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Soluna Holdings, Inc

Soluna Holdings, IncSLNH财报

Nasdaq · 金融 · 金融服务

What changed in Soluna Holdings, Inc's 10-K — 2024 vs 2025

Top changes in Soluna Holdings, Inc's 2025 10-K

396 paragraphs added · 355 removed · 208 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Loss of key patent rights or failure to obtain additional protections could adversely impact our business and competitive position. 12 We also hold a registered trademark for our Company name, Soluna. We have developed a proprietary software system called MaestroOS™ to enable the automation, management, and operations of critical elements of our data centers.
Loss of key patent rights or failure to obtain additional protections could adversely impact our business and competitive position. We also hold a registered trademark for our Company name, Soluna. We have developed a proprietary software system called MaestroOS™ to enable the automation, management, and operations of critical elements of our data centers.
These documents may also be accessed on our website: http://www.solunacomputing.com through a link in the “Investors” section. The contemplated documents are placed on our website as soon as practicable after their filing with the SEC. The information posted on our website is not incorporated by reference into this Annual Report. 14
These documents may also be accessed on our website: http://www.solunacomputing.com through a link in the “Investors” section. The contemplated documents are placed on our website as soon as practicable after their filing with the SEC. The information posted on our website is not incorporated by reference into this Annual Report.
While these companies are much larger than we are today, we believe our competitive advantage lies in our ability to source renewable energy for the growth of this business faster and at better costs than our competitors. Our Bitcoin Hosting Business competes with a large number of other hosting operators.
While some of these companies are much larger than we are today, we believe our competitive advantage lies in our ability to source renewable energy for the growth of this business faster and at better costs than our competitors. Our Bitcoin Hosting Business competes with a large number of other hosting operators.
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 March 23, 2021, our common stock 16 Table of Contents 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.
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.
Of these employees, thirteen were in finance, twenty-six in operations, two in marketing, two in corporate development, six in information technology and engineering, two in human capital, two 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.
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.
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, 2025, we had four 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.
D2 features a superior financial waterfall structure and enhanced management and development fees for Soluna compared to D1A, allowing us to benefit from improved income once the facility is operational. Project Grace Project Grace is a 2 MW project located at the D2 site focused on next generation data center designs for AI.
D2 features a superior financial waterfall structure and enhanced management and development fees for Soluna compared to D1A, allowing us to benefit from improved income once the facility is operational. 11 Table of Contents Project Grace Project Grace is a 2 MW project located at the D2 site focused on next generation data center designs for AI.
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.
Miners compete to solve these algorithms, and the first to do so is awarded a predetermined number of newly issued Bitcoins (the “Block Reward”), together with the transaction fees associated with that block. We participate in one or more mining pools, which are collaborative networks of miners that combine computing power to improve the probability of earning rewards.
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.
MaestroOS is used to optimize performance, manage power consumption, and improve operating 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, digital assets are promptly converted into U.S. dollars through the Coinbase cryptocurrency exchange.
As of the date of this Annual Report, Soluna has two issued US patents, seven pending US patent applications with the U.S. Patent and Trademark Office, and 13 pending non-US patent applications. The non-US jurisdictions include Australia, Canada, China, Europe, and Japan.
As of the date of this Annual Report, Soluna has two issued US patents, three pending US patent applications with the U.S. Patent and Trademark Office, and four pending non-US patent applications. The non-US jurisdictions include Australia, Canada, China, European Patent Office ("EPO"), and Japan.
(“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.
Company History, Information and Organization Soluna Holdings, Inc. (“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.
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.
Bitcoin Mining Business We engage in proprietary Bitcoin mining, a process that validates transactions and secures the Bitcoin blockchain. This process uses specialized computing equipment to solve complex cryptographic algorithms.
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.
An additional 83 MW is under construction and 100+ MW is in development at our Kati project site