation; ● our issuance of securities or debt, particularly if in connection with acquisition activities; ● the sale of a significant number of shares of our common stock by shareholders; ● recent changes in financial condition or results of operations, such as in earnings, revenues or other measure of company value; ● general market and economic conditions; and ● announcements of technological innovations or new product introductions by us or our competitors.
The market price of our securities could be subject to wide fluctuations in response to a broad and diverse range of factors, including those described elsewhere in this “Risk Factors” section as well as the following: ● announcements by us regarding liquidity, significant acquisitions, equity investments and divestitures, addition or loss of significant customers and contracts, capital expenditure commitments and litigation; ● our issuance of securities or debt, particularly if in connection with acquisition activities; ● the sale of a significant number of shares of our common stock by shareholders; ● recent changes in financial condition or results of operations, such as in earnings, revenues, or other measure of company value; ● general market and economic conditions; and ● announcements of technological innovations or new product introductions by us or our competitors. ● Further, broad market and industry factors may have a material adverse effect on the market price of our securities regardless of our actual operating performance.
Department of Treasury requires us to comply with its sanction program and not conduct business with persons named on its SDN list. However, because of the pseudonymous nature of blockchain transactions we may inadvertently and without our knowledge engage in transactions with persons named on OFAC’s SDN list.
The Office of Financial Assets Control (“OFAC”) of the U.S. Department of Treasury requires us to comply with its sanction program and not conduct business with persons named on its SDN list. However, because of the pseudonymous nature of blockchain transactions we may inadvertently and without our knowledge engage in transactions with persons named on OFAC’s SDN list.
We have not yet been able to confirm that our business model can or will be successful over the long term, and we may not ever continue to recognize operating income from this business. Our projections have been developed internally and may not prove to be accurate.
We have not yet been able to confirm that our business model can or will be successful over the long term, and we may not ever recognize operating income from this business.
If we are unable to consistently obtain accurate proportionate rewards from our mining pool operator, we may experience reduced reward for our efforts, which would have an adverse effect on our results of operations and financial condition.
If we are unable to consistently obtain accurate proportionate rewards from our mining pool operator, we may experience reduced reward for our efforts, which would have an adverse effect on our results of operations and financial condition. Declining block rewards, reliance on transaction fees, and network forks could adversely affect our mining operations.
Any such payments could materially and adversely affect our business and financial condition. 25 If we are unable to protect our information systems against service interruption or failure, misappropriation of data or breaches of security, our operations could be disrupted, we could be subject to costly government enforcement actions and private litigation and our reputation may be damaged.
If we are unable to protect our information systems against service interruption or failure, misappropriation of data or breaches of security, our operations could be disrupted, we could be subject to costly government enforcement actions and private litigation and our reputation may be damaged.
If we lose the services of John Belizaire, our Chief Executive Officer and member of our board of directors, David Michaels., our Chief Financial Officer, and/or certain key employees, we may not be able to find appropriate replacements on a timely basis, and our business could be adversely affected.
If we lose the services of John Belizaire, our Chief Executive Officer and member of our board of directors, and/or certain key employees, we may not be able to find appropriate replacements on a timely basis, and our business could be adversely affected. We do not currently maintain key life insurance policies on these officers or key employees.
The fluctuating price of electricity we require for our operations, and to power our expansion, may inhibit our profitability. If we are unable to continue to obtain sufficient electrical power on a cost-effective basis, we may not realize the anticipated benefits of our significant capital investments. Additionally, our operations could be materially adversely affected by prolonged power outages.
The fluctuating price of electricity required for our operations and to power our expansion may inhibit our profitability. If we are unable to continue to obtain sufficient electrical power on a cost-effective basis, we may not realize the anticipated benefits of our significant capital investments.
In addition, competition from existing and future competitors, particularly the other North American companies that may have access to greater volumes of competitively priced energy, could result in our inability to secure acquisitions and partnerships that we may need to expand our business in the future.
Competition from existing and future competitors, particularly those that have access to competitively priced energy, could result in our inability to secure acquisitions and partnerships that we may need to expand our business in the future.
Any such slowdown or adverse development could lead to reduced corporate information technology (“IT”) spending or reduced demand for data center space. Reduced demand could also result from business relocations, including to markets that we do not currently serve. Changes in industry practice or in technology could also reduce demand for the physical data center space we provide.
Reduced demand could also result from business relocations, including to markets that we do not currently serve. Changes in industry practice or in technology could also reduce demand for the physical data center space we provide.
Our employees, consultants and other advisors, however, may not honor these agreements and enforcing a claim that a party illegally obtained and is using our trade secrets is difficult, expensive and time-consuming and the outcome is unpredictable.
Our employees, consultants, and other advisors, however, may not honor these agreements and enforcing a claim that a party illegally obtained and is using our trade secrets is difficult, expensive and time-consuming and the outcome is unpredictable. Our failure to obtain and maintain trade secret protection could adversely affect our competitive position.
To the extent we incur increased utility costs, such increased costs could materially impact our financial condition, results of operations and cash flows. The Dorothy Facility is subject to a five-year ground lease, and if we are unable to renew its term, we may be unable to fully realize the anticipated benefits of the ongoing development of the site.
These cost increases could materially affect our financial condition, operating results, and cash flows. 26 The Dorothy Facility is subject to a five-year ground lease, and if we are unable to renew its term, we may be unable to fully realize the anticipated benefits of the ongoing development of the site.
Because most of our and our hosted customers’ miners are designed specifically to mine Bitcoin and may not be readily adaptable to mining other cryptocurrencies, a sustained decline in Bitcoin’s value could adversely affect our business and results of operations .
Taken together, these factors could materially impact our business, financial condition, and the long-term sustainability of our operations. 25 Because most of our and our hosted customers’ miners are designed specifically to mine Bitcoin and may not be readily adaptable to mining other cryptocurrencies, a sustained decline in Bitcoin’s value could adversely affect our business and results of operations .
Patent and Trademark Office-registered or other proprietary information without our authorization, and trade secrets can be difficult to protect. Policing unauthorized use of our intellectual property and trade secrets is difficult, particularly in light of the global nature of the Internet and because the laws of other countries may afford us little or no effective protection of our intellectual property.
Policing unauthorized use of our intellectual property and trade secrets is difficult, particularly in light of the global nature of the Internet and because the laws of other countries may afford us little or no effective protection of our intellectual property.
Our operating results will likely fluctuate moving forward as we focus on growing our operations. We may need to make business decisions that could adversely affect our operating results, such as modifications to its business structure or operations.
Our projections have been developed internally and may not prove to be accurate and our operating results will likely fluctuate moving forward as we focus on growing our operations. We may need to make business decisions that could adversely affect our operating results, such as modifications to our business structure or operations.
Our data center business has a limited operating history, and we may not recognize operating income in the future. We began our cryptocurrency and computer hosting operations in January 2020 and therefore is subject to all the risks inherent in a relatively recently established business venture in a rapidly developing and changing industry.
We began our cryptocurrency and computer hosting operations in January 2020 and therefore our business is subject to all the risks inherent in a business with limited operating history in a rapidly developing and changing industry.
We do not currently maintain key life insurance policies on these officers or key employees. Our existing operations and continued future development depend to a significant extent upon the performance and active participation of these individuals and certain key employees.
Our existing operations and continued future development depend to a significant extent upon the performance and active participation of these individuals and certain key employees.
These potential consequences of a digital asset exchange’s failure could adversely affect an investment in us. Our business plan is heavily dependent upon acquisitions and strategic alliances and our ability to identify, acquire or ally on appropriate terms, and successfully integrate and manage any acquired companies or alliances will impact our financial condition and operating results.
Our business plan is heavily dependent upon acquisitions and strategic alliances and our ability to identify, acquire or ally on appropriate terms, and successfully integrate and manage any acquired companies or alliances will impact our financial condition and operating results.
The rewards are distributed by the pool operator, proportionally to our contribution to the pool’s overall mining power, used to generate each block. Should the pool operator’s system suffer downtime due to a cyber-attack, software malfunction, or similar issues, it will negatively impact our ability to mine and receive revenue.
Should the mining pool operator’s system suffer downtime due to a cyber-attack, software malfunction, or similar issues, it will negatively impact our ability to mine and receive revenue.
Our goals are to proactively manage risks in a structured approach in conjunction with strategic planning, with the intent to preserve and enhance shareowner value, and to manage prudently, rather than wholly avoiding, risks.
We believe that risk-taking is an inherent aspect of the pursuit of our growth and performance strategy. Our goals are to proactively manage risks in a structured approach in conjunction with strategic planning, with the intent to preserve and enhance shareowner value, and to manage prudently, rather than wholly avoiding, risks.
If we are unable to secure power supply at prices or on terms acceptable to us, it would have a material adverse effect on our business, prospects, financial condition, and operating results.
If we are unable to secure power supply at prices or on terms acceptable to us, it would have a material adverse effect on our business, financial condition, operating results, and prospects. The development and acceptance of competing blockchain platforms or technologies may cause consumers to use alternative distributed ledgers or other alternatives.
As a result, we may have to spend significant resources indemnifying our officers and directors or paying for damages caused by their conduct. 26 The requirements of being a public company may strain our resources and divert management’s attention.
As a result, we may have to spend significant resources indemnifying our officers and directors or paying for damages caused by their conduct. We incur significant costs as a result of operating as a public company. As a public company, we incur significant legal, accounting, and other expenses.
Any of the foregoing could have a material adverse effect on our results of operations and financial condition. General Risk Factors We are heavily dependent on our senior management, and a loss of a member of our senior management team could cause the market prices of our securities to suffer.
We are heavily dependent on our senior management, and a loss of a member of our senior management team could cause the market prices of our securities to suffer.
We may become subject to claims of infringement or misappropriation of the intellectual property rights of others, which could prohibit us from selling our products, require us to obtain licenses from third parties or to develop non-infringing alternatives, and subject us to substantial monetary damages and injunctive relief.
The effect of Nevada’s business combination law is to potentially discourage parties interested in taking control of us from doing so if it cannot obtain the approval of our Board. 34 General Risk Factors We may become subject to claims of infringement or misappropriation of the intellectual property rights of others, which could prohibit us from selling our products, require us to obtain licenses from third parties or to develop non-infringing alternatives, and subject us to substantial monetary damages and injunctive relief.
We may be required to accept terms that restrict our ability to incur additional indebtedness or take other actions including terms that require us to maintain specified liquidity or other ratios that could otherwise not be in the interests of our stockholders. 13 We rely upon strategic partners to finance certain of our facilities.
We may be required to accept terms that restrict our ability to incur additional debt or take other actions, including accepting terms that require us to maintain specified liquidity or other ratios that could otherwise not be in the interests of our stockholders. If we cannot achieve or maintain profitability, stockholders could lose all or part of their investment .
While we are currently in the process of applying for patents with respect to our business, presently we rely on trade secrets to protect our proprietary technology and processes. Despite such protection, however, it is possible that a third party may copy or otherwise obtain and use our U.S.
In addition to the protection afforded by patents, we rely on trade secrets to protect much of our proprietary technology and processes. Despite such protection, however, it is possible that a third party may copy or otherwise obtain and use our proprietary information without our authorization and trade secrets can be difficult to protect.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act), the Dodd-Frank Wall Street Reform and Consumer Protection Act and other applicable securities rules and regulations.
For example, we are subject to the information and reporting requirements of the Securities Act of 1933, as amended (the “Securities Act”), the Exchange Act and other federal securities laws, rules and regulations related thereto, including compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the Dodd-Frank Wall Street Reform and Consumer Protection Act.
We may not be able to address these risks and difficulties successfully, which would materially harm our business and operating results, and we could be forced to terminate our business, liquidate our assets and dissolve, and you could lose part or all of your investment. 15 Prices of cryptocurrencies are extremely volatile, and if our mined cryptocurrencies are converted into dollars when such values are low, we may not recognize the income from the conversion of the mined cryptocurrencies that we were expecting.
We may not be able to address these risks and difficulties successfully, which would materially harm our business and operating results, and we could be forced to terminate our business, liquidate our assets and dissolve, and you could lose part or all of your investment.
Our ERM process uses the most recent integrated risk framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission to assess, manage and monitor risks. We believe that risk-taking is an inherent aspect of the pursuit of our growth and performance strategy.
Our Enterprise Risk Management (“ERM”) process seeks to identify and address significant risks. Our ERM process uses the most recent integrated risk framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission to assess, manage, and monitor risks.
We may not be able, however, to identify and successfully negotiate suitable acquisitions alliances, obtain any financing necessary for such acquisitions on satisfactory terms or otherwise complete any such acquisitions or alliances.
However, we may not be able to identify suitable opportunities, negotiate favorable terms, secure necessary financing, or successfully complete or integrate any such transactions.
We may not be able to continue to develop our technology and keep pace with technological developments, or otherwise compete with other companies, many of whom have greater resources and experience.
Such events and conditions could have a materially adverse effect on our business, operations, or financial results and the value of the Bitcoin we mine. 21 We may not be able to continue to develop our technology and keep pace with technological developments, or otherwise compete with other companies, many of which have greater resources and experience.
You should consider our business and prospects in light of these risks and the risks and difficulties that we will encounter as we continue to develop our business model.
Given our status as an early operating stage company, without positive operating income, there is a substantial risk regarding our ability to succeed. You should consider our business and prospects in light of these risks and the risks and difficulties that we will encounter as we continue to develop our business model.
A reduction in the demand for data center space, power or connectivity would have an adverse effect on our business and financial condition. We are susceptible to general economic slowdowns as well as adverse developments in the data center, internet and data communications and broader technology industries.
We intend to be in the business of owning, leasing and operating data centers. A reduction in the demand for data center space, power or connectivity would have an adverse effect on our business and financial condition.
If we are unable to overcome these risks and additional pressures to complete our expansion projects in a timely manner, if at all, we may not realize their anticipated benefits, and our business and financial condition may suffer as a result. We may have difficulty in obtaining banking services for our cryptocurrency activities.
If we are unable to mitigate these risks and complete our growth initiatives on schedule and within our anticipated costs, such delays or implementation failures may hinder our ability to realize anticipated benefits, and our business and financial condition may suffer as a result. We may have difficulty in obtaining banking services for our cryptocurrency activities.
We and many Bitcoin miners use a third–party mining pool to receive our mining rewards from the network. Cryptocurrency mining pools allow miners to combine their computing power, increasing their chances of solving a block and getting paid by the network.
In general, mining pools allow miners to combine their computing power, increasing their chances of solving a block and getting paid by the network. The rewards are distributed by the mining pool operator, proportionally to our contribution to the mining pool’s overall mining power, used to generate each block.
We are subject to risks associated with our need for significant electrical power. Our operations have required significant amounts of electrical power, and, as we continue to expand our mining fleet and begin to operate our Dorothy Facility, we anticipate our demand for electrical power will continue to grow.
Our operations currently require significant amounts of electrical power, and we anticipate our demand for electrical power will continue to grow as we continue to expand our mining fleet and begin to operate our Dorothy Facility, and as we expand our business to implement our strategy to move into the cloud service business and HPC/AI hosting business.
Risks Related to our Company Generally Our confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information, which could limit our ability to compete.
Any of these issues—supply failures, price increases, or contract imbalances—could materially affect our business, operations, and financial results. 31 Our confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information, which could limit our ability to compete.
Our interactions with a blockchain may expose us to specially designated nationals (“SDN”) or blocked persons and new legislation or regulation could adversely impact our business or the market for cryptocurrencies. The Office of Financial Assets Control (“OFAC”) of the U.S.
Even well-intentioned or positive regulatory initiatives could have unintended consequences that negatively affect our operations, financial condition, or growth prospects. Our interactions with a blockchain may expose us to specially designated nationals (“SDNs”) or blocked persons and new legislation or regulation could adversely impact our business or the market for cryptocurrencies.
Regulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects, or operations.
If Bitcoin prices fall or fail to meet our expectations, or if instability in the broader digital asset market increases, our financial condition and results of operations could be materially and adversely affected. 23 Regulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects, or operations.
If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests, and the per-share value of our Common Stock could decline. Furthermore, if we engage in additional debt financing, the holders of debt likely would have priority over the holders of Common Stock on order of payment preference.
These disruptions in the crypto asset market may impact our ability to obtain favorable financing. If we raise additional equity financing, stockholders may experience dilution of their ownership interests, and the per share value of our common stock could decline.
This could have a material adverse effect on our business, prospects, operations and financial condition, as well as on the market value of our securities . Our business model depends upon the demand for data centers. We intend to be in the business of owning, leasing and operating data centers.
This could have a material adverse effect on our business, prospects, operations, and financial condition, as well as on the market value of our securities. Our data center business could be harmed by prolonged power outages, power and fuel shortages, capacity constraints and increases in power costs.
Our failure to obtain and maintain trade secret protection could adversely affect our competitive position. 23 We rely on highly skilled personnel and the continuing efforts of our executive officers and, if we are unable to retain, motivate or hire qualified personnel, our business may be severely disrupted.
Our financial condition, results of operations, cash flows and ability to satisfy our debt service obligations could be materially adversely affected as a result of any or all of these factors. 32 We rely on highly skilled personnel and the continuing efforts of our executive officers and, if we are unable to retain, motivate or hire qualified personnel, our business may be severely disrupted.
His absence, were it to occur, would materially and adversely impact development and implementation of our projects and businesses. Our future success depends on our continuing ability to identify, hire, develop, motivate and retain highly skilled personnel for all areas of our organization.
Our performance largely depends on the talents, knowledge, skills, know-how and efforts of highly skilled individuals Our future success depends on our continuing ability to identify, hire, develop, motivate, and retain highly skilled personnel for all areas of our organization.
We do not have the resources to compete with larger cryptocurrency mining and other entities in the advanced data processing space at this time and may not be able to compete successfully against present or future competitors. These markets have attracted various high-profile and well-established operators, many of which have substantially greater liquidity and financial resources than we do.
We may not be able to compete with other companies, some of which have greater resources and experience. We may not be able to compete successfully against present or future competitors. We do not have the resources to compete with larger providers of similar products or services at this time.
Accordingly, we have had, and may have in the future have, difficulty in opening bank accounts, obtaining letters of credit and generally access to the banking system. We may be unable to obtain additional funding to scale the AI hosting and its hosting and proprietary cryptocurrency mining business to a larger-scale business.
Accordingly, we have had and may have in the future, difficulty in opening bank accounts, obtaining letters of credit and generally accessing the banking system for our operational needs.
In addition, increased labor costs and the unavailability of skilled workers could hurt our business, financial condition and results of operations. Our performance largely depends on the talents, knowledge, skills, know-how and efforts of highly skilled individuals and in particular, the expertise held by our Chief Executive Officer, John Belizaire.
In addition, increased labor costs and the unavailability of skilled workers could hurt our business, financial condition, and results of operations.
Risks Related to our Securities The market price of our securities are likely be volatile, which may cause investment losses for our shareholders.
Changes to accounting methods or policies, or interpretations thereof, may require us to reclassify, restate or otherwise change or revise our historical financial statements, including those contained in this Annual Report. Risks Related to Our Securities The market price of our securities are likely to be volatile, which may cause investment losses for our shareholders.
As of December 31, 2023, we had approximately 2,318,989 shares of our common stock outstanding held by non-affiliates and 3,049,521 shares of our Series A Preferred Stock outstanding held by non-affiliates. Our daily trading volume for the year ended December 31, 2023, averaged approximately 62,652 shares of common stock and 4,149 shares of Series A Preferred Stock.
Our daily trading volume for the year ended December 31, 2024, averaged approximately 238,987 shares of common stock and 12,516 shares of Series A Preferred Stock.
As the aggregate amount of computing power, or hash rate, in the Bitcoin network increases, the amount of Bitcoin earned per unit of hash rate decreases; as a result, in order to maintain our market share, we may have to incur significant capital expenditures in order to expand our fleet of miners.
If the aggregate computing power or has rate on the Bitcoin network increases significantly, for proprietary Bitcoin mining, we may incur elevated capital expenses to maintain and upgrade our mining fleet in order to maintain market share.
This competition from other entities with greater resources, experience and reputations may result in our failure to maintain or expand our business. If we are unable to expand and remain competitive, our business could be negatively affected which would have an adverse effect on the trading prices of our securities, which in turn would harm investors in our Company.
If we are unable to expand and remain competitive, our business could be negatively affected which would have an adverse effect on our business, results of operations, financial condition, and the trading price of our common stock, which would harm our investors. Our business model depends upon the demand for data centers.
Such restrictions may adversely affect us as the large-scale use of cryptocurrencies as a means of exchange is presently confined to certain regions globally. Such circumstances could have a material adverse effect on our business, prospects or operations and potentially the value of any Bitcoin or other cryptocurrencies we or our hosted customers mine, and thus harm our investors.
Such circumstances could have a material adverse effect on our business, prospects, or operations and potentially the value of any Bitcoin we mine or otherwise acquire or hold for our own account and therefore harm investors. We have an evolving business model which is subject to various uncertainties.
Part of our strategy to grow our business is dependent on the acquisition of other entities or businesses in the future that complement our current products, enhance our market coverage or technical capabilities, or offer growth opportunities. We may also need to form strategic alliances or partnerships in order to remain competitive in our market.
As part of our growth strategy, we may seek to acquire other businesses or form strategic alliances and partnerships that expand our market presence, complement our offerings, or provide access to new technologies. We may also need to do so to remain competitive.
Given the political significance and uncertainty around the impact of climate change and how it should be addressed, we cannot predict how legislation and regulation will affect our financial condition, operating performance and ability to compete. Any of the foregoing could result in a material adverse effect on our business, prospects and financial condition.
Given the uncertainty surrounding climate change policy and energy regulation, we cannot predict how these issues will evolve or the long-term effects on our operations. However, any of the risks described above could materially impact our financial condition, operating performance, and ability to compete. We may be affected by price fluctuations in the wholesale and retail power markets.
In recent years, a number of digital asset exchanges filed for bankruptcy proceedings and/or became the subjects of investigation by various governmental agencies for, among other things, fraud, causing a loss of confidence and an increase in negative publicity for the digital asset ecosystem.
We may not be able to secure additional debt or equity financing on favorable terms, if at all, which could hinder our growth and adversely impact our operations. In 2022 and 2023, a number of digital asset platforms and exchanges filed for bankruptcy and/or became the subjects of investigation by various governmental agencies for, among other things, fraud.
Our costs of electricity may also increase as a result of the physical effects of climate change, increased regulations driving alternative electricity generation due to environmental considerations or as a result of our election to use renewable energy sources.
Over time, electricity prices may continue to rise due to climate change impacts, new environmental regulations, or our use of renewable energy.
Our failure to successfully manage our strategic relationships with Spring Lane and Navitas, or other future acquisitions, strategic alliances or partnerships, could seriously harm our operating results. In addition, our stockholders would be diluted if we finance the future acquisitions, strategic alliances or partnerships by incurring convertible debt or issuing equity securities.
We may finance future deals by issuing equity or convertible debt, which could dilute existing stockholders or increase leverage. Our strategic relationships, including those with SLC and Navitas, or any future partnerships, must be well-managed to avoid harming our operations or results.
While we are currently in compliance, our share price has in the past dropped below the minimum share price and there can be no assurances that we will be able to comply with such applicable listing standards.
While we are currently in compliance, our share price has previously fallen below Nasdaq’s minimum, and there is no guarantee we will continue to meet all listing requirements. If we are unable to maintain our Nasdaq listings, our securities may be delisted and quoted on over-the-counter (OTC) markets instead.
Such actions on the part of Brookstone XXIV or its director designees could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, Michael Toporek, the Company’s Executive Chairman, serves as the Managing General Partner of Brookstone XXIV.
The concentration of our customer base increases risks related to the financial condition of our customers, and the deterioration in financial condition of a single customer or the failure of a single customer to perform its obligations could have a material adverse effect on our results of operations and cash flow.
If any of these risk factors should occur, moreover, the trading price of our securities could decline, and investors in our securities could lose all or part of their investment in our securities. These risk factors, along with other information contained in this Report, should be carefully considered in evaluating our prospects.
If any of the risks described below occur, our business, financial condition, results of operations and prospects could be materially adversely affected. In that case, the market price of our common stock would likely decline, and investors could lose all or a part of their investment.

… 428 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+3 added−7 removed4 unchanged
Biggest changeItem 1C: Cybersecurity We proactively approach cybersecurity through a systemized thorough process established by our internal Management and IT teams as well as external IT providers. 28 These processes are specifically designed to adapt to the evolving cybersecurity environment, enabling us to respond swiftly and effectively to new and emerging threats.
Biggest changeDuring the reporting period, we have not experienced any material cyber incidents, nor have we experienced a series of immaterial incidents, which would require disclosure. We proactively approach cybersecurity through a systemized thorough process established by our internal Management and IT teams as well as external IT providers.
If a third-party vendor is unable to provide a SOC 1 or SOC 2 report, we take additional steps to assess their cybersecurity preparedness and assess our relationship on that basis. The Director of IT regularly oversees the Company’s cybersecurity program.
If a third-party vendor is unable to provide a SOC 1 or SOC 2 report, we take additional steps to assess their cybersecurity preparedness and assess our relationship on that basis.
In addition, we have other policies related to endpoint and network protection, encryption standards, malware/ransomware protection, multi-factor authentication, operational security, and confidential information. These policies go through an internal review process and are approved by appropriate members of management.
We also have Company-wide policies and procedures concerning cybersecurity and technology standards, including a Resource and Data Recovery policy. In addition, we have other policies related to endpoint and network protection, encryption standards, malware/ransomware protection, multi-factor authentication, operational security, and confidential information. These policies go through an internal review process and are approved by appropriate members of management.
The Company’s Chief Technology Officer (“CTO”) and Director of Information Technology (IT) are responsible for developing and implementing our information security program. Our CTO is an Executive Sponsor of the Cyber Security Program and has over a decade of experience in the Defense sector working directly with technology-driven Operational Security.
Our CTO is an Executive Sponsor of the Cyber Security Program and has over a decade of experience in the Defense sector working directly with technology-driven Operational Security. The Director of IT regularly oversees the Company’s cybersecurity program.
Our board of directors has ultimate oversight of our strategic and business risk management and, as such, has oversight responsibilities for risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements, cooperation with law enforcement, and related effects on financial and other risks.
The internal IT team also subscribes to various threat intelligence services to evaluate our security strategy or defense mechanism against such threats. 42 Our board of directors has ultimate oversight of our strategic and business risk management and, as such, has oversight responsibilities for risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements, cooperation with law enforcement, and related effects on financial and other risks.
Our internal IT team works closely with our external IT management provider to comprehensively evaluate cybersecurity risks. They focus on monitoring, identifying, and addressing significant cybersecurity issues in real-time by employing advanced software monitoring platforms for effective mitigation and management.
They focus on monitoring, identifying, and addressing significant cybersecurity issues in real-time by employing advanced software monitoring platforms for effective mitigation and management. In addition, we have several avenues to gather risk intelligence and potential threats identified by various services and capabilities to adjust our security strategy.
Our cybersecurity initiative incorporates elements from multiple industry benchmarks, including frameworks from the National Institute of Standards and Technology (NIST) and the Center for Internet Security. We regularly assess the threat landscape and take a holistic view of cybersecurity risks with a layered cybersecurity strategy based on prevention, detection, and mitigation.
We regularly assess the threat landscape and take a holistic view of cybersecurity risks with a layered cybersecurity strategy based on prevention, detection, and mitigation. Our internal IT team works closely with our external IT management provider to comprehensively evaluate cybersecurity risks.
Removed
In addition, we have several avenues to gather risk intelligence and potential threats identified by various services and capabilities to adjust our security strategy. We also have Company-wide policies and procedures concerning cybersecurity and technology standards, including a Resource and Data Recovery policy.
Added
Item 1C: Cybersecurity We, like other companies in our industry, face several cybersecurity risks in connection with our business. Our business strategy, results of operations, and financial condition have not, to date, been affected by risks from cybersecurity threats.
Removed
The internal IT team also subscribes to various threat intelligence services to evaluate our security strategy or defense mechanism against such threats.
Added
These processes are specifically designed to adapt to the evolving cybersecurity environment, enabling us to respond swiftly and effectively to new and emerging threats. Our cybersecurity initiative incorporates elements from multiple industry benchmarks, including frameworks from the National Institute of Standards and Technology and the Center for Internet Security.
Removed
Upon detection of a cybersecurity incident and initial intake and validation by our CTO and IT Director, our response team evaluates the cybersecurity incident, and, depending on the severity, escalates the incident to management and a cross-functional working group. Any incident assessed as potentially being or potentially becoming material is immediately escalated for further assessment and reported to executive management.
Added
Governance Under the direction of the Company’s Chief Technology Officer (“CTO”) and Director of Information Technology, with oversight from the Board, we maintain a security governance structure to evaluate and address cyber risk. The CTO and the Director of IT are responsible for developing and implementing our information security program.
Removed
Determination of what resources are needed to address the incident, prioritizing of response activities, forming of action plans, and notification of external parties as needed are then undertaken by executive management and the cross-functional working group, led by our CTO and IT Director.
Removed
We consult with outside counsel as appropriate, including on materiality analysis and disclosure matters, and our executive management makes the final materiality and disclosure determinations, among other compliance decisions.
Removed
Notwithstanding these measures, we face a number of cybersecurity risks in connection with our business, and no cybersecurity process, however thorough, can alleviate all of these risks, which if an event to occur, could have a material adverse effect on our business, financial condition and results of operations.
Removed
For fiscal years 2023 and 2022, we have not suffered a material breach or a reportable incident, and cybersecurity risks (including breach of third parties with whom we work) have not materially affected us, including our business strategy, results of operations or financial condition.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−1 removed1 unchanged
Biggest changeItem 2: Properties We lease approximately 3,478 square feet of office, in Albany, New York, which houses the corporate offices of SHI. The current lease agreement expires on December 31, 2024. SCI leases approximately 19,000 square feet of space in four buildings in East Wenatchee, Washington. The space is currently used for hosted operations.
Biggest changeItem 2: Properties We lease approximately 3,478 square feet of office, in Albany, New York, which houses the corporate offices of SHI. The current lease agreement expires on December 31, 2027.
The Agreement is for an Initial Term that expires on the date five years from the Service Date with the right to extend the term of the Agreement for five additional one-year terms. We believe these facilities are generally well-maintained and adequate for the Company’s current needs and for expansion, if required.
The agreement has an initial five-year term with the right to extend the term of the agreement for five additional one-year terms. We believe these facilities are generally well-maintained and adequate for the Company’s current needs and for expansion, if required.
Our business growth, however, is dependent on developing additional properties, and we believe our project pipeline is strong enough to support our current business plan. See Part I, Item 1A. “Risk Factors” of this Annual Report. 29
Our business growth, however, is dependent on developing additional properties, and we believe our project pipeline is strong enough to support our current business plan.
Removed
The current lease agreements expire for one building on June 30, 2025, another on November 30, 2025, and for the remaining two buildings on January 31, 2025.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

7 edited+2 added−15 removed1 unchanged
Biggest changeNYDIG NYDIG ABL LLC, (“ NYDIG”) filed a complaint against SMCB1(“Borrower”) and SMC (“Guarantor”, and together with Borrower, “NYDIG Defendants”) in Marshall Circuit Court of the Commonwealth of Kentucky on December 29, 2022 regarding a series of loans made by NYDIG to Borrower pursuant to a master equipment finance agreement that were secured by certain assets of Borrower and guaranteed by Guarantor pursuant to a written guaranty agreement executed by Guarantor.
Biggest changeOn December 29, 2022, NYDIG filed a complaint against Borrower, a subsidiary of Soluna MC, LLC, a subsidiary of Soluna Digital, a subsidiary of the Company, and Guarantor in Marshall Circuit Court of the Commonwealth of Kentucky regarding the NYDIG Loans made by NYDIG to Borrower pursuant to the MEFA that were secured by certain assets of Borrower and guaranteed by Guarantor pursuant to a written guaranty agreement executed by Guarantor.
SCI intends to continue to vigorously defend any allegations regarding liability on account of NYDIG Defendants’ debts and liabilities to NYDIG under their loan documents and intends to refile a declaratory judgment complaint against NYDIG.
Parent Entity intends to continue to vigorously defend any allegations regarding liability on account of NYDIG Defendants’ debts and liabilities to NYDIG under their loan documents.
Additionally, NYDIG has stated its intention to pursue SCI, the parent company of Guarantor, under a piercing of the corporate veil claim relating to NYDIG Defendants’ debts and liabilities under the loan documents.
Additionally, NYDIG has stated its intention to pursue the parent company of Guarantor (the “Parent Entity”) under a piercing of the corporate veil theory relating to NYDIG Defendants’ debts and liabilities under the loan documents. Parent Entity intends to vigorously defend itself from NYDIG’s parent company claims.
SCI denies any such liability and has filed a complaint for a declaratory judgment against NYDIG in the Eighth Judicial District Court in Clark County, Nevada on March 16, 2023, seeking a declaratory judgment as to such matter. NYDIG filed a motion to dismiss in response to SCI’s declaratory judgment complaint on April 13, 2023.
Parent Entity denies any such liability and filed a complaint for a declaratory judgment against NYDIG in the Eighth Judicial District Court in Clark County, Nevada on March 16, 2023, seeking a declaratory judgment as to such matter. On June 22, 2023, the court issued an order granting NYDIG’s motion to dismiss without prejudice.
On December 7, 2023, NYDIG filed its Motion for Summary Judgment seeking entry of a judgment against Soluna in the approximate amount of $10.3 million for principal and interest and penalties.
Subsequently, NYDIG filed its Motion for Summary Judgment seeking entry of a judgment against the NYDIG Defendants in the approximate amount of $10.3 million, and NYDIG and the NYDIG Defendants consensually resolved the motion in the form of a Stipulation and Agreed Judgment, which the Court approved on February 23, 2024.
On February 23, 2023, NYDIG proceeded to foreclose on all of the collateral securing the MEFA, and repossessed the collateralized assets that totaled approximately $3.4 million, in which approximately $560 thousand was first used to pay off accrued interest and penalty to date.
On February 23, 2023, NYDIG proceeded to foreclose on all of the collateral securing the MEFA and repossessed the collateralized assets.
On March 13, 2024, NYDIG served the Company with a post-judgment discovery seeking information regarding the Company’s assets and liabilities. The deadline for response to the discovery is April 12, 2024. The Company intends to vigorously defend itself from NYDIG’s parent company claims.
On March 13, 2024, NYDIG served the NYDIG Defendants with a post-judgment discovery seeking information regarding the NYDIG Defendants’ assets and liabilities. The NYDIG Defendants completed responding to NYDIG’s initial document requests on May 13, 2024.
Removed
EPA We have been named as a party in the December 19, 2019 United States Environmental Protection Agency (“EPA”) Demand Letter regarding the Malta Rocket Fuel Area Superfund Site (“Site”) located in Malta and Stillwater, New York, in connection with an alleged release of hazardous materials into the environment.
Added
On September 24, 2024, NYDIG sent a letter seeking supplemental discovery from the NYDIG Defendants, and the NYDIG Defendants completed responding to NYDIG’s additional/supplemental document requests by November 20, 2024 and the deposition of a representative of the Defendants on or before December 15, 2024.
Removed
The EPA is seeking reimbursement of response costs from all named parties in the amount of approximately $358 thousand plus interest in connection with the investigation and disposal activities associated with the various drum caches discovered at the Site, issuance of the Explanation of Significant Differences (“ESD”) of the Site, and implementation of the work contemplated by the ESD.
Added
Per agreement between NYDIG and the NYDIG Defendants, (i) the deadline to respond to the supplemental discovery demands was extended to December 12, 2024 but with rolling weekly production to commence on November 21, 2024, and (ii) a deposition of a representative of the NYDIG Defendants occurred on January 23, 2025.
Removed
We consider the likelihood of a material adverse outcome with respect to this matter to be remote and do not currently anticipate that any expense or liability that we may incur as a result of this matter in the future will be material to the Company’s business or financial condition.
Removed
The Court issued on February 15, 2023, an agreed order granting NYDIG’s motion for writ of possession which, among other things, ordered parties to provide NYDIG access to the collateral described therein and preserved the rights of NYDIG to pursue a deficiency judgment against the NYDIG Defendants.
Removed
Also on February 15, 2023, the NYDIG Defendants filed their answer and affirmative defenses in this proceeding. The NYDIG Defendants believe that NYDIG has liquidated some of the collateral securing the loans and anticipate that NYDIG will complete the liquidation of collateral and continue to prosecute the complaint to obtain a judgment against the NYDIG Defendants.
Removed
SCI filed a response in opposition to NYDIG’s motion to dismiss on April 27, 2023. The court heard oral arguments on May 16, 2023. On June 22, 2023, the court issued an order granting NYDIG’s motion to dismiss, on the basis that the case was not ripe for decision, without prejudice.
Removed
On September 5, 2023, NYDIG provided a letter finalizing the accounting for the repossessed collateralized assets totaling proceeds of approximately $3.4 million.
Removed
This included legal and other expenses associated with the sale of the assets net a modest gain on the estimated net book value of the assets totaling $251 thousand that was expensed as a loss on disposition of assets for the year ended December 31, 2023.
Removed
On January 12, 2024, Soluna filed its objection to NYDIG’s motion for summary judgment on the grounds that NYDIG failed to explain what collateral of which loan was sold and how the sale proceeds were allocated to each loan.
Removed
A summary judgment motion was performed on February 13, 2024, and was agreed upon by both NYDIG and the Borrower, that the total outstanding loan principal balance would be approximately $9.2 million. This settlement did not result in the admission of any liability on the part of SHI, whose declaratory judgment remains the subject of litigation.
Removed
Atlas In September 2023, Atlas Technology Group LLC (“Atlas”) filed a complaint against SMC (formerly EcoChain Block LLC) (“Soluna MC”), SCI, and SHI (collectively, the “Atlas Defendants”) in the Supreme Court of the State of New York, County of New York regarding a co-location services agreement between Soluna MC and Atlas.
Removed
Atlas alleges that the termination of such agreement by SMC was a breach and asserts various claims, including breach of contract and the return of pre-paid fees.
Removed
The claim requests a judgement against the Atlas Defendants for the return of pre-paid fees of approximately $464 thousand and additional damages to be determined at trial of not less than $7.9 million, and reimbursement of costs including legal fees and other costs. The complaint also contains references to alter ego liability and piercing the corporate veil.
Removed
The Atlas Defendants believes they have substantial factual and legal defenses to these claims and intend to defend the claims vigorously. The referenced to pre-paid fees of approximately $464 thousand have been reported in previous filings on SMC’s balance sheet. No reserves have been established for any other claims asserted in such complaint.
Removed
Item 4: Mine Safety Disclosures Not applicable. 30 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+2 added−3 removed1 unchanged
Biggest changeThe Company’s Series B Preferred Stock included a 10% accruing dividend and could be paid in cash or stock before the shares are converted or a set date comes around.
Biggest changeOur Series B Preferred Stock included a 10% accruing dividend compounded daily for 12 months from the original issue date of July 20, 2022, and annually thereafter, that may be paid in cash or stock at the Company’s option at the earlier of (i) the date the Series B Preferred Stock is converted, or (ii) the Series B Dividend Termination Date (as defined in the Certificate of Designation of the Series B Preferred Stock).
Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Capital Market under the trading symbol “SLNH.” The Company’s preferred stock is listed on Nasdaq Capital Market under the trading symbol “SLNHP.” Holders We have one class of common stock, par value $.001, and are authorized to issue 75,000,000 shares of common stock.
Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Capital Market under the trading symbol “SLNH.” Holders We have one class of common stock, par value $0.001, and are authorized to issue 75,000,000 shares of common stock.
Dividends As of December 31, 2023, we had 3,061,245 shares of our of 9.0% Series A Cumulative Perpetual Preferred Stock outstanding, which pursuant to the Certificate of Designations, Preferences and Rights of 9.0% Series A Cumulative Perpetual Preferred Stock (“Series A Preferred Stock”), of the Company entitle such holders to monthly dividends, when, as and if declared by the Company’s Board of Directors.
Dividends As of December 31, 2024, we had 4,953,545 shares of our Series A Preferred Stock outstanding, which pursuant to the Certificate of Designations, Preferences and Rights of 9.0% Series A Cumulative Perpetual Preferred Stock, of the Company entitle such holders to monthly dividends, when, as and if declared by our board of directors.
The Board of Directors had not declared any Series A Preferred Stock dividends beginning October 2022 through the date of this report, as such the Company has accumulated approximately $8.6 million of dividends in arrears on the Series A Preferred Stock through December 31, 2023.
Our board of directors had not declared any Series A Preferred Stock dividends beginning October 2022 through December 31, 2023, as such the Company has accumulated approximately $8.6 million of dividends in arrears on the Series A Preferred Stock through December 31, 2023, and an additional $9.9 million of dividends in arrears for the year ended December 31, 2024, for a total of approximately $18.5 million.
Each share of the Company’s common stock is entitled to one vote on all matters submitted to shareholders. As of December 31, 2023, there were 2,505,620 shares of common stock issued and outstanding. As of March 19, 2024, there were approximately 100 shareholders of record of the Company’s common stock.
Each share of our common stock is entitled to one vote on all matters submitted to shareholders. As of December 31, 2024, there were 10,607,020 shares of common stock issued and outstanding. As of March 21, 2025, there were approximately 119 shareholders of record of our common stock.
The Company does not intend to pay dividends on our common stock and do not anticipate or contemplate paying cash dividends on our common stock in the foreseeable future. We currently intend to use all available funds to develop our business. We can give no assurance that we will ever have excess funds available to pay dividends.
As such, we have accumulated approximately $941 thousand dividends in arrears in relation to the Series B Preferred Stock. The Company does not intend to pay dividends on our common stock and do not anticipate or contemplate paying cash dividends on our common stock in the foreseeable future. We currently intend to use all available funds to develop our business.
Any future determination as to the payment of dividends will depend upon critical requirements and limitations imposed by our credit agreements, if any, and such other factors as our Board of Directors may consider. 31 Item 6: Selected Financial Data Not applicable.
We can give no assurance that we will ever have excess funds available to pay dividends. Any future determination as to the payment of dividends will depend upon critical requirements and limitations imposed by our credit agreements, if any, and such other factors as our board of directors may consider.
Removed
During the year ended December 31, 2022, the Board of Directors declared, and the Company paid aggregate dividends on the shares of Series A Preferred Stock of approximately $3.9 million, respectively.
Added
Effective October 1, 2024, the dividend payment obligation has been modified to be annual. The amendment resulted in annual dividend payments going forward.
Removed
On August 11, 2023, SHI paid a mandatory dividend on its outstanding Series B Convertible Preferred Stock in the amount of approximately $656 thousand through the issuance of common stock and warrants.
Added
As a result of the amendment, we would be obligated to make annual dividend payments for the period starting from July 2023 as per the Series B Preferred Consent and Waiver, however, the board of directors has not yet declared any dividends for that period.
Removed
These warrants are fully paid except for a tiny fraction of a cent and can be used to buy SHI common stock unless doing so results in the holder owning more than 4.99% of the outstanding shares of the Company.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

63 edited+100 added−152 removed28 unchanged
Biggest change(Dollars in thousands) Year Ended December 31, 2023 Year Ended December 31, 2022 $ Change % Change Cryptocurrency mining revenue $ 10,602 24,409 (13,807 ) (57 )% Data hosting revenue 10,196 4,138 6,058 146 % Demand response service revenue 268 - 268 100 % Operating costs and expenses: Cost of cryptocurrency mining revenue, exclusive of depreciation 6,365 14,226 (7,861 ) (55 )% Cost of data hosting revenue, exclusive of depreciation 5,601 3,572 2,029 57 % Costs of revenue- depreciation 3,863 18,708 (14,845 ) (79 )% General and administrative expenses, exclusive of depreciation and amortization 15,390 19,203 (3,813 ) (20 )% Depreciation and amortization associated with general and administrative expenses 9,513 9,506 7 - % Impairment on equity investment - 750 (750 ) (100 )% Impairment on fixed assets 575 47,372 (46,797 ) (99 )% Operating loss (20,241 ) (84,790 ) 64,549 (76 )% Other (expense) income, net (1,479 ) 22 (1,501 ) (6,823 )% Interest expense (2,748 ) (8,375 ) 5,627 (67 )% Loss on sale of fixed assets (398 ) (4,089 ) 3,691 (90 )% Loss on debt extinguishment and revaluation, net (3,904 ) (11,130 ) 7,226 (65 )% Loss before income taxes from continuing operations (28,770 ) (108,362 ) 79,592 (73 )% Income tax benefit (expense) from continuing operations 1,067 1,346 (279 ) (21 )% Net loss from continuing operations (27,703 ) (107,016 ) 79,313 (74 )% Net income from discontinued operations - 7,921 (7,921 ) (100 )% Net loss (27,703 ) (99,095 ) 71,392 (72 )% Net income (loss) attributable to non-controlling interest 1,498 (380 ) 1,878 (494 )% Net loss attributable to Soluna Holdings, Inc. $ (29,201 ) (98,715 ) 69,514 (70 )% 36 The following table summarizes the balances for the Project sites for cryptocurrency mining revenue, data hosting revenue, cost of cryptocurrency mining revenue, exclusive of depreciation, cost of data hosting revenue, exclusive of depreciation, and cost of depreciation during the year ended December 31, 2023: (Dollars in thousands) Project Dorothy 1B Project Dorothy 1A Project Sophie Project Marie Other Total Cryptocurrency mining revenue $ 6,849 $ - $ 2,984 $ 769 $ - $ 10,602 Data hosting revenue - 6,876 3,021 276 23 10,196 Demand response services - - 268 268 Total revenue $ 6,849 $ 6,876 $ 6,005 $ 1,045 $ 291 $ 21,066 Cost of cryptocurrency mining, exclusive of depreciation $ 3,358 $ - 2,206 801 - 6,365 Cost of data hosting revenue, exclusive of depreciation - 4,366 1,030 205 - 5,601 Cost of revenue- depreciation 1,816 755 1,154 136 2 3,863 Total cost of revenue $ 5,174 $ 5,121 $ 4,390 $ 1,142 $ 2 $ 15,829 The following table summarizes the balances for the Project sites for cryptocurrency mining revenue, data hosting revenue, cost of cryptocurrency mining revenue, exclusive of depreciation, cost of data hosting revenue, exclusive of depreciation, and cost of depreciation during the year ended December 31, 2022: (Dollars in thousands) Project Dorothy 1B Project Dorothy 1A Project Sophie Project Marie Other Total Cryptocurrency mining revenue $ - $ - $ 13,221 $ 10,028 $ 1,160 $ 24,409 Data hosting revenue - - - 4,131 7 4,138 Demand response services - - - - - - Total revenue $ - $ - $ 13,221 $ 14,159 $ 1,167 $ 28,547 Cost of cryptocurrency mining, exclusive of depreciation $ 54 $ - 7,471 6,048 653 14,226 Cost of data hosting revenue, exclusive of depreciation - 54 - 3,518 - 3,572 Cost of revenue- depreciation - - 10,597 7,813 298 18,708 Total cost of revenue $ 54 $ 54 $ 18,068 $ 17,379 $ 951 $ 36,506 37 Cryptocurrency Mining Revenue : Cryptocurrency revenue consists of revenue recognized from Soluna’s cryptocurrency mining operations.
Biggest change(Dollars in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 $ Change % Change Cryptocurrency mining revenue $ 17,027 10,602 6,425 61 % Data hosting revenue 18,838 10,196 8,642 85 % High-performance computing service revenue 16 - 16 100 % Demand response service revenue 2,140 268 1,872 699 % Operating costs and expenses: Cost of cryptocurrency mining revenue, exclusive of depreciation 7,499 6,365 1,134 18 % Cost of data hosting revenue, exclusive of depreciation 9,377 5,601 3,776 67 % Cost of high-performance computing service revenue 5,724 - 5,724 100 % Cost of cryptocurrency mining revenue- depreciation 4,292 2,696 1,596 59 % Cost of data hosting revenue- depreciation 1,735 1,167 568 49 % General and administrative expenses, exclusive of depreciation and amortization 18,581 15,390 3,191 21 % Depreciation and amortization associated with general and administrative expenses 9,613 9,513 99 1 % Loss on contract 28,593 - 28,593 100 % Impairment on fixed assets 130 575 (445 ) (77 )% Operating loss (47,523 ) (20,241 ) (27,282 ) 135 % Other expense, net (3,357 ) (1,479 ) (1,878 ) 127 % Interest expense (2,527 ) (2,748 ) 221 (8 )% Loss on sale of fixed assets (31 ) (398 ) 367 (92 )% Loss on debt extinguishment and revaluation, net (7,349 ) (3,904 ) (3,445 ) 88 % Loss before income taxes (60,787 ) (28,770 ) (32,017 ) 111 % Income tax benefit, net 2,487 1,067 1,420 133 % Net loss (58,300 ) (27,703 ) (30,597 ) 110 % Net income attributable to non-controlling interest, net (5,034 ) (1,498 ) (3,536 ) 236 % Net loss attributable to Soluna Holdings, Inc. $ (63,334 ) (29,201 ) (34,133 ) 117 % 47 The following table summarizes the balances for the Project sites for cryptocurrency mining revenue, data hosting revenue, high-performance computing service revenue, demand response revenue, cost of cryptocurrency mining revenue, exclusive of depreciation, cost of data hosting revenue, exclusive of depreciation, cost of high-performance computing services, and cost of depreciation during the year ended December 31, 2024: Soluna Digital Soluna Cloud (Dollars in thousands) Project Dorothy 1B Project Dorothy 1A Project Sophie Other Soluna Digital Subtotal Project Ada Total Cryptocurrency mining revenue $ 17,027 $ - $ - $ - $ 17,027 $ - $ 17,027 Data hosting revenue - 13,742 5,096 - 18,838 - 18,838 High-performance computing services - - - - - 16 16 Demand response services - - - 2,140 2,140 - 2,140 Total revenue 17,027 13,742 5,096 2,140 38,005 16 38,021 Cost of cryptocurrency mining, exclusive of depreciation $ 7,499 $ - $ - $ - $ 7,499 $ - $ 7,499 Cost of data hosting revenue, exclusive of depreciation - 7,252 2,059 66 9,377 - 9,377 Cost of high-performance computing service revenue - - - - - 5,724 5,724 Cost of cryptocurrency mining revenue- depreciation 4,292 - - - 4,292 - 4,292 Cost of data hosting revenue- depreciation - 1,162 573 - 1,735 - 1,735 Total cost of revenue 11,791 8,414 2,632 66 22,903 5,724 28,627 Gross profit (loss) $ 5,236 $ 5,328 $ 2,464 $ 2,074 $ 15,102 $ (5,708 ) $ 9,394 The following table summarizes the balances for the Project sites for cryptocurrency mining revenue, data hosting revenue, high-performance computing service revenue, demand response revenue, cost of cryptocurrency mining revenue, exclusive of depreciation, cost of data hosting revenue, exclusive of depreciation, cost of high-performance computing services, and cost of depreciation during the year ended December 31, 2023: Soluna Digital (Dollars in thousands) Project Dorothy 1B Project Dorothy 1A Project Sophie Project Marie Other Total Cryptocurrency mining revenue $ 6,849 $ - $ 2,984 $ 769 $ - $ 10,602 Data hosting revenue - 6,876 3,021 276 23 10,196 Demand response services - - - - 268 268 Total revenue 6,849 6,876 6,005 1,045 291 21,066 Cost of cryptocurrency mining, exclusive of depreciation $ 3,358 $ - $ 2,206 $ 801 $ - $ 6,365 Cost of data hosting revenue, exclusive of depreciation - 4,366 1,030 205 - 5,601 Cost of cryptocurrency mining revenue-depreciation 1,816 - 775 103 2 2,696 Cost of data hosting revenue- depreciation - 755 379 33 - 1,167 Total cost of revenue 5,174 5,121 4,390 1,142 2 15,829 Gross profit (loss) $ 1,675 $ 1,755 $ 1,615 $ (97 ) $ 289 $ 5,237 48 Cryptocurrency Mining Revenue : Cryptocurrency mining revenue increase year over year consists of revenue recognized from Soluna’s cryptocurrency mining operations related to Project Dorothy 1B, which began energization in the third quarter of 2023.
The valuation provisions apply to new awards and to awards that are outstanding on the effective date and subsequently modified. 47 The determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables.
The valuation provisions apply to new awards and to awards that are outstanding on the effective date and subsequently modified. 59 The determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables.
The Company also received net proceeds of approximately $817 thousand from the subsequent SPA offerings, in addition to proceeds from debt issuances of $3.1 million less debt payment costs of $1.1 million on promissory notes and the Navitas loan, and $350 thousand for payment on the Company’s line of credit.
We also received net proceeds of approximately $817 thousand from the subsequent SPA offerings, in addition to proceeds from debt issuances of $3.1 million less debt payment costs of $1.1 million on promissory notes and the Navitas loan, and $350 thousand for payment on the Company’s line of credit.
The obligations of Borrower under the Master Agreement and reflected in the NYDIG Notice are ring-fenced to Borrower and its direct parent company, Soluna MC LLC. The Company is not a party to any guaranty, collateral agreement or other support agreement with or for the benefit of NYDIG.
The obligations of Borrower under the MEFA and reflected in the NYDIG Notice are ring-fenced to Borrower and its direct parent company, Soluna MC LLC. The Company is not a party to any guaranty, collateral agreement, or other support agreement with or for the benefit of NYDIG.
Following the debt extinguishment on July 19, 2022 as noted further in Note 9, the Convertible Notes will be recorded at fair value upon issuance (e.g., upon execution of the Addendum) per guidance within ASC 480, and at each subsequent reporting period, with changes in fair value reported in earnings.
Following the debt extinguishment on July 19, 2022 as noted further in Note 2 and 8, the Convertible Notes will be recorded at fair value upon issuance (e.g., upon execution of the Addendum) per guidance within ASC 480, and at each subsequent reporting period, with changes in fair value reported in earnings.
As such, the principal balance of $10.5 million as of December 31, 2022 became due immediately and the Borrower shall bear interest, at a rate per annum equal to 2.0% plus the rate per annum otherwise applicable to such obligations set forth in the Master Agreement.
As such, the principal balance of $10.5 million as of December 31, 2022 became due immediately and the Borrower shall bear interest, at a rate per annum equal to 2.0% plus the rate per annum otherwise applicable to such obligations set forth in the MEFA.
Interest Expense: Interest expense for the year ended December 31, 2023 was approximately $2.7 million and related to default and continuing interest expense of the NYDIG loan of approximately $1.4 million (see legal proceedings) , a financing loan with Navitas of approximately $228 thousand, interest and other charges of approximately $212 thousand for the promissory notes issued in January and February of 2023 to certain investors, and interest on amortization of warrants for the convertible debt of approximately $475 thousand, as well as default interest charged through March 10, 2023 for the convertible holders of approximately $420 thousand.
Interest expense for the year ended December 31, 2023 was $2.7 million and related to default and continuing interest expense of the NYDIG loan of approximately $1.4 million, a financing loan with Navitas of approximately $228 thousand, interest and other charges of approximately $212 thousand for the promissory notes issued in January and February of 2023, and interest on amortization of warrants for the convertible debt of approximately $475 thousand, as well as default interest charged through March 10, 2023 for the convertible holders of approximately $420 thousand.
Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with U.S. GAAP.
Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with GAAP.
As such, the Company is required to adjust the value of the strategic contract pipeline by approximately $10.9 million at inception date (October 29, 2021), in which was recorded as a deferred tax liability and this amount will be amortized over the life of the asset.
As such, we are required to adjust the value of the strategic contract pipeline by approximately $10.9 million at inception date (October 29, 2021), in which was recorded as a deferred tax liability and this amount will be amortized over the life of the asset.
The Company had Warrants included within the SPA agreement as noted in Note 9. The Warrants are considered freestanding equity-classified instruments due to their detachable and separately exercisable features and meet the indexation criteria within derivative accounting. Accordingly, the Warrants are presented as a component of Stockholders’ Equity in accordance with derivative accounting.
We had Warrants included within the SPA agreement as noted in Note 8. The Warrants are considered freestanding equity-classified instruments due to their detachable and separately exercisable features and meet the indexation criteria within derivative accounting. Accordingly, the Warrants are presented as a component of Stockholders’ Equity in accordance with derivative accounting.
“Fair value” is the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.
“Fair value” is the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.
Based on the observability of the inputs used in the valuation methods, the Company is required to provide the following information according to the fair value accounting standards. These standards established a fair value hierarchy as specified that ranks the quality and reliability of the information used to determine fair values.
Based on the observability of the inputs used in the valuation methods, we are required to provide the following information according to the fair value accounting standards. These standards established a fair value hierarchy as specified that ranks the quality and reliability of the information used to determine fair values.
Critical Accounting Policies and Significant Judgments and Estimates The prior discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. Note 2 of the Consolidated Financial Statements included in this Annual Report on Form 10-K includes a summary of our most significant accounting policies.
Critical Accounting Policies and Use of Estimates The prior discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. Note 2 of the Consolidated Financial Statements included in this Annual Report includes a summary of our most significant accounting policies.
Similarly, we expect that depreciation and amortization of fixed assets will continue to be a recurring expense over the term of the useful life of the assets. 41 Adjusted EBITDA is provided in addition to and should not be considered to be a substitute for, or superior to net income, the comparable measure calculated in accordance with U.S. GAAP.
Similarly, we expect that depreciation and amortization of fixed assets will continue to be a recurring expense over the term of the useful life of the assets. EBITDA and Adjusted EBITDA are provided in addition to and should not be considered to be substitutes for, or superior to net income, the comparable measure calculated in accordance with GAAP.
There was no cash provided by investing activities from discontinued operations for the year ended December 31, 2023. Financing Activities Net cash provided by financing activities was approximately $21.8 million during the year ended December 31, 2023, which consisted of cash contributions for noncontrolling interest of approximately $20.4 million, offset with distributions for non-controlling interest of $1.0 million.
Net cash provided by financing activities was approximately $21.8 million during the year ended December 31, 2023, which consisted of cash contributions for noncontrolling interest of approximately $20.4 million, offset with distributions for non-controlling interest of $1.0 million.
(Dollars in thousands) Three months ended March 31, 2023 Three months ended June 30, 2023 Three months ended September 30, 2023 Three months ended December 31, 2023 Year ended December 31, 2023 Net loss from continuing operations $ (7,432 ) $ (9,257 ) $ (6,016 ) $ (4,998 ) $ (27,703 ) Interest expense, net 1,374 486 495 393 2,748 Income tax (benefit) expense from continuing operations (547 ) (547 ) 569 (542 ) (1,067 ) Depreciation and amortization 3,002 2,918 3,579 3,877 13,376 EBITDA (3,603 ) (6,400 ) (1,373 ) (1,270 ) (12,646 ) Adjustments: Non-cash items Stock-based compensation costs 879 2,232 595 606 4,312 Loss (gain) on sale of fixed assets 78 (48 ) 373 (5 ) 398 Impairment on fixed assets 209 169 41 156 575 Loss on debt extinguishment and revaluation, net (473 ) 2,054 769 1,554 3,904 Adjusted EBITDA $ (2,910 ) $ (1,993 ) $ 405 $ 1,041 $ (3,457 ) 42 The following table represents the Adjusted EBITDA activity between each three-month period for the year ended December 31, 2022.
(Dollars in thousands) Three months ended March 31, 2023 Three months ended June 30, 2023 Three months ended September 30, 2023 Three months ended December 31, 2023 Year ended December 31, 2023 Net loss from continuing operations $ (7,432 ) $ (9,257 ) $ (6,016 ) $ (4,998 ) $ (27,703 ) Interest expense, net 1,374 486 495 393 2,748 Income tax (benefit) expense from continuing operations (547 ) (547 ) 569 (542 ) (1,067 ) Depreciation and amortization 3,002 2,918 3,579 3,877 13,376 EBITDA (3,603 ) (6,400 ) (1,373 ) (1,270 ) (12,646 ) Adjustments: Non-cash items Stock-based compensation costs 879 2,232 595 606 4,312 Loss (gain) on sale of fixed assets 78 (48 ) 373 (5 ) 398 Impairment on fixed assets 209 169 41 156 575 Loss on debt extinguishment and revaluation, net (473 ) 2,054 769 1,554 3,904 Adjusted EBITDA $ (2,910 ) $ (1,993 ) $ 405 $ 1,041 $ (3,457 ) We continued positive Adjusted EBITDA from the third quarter of 2023 through the second quarter of 2024.
With quarterly fair value assessments and conversions of debt throughout the year ending December 31, 2023, Company incurred an additional loss on revaluation of approximately $1.2 million with changes in annual volatility of the debt at each quarter end, in addition to note conversions that occurred throughout the year. See Note 9 for further details.
With quarterly fair value assessments and conversions of debt throughout the year ending December 31, 2023, we incurred an additional loss on revaluation of approximately $1.2 million with changes in annual volatility of the debt at each quarter end, in addition to note conversions that occurred throughout the year.
Stock-based compensation represents the cost related to stock-based awards granted to employees and directors. We measure stock-based compensation cost at grant date based on the estimated fair value of the award and recognize the cost as expense on a straight-line basis in accordance with the vesting of the options (net of estimated forfeitures) over the option’s requisite service period.
We measure stock-based compensation cost at grant date based on the estimated fair value of the award and recognize the cost as expense on a straight-line basis in accordance with the vesting of the options (net of estimated forfeitures) over the option’s requisite service period.
We believe Adjusted EBITDA can be an important financial measure because it allows management, investors, and the Board to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments.
We believe EBITDA and Adjusted EBITDA can be important financial measures because they allow management, investors, and the Board to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments.
Net Income (loss) attributable to non-controlling interest: Net income attributable to non-controlling interest for the year ended December 31, 2023 was approximately $1.5 million compared to a net loss attributable to non-controlling interest for the year ended December 31, 2022 of approximately $380 thousand.
Net income attributable to non-controlling interest: Net income attributable to non-controlling interest for the year ended December 31, 2024 was approximately $5.0 million compared to a net income of approximately $1.5 million for the year ended December 31, 2023.
The following table summarizes changes in the various components of our net loss during the year ended December 31, 2023 compared to the year ended December 31, 2022.
Consolidated Results of Operations Results of Operations for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023. The following table summarizes changes in the various components of our net loss during the year ended December 31, 2024 compared to the year ended December 31, 2023.
On May 11, 2023, the Company entered into the Second Amendment with the Noteholders in which increased the principal outstanding balance to approximately $13.3 million and extending the maturity date to July 2024.
On May 11, 2023, we and the Noteholders entered into the Second Amendment with the Noteholders, which increased the principal outstanding balance of the Convertible Notes to approximately $13.3 million and extended the maturity date of the Convertible Notes to July 2024.
Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted earnings per share or any other performance measure calculated in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity.
Further, EBITDA and Adjusted EBITDA should not be considered as alternatives to revenue growth, net income, or any other performance measure calculated in accordance with GAAP, or as alternatives to cash flow from operating activities as a measure of our liquidity.
Our effective tax rates could be affected by numerous factors, such as intercompany transactions, earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, the applicability of special tax regimes, losses incurred in jurisdictions for which we are not able to realize the related tax benefit, changes in foreign currency exchange rates, entry into new businesses and geographies, changes to our existing businesses and operations, acquisitions and investments and how they are financed, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative practices, principles, and interpretations.
Our effective tax rates could be affected by numerous factors, such as intercompany transactions, earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, the applicability of special tax regimes, losses incurred in jurisdictions for which we are not able to realize the related tax benefit, changes in foreign currency exchange rates, entry into new businesses and geographies, changes to our existing businesses and operations, acquisitions and investments and how they are financed, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative practices, principles, and interpretations. 60 Impairment of long-lived assets Management reviews long-lived assets, including finite lived intangible assets, property, plant and equipment, and other assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset, asset group, or investment may not be recoverable.
Note, there was no noncontrolling interest of DV ComputeCo for the year ended December 31, 2022. The change in non-controlling interest relates to continued profitability at Dorothy 1A and Dorothy 1B, creating a total net profit which started to grow in the third quarter of fiscal year 2023.
The change in non-controlling interest relates to continued profitability at Dorothy 1A and Dorothy 1B, creating a total net profit in noncontrolling interest of approximately $6.9 million attributable to non-controlling interest for the year ended December 31, 2024, which started to grow in the third quarter of fiscal year 2023.
Management believes that Adjusted EBITDA results in a performance measurement that represents a key indicator of the Company’s business operations of cryptocurrency mining and hosting customers engaged in cryptocurrency mining.
Management believes that EBITDA and Adjusted EBITDA results in a performance measurement that represents a key indicator of our business operations of cryptocurrency mining, hosting customers engaged in cryptocurrency mining, demand service revenue, and high-performance computing services.
On January 26, 2022, the Company had a subsequent drawdown of $9.6 million. On December 20, 2022, Soluna MC Borrowing 2021-1 LLC (“Borrower”) received a Notice of Acceleration and Repossession (the “NYDIG Notice”) from NYDIG with respect to the Master Agreement, by and between Borrower and NYDIG.
On December 20, 2022, Soluna MC Borrowing 2021-1 LLC (“Borrower”) received a Notice of Acceleration and Repossession (the “NYDIG Notice”) from NYDIG with respect to the MEFA, by and between Borrower, a subsidiary of Soluna MC, LLC, a subsidiary of Soluna Digital, a subsidiary of the Company, and NYDIG.
No such services were performed for the year ended December 31, 2022. Cost of Cryptocurrency Revenue, exclusive of depreciation : Cost of cryptocurrency mining revenue includes direct utility costs, site overhead expenses, and overhead costs that relate to the operations of our cryptocurrency mining facilities in Washington, Kentucky, and Texas.
Cost of Cryptocurrency Mining Revenue, exclusive of depreciation : Cost of cryptocurrency mining revenue includes direct utility costs, site overhead expenses, and overhead costs that relate to the operations of our cryptocurrency mining facilities in Kentucky and Texas.
The Company had a net loss of approximately $27.7 million, in which was offset by non-cash items of approximately $22.5 million. The non-cash items consisted primarily of approximately $13.4 million of amortization and depreciation expenses for the intangible assets acquired in 2021 and the fixed assets still in service and capital additions in 2023.
The non-cash items consisted primarily of approximately $13.4 million of amortization and depreciation expenses for the intangible assets acquired in 2021 and the fixed assets still in service and capital additions in 2023.
On May 9, 2023, Soluna DV ComputeCo, LLC and Navitas West Texas Investments SPV, LLC entered into a 2-year Loan Agreement for $2,050,000. The unpaid principal balance of the Term Loan shall bear interest at per annum rate equal to 15%.
No further amounts are owed by us under the Convertible Notes as of December 31, 2024. On May 9, 2023, DVCC and Navitas West Texas Investments SPV, LLC entered into a 2-year Loan Agreement for $2,050,000. The unpaid principal balance of the Term Loan shall bear interest at per annum rate equal to 15%.
As of December 31, 2023, and 2022, the fair values of cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued expenses approximated their carrying values because of the short-term nature of these instruments. Share-Based Payments .
As of December 31, 2024, and 2023, the fair values of cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued expenses approximated their carrying values because of the short-term nature of these instruments. Share-Based Payments We award restricted stock to our employees and directors under the 2021 Plan and the Soluna Holdings, Inc.
The Company had outstanding commitments as of December 31, 2023, related to SCI for $100 thousand in capital expenditures, and approximately $6.4 million of cash available to fund its operations. Based on business developments, including changes in production levels, staffing requirements, and network infrastructure improvements, we will require additional capital equipment in the foreseeable future.
As of December 31, 2024, we had $7.8 million of cash available to fund our operations. Based on business developments, including changes in production levels, staffing requirements, and network infrastructure improvements, we will require additional capital equipment in the foreseeable future.
Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors, including those discussed in Item 1A: “Risk Factors” and elsewhere in this Annual Report.
Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors, including those discussed in Item 1A: “Risk Factors” and elsewhere in this Annual Report. Recent Developments Soluna Cloud – Termination of HPE Agreement Soluna launched Project Ada- its GPU-as-a-Service business via Soluna Cloud, Inc.
The income tax benefit for the fiscal year ended December 31, 2023 and 2022 related to deferred tax amortization impact of acquiring an asset in a transaction that is not a business combination when the amount paid exceeds the tax basis on the acquisition date.
The balances were mainly related to deferred tax amortization impact of acquiring an asset in a transaction that is not a business combination when the amount paid exceeds the tax basis on the acquisition date.
The Company incurred a loss on debt extinguishment and revaluation of approximately $3.9 million for the year ended December 31, 2023. On May 11, 2023, the Company entered into a new debt amendment agreement (“Second Amendment”) with the convertible noteholders and issued new warrants, creating a debt extinguishment and loss of $1.8 million.
On May 11, 2023, we entered into a new debt amendment agreement (the “Second Amendment”) with the Noteholders and issued new warrants, creating a loss on debt extinguishment of approximately $1.8 million. The main factor for the loss was the valuation of the new warrants.
This amount relates to Springlane’s 85% noncontrolling interest of the net profit in Soluna DVSL and Navitas 49% noncontrolling interest of the net profit in Soluna DV ComputeCo for the year ended December 31, 2023, compared to the Springlane’s 32.2% noncontrolling interest of Net loss in Soluna DVSL for the year ended December 31, 2022.
This amount relates to Spring Lane’s 85% noncontrolling interest of the net profit in Soluna DVSL ComputeCo, LLC (“DVSL”) and Navitas 49% noncontrolling interest of the net profit in Soluna DV ComputeCo, LLC (“DVCC”) for the year ended December 31, 2024.
On November 20, 2023 the Company and the Noteholders entered into a Third Amendment Agreement to amend the Notes, the October SPA and related agreements to facilitate future financings by the Company that may include funds for prepayment of the Notes by permitting the Company to force conversion of up to $1.5 million of the Notes under certain circumstances and reduce the prepayment penalty in return for reducing the conversion price of the $4.7 million of the Notes to $3.78 and reducing the exercise price of 150 thousand of the Warrants to $0.01.The Noteholders have converted approximately $4.6 million between May 11, 2023 to December 31, 2023, reducing the principal balance to approximately $8.7 million as of December 31, 2023. 45 On January 14, 2022, the Company effected an initial drawdown under the Master Equipment Finance Agreement with NYDIG in the aggregate principal amount of approximately $4.6 million that bore interest at 14%.
On November 20, 2023 we and the Noteholders entered into the Third Amendment to the SPA related agreements to facilitate future financings by us that may include funds for prepayment of the Convertible Notes by permitting us to force conversion of up to $1.5 million of the Convertible Notes under certain circumstances and reduce the prepayment penalty in return for reducing the conversion price of the $4.7 million of the Convertible Notes to $3.78 and reducing the exercise price of 150,000 of the Warrants to $0.01.Between May 11, 2023 and December 31, 2023, the Noteholders converted approximately $4.6 million of the principal outstanding balance of the Convertible Notes and received approximately 1.1 million shares of our common stock, reducing the principal balance to approximately $8.7 million as of December 31, 2023.
For the years ended December 31, 2023 and 2022 the Company amortized approximately $2.2 million. For the year ended December 31, 2023, these amounts were offset with a timing difference due to significant increase for in-service capital assets at the Dorothy entities which created an offset of approximately $1.1 million in deferred income tax expense.
For the year ended December 31, 2024 and 2023, we amortized approximately $2.2 million in each year, respectively. In addition, for the year ended December 31, 2023, there were timing differences due to significant increase for in-service capital assets for the year ended December 31, 2023 which created an offset of approximately $1.1 million in deferred income tax expense.
Consistent with the guidance in purchase accounting, the value of the Strategic Pipeline Contract as of the acquisition date was estimated using an expected value approach, which probability-weights various future outcomes and uses certain Level 3 inputs. The Company’s equipment miners are classified in Level 2 of the fair value hierarchy due to the quoted market prices for similar assets.
Consistent with the guidance in purchase accounting, the value of the Strategic Pipeline Contract, see Note 5, as of the acquisition date of October 2021 was estimated using an expected value approach, which probability-weights various future outcomes and uses certain Level 3 inputs.
The main factor for the loss was the valuation of the new warrants. On November 20, 2023, the Company completed another new amendment (the “Third Amendment”) of the convertible notes and incurred an additional loss on extinguishment and revaluation of approximately $911 thousand.
On November 20, 2023, we entered into another amendment with the convertible noteholders (the “Third Amendment”) and incurred an additional loss on extinguishment and revaluation of approximately $911 thousand.
We grant options to purchase our common stock and award restricted stock to our employees and directors under our equity incentive plans. The benefits provided under these plans are share-based payments and we account for stock-based awards exchanged for employee service in accordance with the appropriate share-based payment accounting guidance.
Amended and Restated 2023 Stock Incentive Plan (the “2023 Plan,” together with the 2021 Plan, the “Plans”). The benefits provided under these plans are share-based payments and we account for stock-based awards exchanged for employee service in accordance with the appropriate share-based payment accounting guidance. Stock-based compensation represents the cost related to stock-based awards granted to employees and directors.
In addition, there was a $250 thousand expense in relation to an extension fee for the noteholders of the convertible debt when the 2nd Amendment was signed on May 11, 2023, in addition to the prepayment penalty for the notes payable in the third quarter of fiscal 2023.
For the year ended December 31, 2023, other expense, net was approximately $1.5 million, consisting of primarily an approximate $1.0 million penalty charge in relation to moving further in the settlement litigation with NYDIG and a $250 thousand expense in relation to an extension fee for the Noteholders when the Second Amendment was signed on May 11, 2023, in addition to the prepayment penalty for the notes payable in the third quarter of fiscal 2023.
Periodically, our management reviews our critical accounting estimates with the Audit Committee of our Board of Directors. The significant accounting policies that we believe are most critical to aid in fully understanding and evaluating our consolidated financial statements include the following: 46 Revenue Recognition Cryptocurrency revenue consists of revenue recognized from the Company’s cryptocurrency mining facilities.
The significant accounting policies that we believe are most critical to aid in fully understanding and evaluating our consolidated financial statements include the following: Revenue Recognition We have entered into customer hosting contracts whereby we provide hosting services which include, electrical power to cryptocurrency mining customers, other utilities, and management of hosting facilities.
Demand Response Service : In November 2023, we completed our registration of Project Dorothy for one of ERCOT’s demand response programs, in which we began services in December 2023. On a monthly basis we stand ready to deliver a set amount of committed capacity per month when and if called upon by ERCOT.
Starting in December 2023, we began providing emergency demand response solutions to ERCOT pursuant to a contractual commitment over defined service delivery periods. This contract includes a single promise to stand ready, on a monthly basis, to deliver a set amount of curtailment (committed capacity) per month when and if called upon by ERCOT.
On October 25, 2021, the Company issued to certain institutional investors secured convertible notes in the aggregate principal amount of approximately $16.3 million for an aggregate purchase price of $15.0 million. The notes are convertible, subject to certain conditions, at any time at the option of the investors, into an aggregate of 71,043 shares of the Company’s common stock.
On October 25, 2021, we issued the Convertible Notes to the Noteholders in the aggregate principal amount of approximately $16.3 million for an aggregate purchase price of $15.0 million pursuant to the terms of the SPA.
The actual monthly amounts are calculated after the close of each month and billed to the customers. Fair Value Measurement. The estimated fair value of certain financial instruments, including cash, accounts receivable and short-term debt approximates their carrying value due to their short maturities and varying interest rates.
Accordingly, the Company recognizes monthly revenue based on the proportion of committed stand-ready capacity obligation that has been fulfilled to date. 58 Fair Value Measurement The estimated fair value of certain financial instruments, including cash, accounts receivable and short-term debt approximates their carrying value due to their short maturities and varying interest rates.
As of December 31, 2023, the Company has an outstanding principal balance of approximately $1.7 million and incurred approximately $204 thousand in interest expense and $25 thousand in deferred amortization expense.
As of December 31, 2024, the Company still has an outstanding loan principal of approximately $9.2 million and outstanding interest and penalty balance of approximately $2.3 million.
Data hosting revenue was approximately $10.2 million for the year ended December 31, 2023 compared to $4.1 million for year ended December 31, 2022, an increase of approximately $6.1 million.
Income Tax Benefit: Income tax benefit for the year ended December 31, 2024 was approximately $2.5 million, compared to approximately $1.1 million thousand for the year ended December 321, 2023.
In addition, Project Sophie switched their business model from proprietary mining to data hosting in the second quarter of 2023, which created an additional increase of approximately $3.0 million. Offsetting the increase for the year was the decommission of Project Marie operations in February 2023 causing a decline of approximately $3.9 million.
The increase was due to a full year of revenues in Project Dorothy 1A and Project Sophie switched their business model from proprietary mining to data hosting in the second quarter of 2023 resulting in a full year of revenue in 2024.
If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. 48 Recent Accounting Pronouncements A discussion of recently adopted and new accounting pronouncements is included in Note 2 of the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
Recent Accounting Pronouncements A discussion of recently adopted and new accounting pronouncements is included in Note 2 of the Consolidated Financial Statements included in this Annual Report.
Net cash used in investing activities from continuing operations during the year ended December 31, 2022 was approximately $54.7 million. For the year ended December 31, 2022, we had $63.7 million worth of capital expenditures, less a net change in deposits on equipment of $6.4 million, and $2.6 million in proceeds from the sale of equipment.
Investing Activities Net cash used in investing activities during the year ended December 31, 2024 was approximately $13.2 million consisting mainly of capital expenditures of $9.2 million and increase in deposits on equipment of $4.1 million, primarily related to the development build of Project Dorothy 2.
GAAP financial metric, for historical periods are presented in the table below: (Dollars in thousands) Years Ended December 31, 2023 2022 Net loss from continuing operations $ (27,703 ) $ (107,016 ) Interest expense 2,748 8,375 Income tax (benefit) expense (1,067 ) (1,346 ) Depreciation and amortization 13,376 28,214 EBITDA (12,646 ) (71,773 ) Adjustments: Non-cash items Stock-based compensation costs 4,312 3,852 Loss on sale of fixed assets 398 4,089 Loss on debt extinguishment and revaluation, net 3,904 11,130 Impairment of equity investment - 750 Impairment on fixed assets 575 47,372 Adjusted EBITDA $ (3,457 ) $ (4,580 ) Stock based compensation costs represented approximately $3.4 million non-cash restricted stock units and $908 thousand non-cash stock options for the year ended December 31, 2023 to members of our Board of Directors and certain Company employees compared to non-cash restricted stock units of approximately $2.6 million to members of our Board of Directors and certain Company employees for the year ended December 31, 2022 and non-cash stock options of approximately $1.2 million for the year ended December 31, 2022.
EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under GAAP. 52 Reconciliations of EBITDA and Adjusted EBITDA to net loss, the most comparable GAAP financial metric, for historical periods are presented in the table below: (Dollars in thousands) Years Ended December 31, 2024 2023 Net loss from continuing operations $ (58,300 ) $ (27,703 ) Interest expense 2,527 2,748 Income tax (benefit) expense (2,487 ) (1,067 ) Depreciation and amortization 15,640 13,376 EBITDA (42,620 ) (12,646 ) Adjustments: Non-cash items Stock-based compensation costs 5,311 4,312 Loss on sale of fixed assets 31 398 Loss on debt extinguishment and revaluation, net 7,349 3,904 Placement agent release expense 1,000 - Loss on contract 28,593 - Provision for credit losses 760 - Convertible note inducement expense 388 - Impairment on fixed assets 130 575 Adjusted EBITDA $ 942 $ (3,457 ) The following table represents the EBITDA and Adjusted EBITDA activity between each three-month period from January 1, 2024 through December 31, 2024.
Net cash used in operating activities from continuing operations was approximately $6.1 million for the year ended December 31, 2022.
Operating Activities Net cash used in operations was approximately $5.1 million during the year ended December 31, 2024. We had a net loss for the year ended December 31, 2024 of approximately $58.3 million. Results included cost of revenue in connection with the HPE Agreement for $5.7 million.
Cost of data hosting revenue was approximately $5.6 million for the year ended December 31, 2023, compared to $3.5 million for the year ended December 31, 2022. This increase was due to Project Dorothy 1A which began operations and hosting services in May 2023, creating costs of approximately $4.4 million and had minimal costs in fiscal year 2022.
Cost of data hosting revenue increase was due to Project Dorothy 1A which began operations and hosting services in May 2023 with full year hosting expense in 2024. Also, we transitioned to data hosting at Project Sophie in April 2023, which created an increase in costs.
Also, the Company has entered into customer hosting contracts whereby the Company provides electrical power to cryptocurrency mining customers, and the customers pay a stated amount per megawatt-hour (“MWh”) (“Contract Capacity”) as well as a percentage of the profit share of the daily net income from the customer’s mining operations.
Customer contracts can be a combination of a stated fixed amount per megawatt-hour (“MWh”) (“Contract Capacity”), a percentage of the profit share of the daily net income from the customer’s mining operations, or a combination thereof. Some contracts also include pass-through expenses which are not recognized in revenue.
Data Hosting Revenue : In August 2021, the Company began cryptocurrency hosting services in which we provide energized space and operating services to third-party mining companies who locate their mining hardware at one of our mining locations, in which they may receive a fee per miner installed, revenue share and if additional services are rendered, an additional service fee is charged to the hosted parties.
Project Marie discontinued site operations in the second quarter of 2023 and Project Sophie converted to a hosting facility within the 2023 year. Data Hosting Revenue : Cryptocurrency hosting services provide energized space and operating services to third-party mining companies who locate their mining hardware at our mining locations.
The Company incurred a loss on the fair value valuation of approximately of approximately $12.9 million for the debt extinguishment and revaluation of debt through September 31, 2022.
Loss on Debt Extinguishment and Revaluation, net : For the year ended December 31, 2024, we recorded a loss on debt extinguishment and revaluation of approximately $7.3 million.
However, the Company is actively monitoring this situation and the possible effects on our financial condition, liquidity, operations, suppliers, and the industry. Operating Activities Net cash used in operating activities from continuing operations was approximately $3.0 million for the year ended December 31, 2023.
The other changes in assets and liabilities were not material. Net cash used in operating activities from continuing operations was approximately $3.0 million for the year ended December 31, 2023. We had a net loss of approximately $27.7 million, which was offset by non-cash items of approximately $22.5 million.
GAAP”), we also use “Adjusted EBITDA.” Adjusted EBITDA is a non-GAAP financial measure defined as net income (loss) from continuing operations before interest, taxes, depreciation and amortization (“EBITDA”) adjusted to eliminate the effects of certain non-cash, non-recurring items, that we believe do not reflect our ongoing strategic business operations.
EBITDA and Adjusted EBITDA In addition to financial measures calculated in accordance with GAAP, we also use “EBITDA” and “Adjusted EBITDA.” “EBITDA” is defined as earnings before interest, taxes, and depreciation and amortization.
Cash was used in operations by a net loss from continuing operations of $107.0 million, less non-cash items of $97.7 million, consisting primarily of $28.2 million of amortization and depreciation expense for the year for the intangible asset acquired in 2021 and significant additions in fixed assets, approximately $3.9 million in stock-based compensation expense, $4.1 million in loss on sale of fixed assets, $47.4 million in impairment of fixed assets, $750 thousand for impairment on equity investment, $11.1 million on loss on debt extinguishment and revaluation, and $6.5 million for amortization of deferred financing costs and discount on notes payables issued during the year, offset with $1.4 million in deferred income tax benefits.
Non-cash items included approximately $6.2 million of depreciation expense and $9.5 million of amortization expenses, approximately $28.6 million on loss on contract, $5.3 million of stock compensation expenses, $7.3 million of loss on debt extinguishment and revaluation, $2.1 million in debt issuance costs, $760 thousand in provision for credit losses, and $351 thousand amortized deferred financing costs.
These declines at Project Marie and Project Sophie were offset with increases at Project Dorothy 1B due to energization in the third quarter of 2023, creating an increase in costs of approximately $3.3 million. Cost of Data Hosting Revenue, exclusive of depreciation: Cost of data hosting revenue includes utility charges, site overhead expenses, and other charges.
The increase was slightly offset with the Company operating only one facility for the year ended December 31, 2024, compared to three facilities for the year ended December 31, 2023. Cost of Data Hosting Revenue, exclusive of depreciation: Cost of data hosting revenue includes utility charges, site overhead expenses, and other charges.
As such, DVSL (Dorothy 1A) had a net profit for minority interest of $765 thousand for the year ended December 31, 2023 compared to $380 thousand net loss in minority interest for year ended December 31, 2022, a $1.1 million increase.
The $1.5 million net income attributable to non-controlling interest for the year ended December 31, 2023 related only to Dorothy 1A and Dorothy 1B.
Investor relations increased by approximately $980 thousand due to the Company implementing a series of investor acquisition and influencer marketing programs to attract new investors to Soluna Holdings. Depreciation and Amortization associated with general and administrative expenses: Depreciation and amortization expense for the year ended December 31, 2023 totaled approximately $9.5 million, consistent with year ended December 31, 2022.
Depreciation and Amortization associated with general and administrative expenses: Depreciation and amortization expense was comparable for the year ended December 31, 2024 and the year ended December 31, 2023 in which the balances totaled approximately $9.6 million and $9.5 million, respectively. The balances mainly related to amortization expense related to the strategic pipeline contract that was acquired in October 2021.
Removed
Recent Developments and Trends 2023 In 2023, we executed on the following four-pronged strategy: (1) Energize Project Dorothy; (2) Cash Flow, Site and Process Optimization; (3) Flagship Expansion; (4) Pipeline growth. A summary of our developments in these areas follows below. Energize Project Dorothy We transitioned our flagship data center Project Dorothy from construction to operations.
Added
(“Soluna Cloud”) earlier in 2024 in order to achieve two primary goals: 1. Gain commercial experience in the AI/HPC market in support of future data center development focused on large language models (LLMs) and other AI workloads. 2. Capitalize on lower-cost capital to pursue high-growth revenue opportunities in the compute infrastructure market.
Removed
ERCOT approved the energizing of the first 50 MW of our new data center on April 20, 2023. We completed the construction and ramping of the facility starting in the spring of fiscal year 2023, and completed the full ramp by the end of October 2023.
Added
As a point of entry into Project Ada, Soluna AL CloudCo, LLC (“CloudCo”), a subsidiary of Soluna Cloud, entered into the HPC & AI Cloud Services Agreement and HPE Greenlake Services Custom Statement of Work with Hewlett Packard Enterprise Company (“HPE”) on June 18, 2024 (together with the associated Statement of Work, the “HPE Agreement”), that provided data center and cloud services for artificial intelligence (“AI”) and supercomputing applications, utilizing NVIDIA H100 Graphic Processing Units (“GPUs”).
Removed
The data center is colocated with Briscoe Wind Farm (“Briscoe”), a 150 MW wind power generation facility in Silverton, Texas. The project is comprised of two elements, Project Dorothy 1A (“D1A”), and Project Dorothy 1B (“D1B”), each 25 MW facilities. D1A is focused on Bitcoin Hosting.
Added
At the time of launch, the market for NVIDIA H100 GPUs was characterized by constrained supply and strong pricing, which aligned with the economics of the fixed-cost HPE Agreement. However, by the end of 2024, the GPU market shifted significantly.
Removed
On April 26, 2023 we signed a 5 MW 2-year hosting deal with Compass Mining at D1A. On April 24, 2023 we signed a 20 MW 2-year hosting agreement with another strategic hosting partner at Dorothy 1A.
Added
Lead times for NVIDIA H100 GPUs shortened from over 50 weeks in 2023 to 8–12 weeks by the end of 2024, easing supply constraints and reducing urgency among buyers. At the same time, market demand shifted toward larger GPU clusters than those available under the HPE Agreement, making it difficult to secure long-term, reserved contracts at profitable rates.
Removed
In the summer of 2023, we completed the construction of D1A and the installation of approximately 7,700 Bitcoin miners between the two customers, resulting in an installed hashrate of approximately 950 PH/s. As of December 31, 2023, D1A has consumed over 11,900 MWh of Curtailed Energy from the co-located power plant and achieved a power usage effectiveness (“PUE”) of 1.03.
Added
The expected release of NVIDIA’s H200 Blackwell architecture also caused some customers to delay purchases. Although release timelines were impacted by design issues, the prospect of next-generation technology contributed to hesitancy in NVIDIA H100 GPU acquisition. Competitive pressure from alternative GPU vendors further softened demand and market pricing. As a result, Soluna Cloud’s business progressed more slowly than anticipated.
Removed
The construction of D1A was made possible by a partnership with Spring Lane Capital (“SLC”), a leading venture capital firm focused on sustainability solutions. On April 22, 2022, we finalized agreements with SLC for a $35 million capital pool to finance Soluna projects alongside renewable energy power plants. Approximately $12.5 million of this was designated for the Dorothy Project.
Added
Revenues were first recognized in December 2024, with modest growth in early 2025.
Removed
In July 2022, Soluna began tapping into the SLC managed funds to finance Dorothy construction and repay prior funding provided by the Company. In return, SLC received approximately 32% of Class B Membership Interests of D1A. On March 10, 2023, we completed a new series of project-level agreements for $7.5 million from SLC-managed funds.
Added
During the last six months, our engagement with potential financing and operating partners for AI/HPC confirmed that rather than continuing the effort to lease and resell GPU/HPC chips, refocusing on our core strength - creating, developing, financing and operating our extensive pipeline of potential bitcoin and AI hosting facilities - will create far more value for us and our shareholders.
Removed
Due to limited liquidity, and access to the capital markets, we sold a portion of our ownership to SLC in 2023. The funds raised aided in the completion of the substation interconnection, and the final stages of project Dorothy. It also provided capital to fund Soluna’s corporate operations.
Added
In light of these developments, on March 24, 2025, CloudCo sent notice of its termination of the HPE Agreement for convenience. Subsequently, on March 26, 2025, HPE sent notice of its termination of the HPE Agreement for cause, effective immediately, due to CloudCo’s material breach of its payment obligations that remained uncured for more than thirty (30) days.
Removed
SLC, increased its stake in D1A from approximately 32% to 85%, reducing Soluna’s ownership from 68% to 15%. After SLC achieves an 18% Internal Rate of Return hurdle, Soluna retains 50% of the profits on D1A. D1B is focused on Bitcoin Mining through a strategic partnership with Navitas Global (“Navitas”).

… 235 more changes not shown on this page.

Other SLNH 10-K year-over-year comparisons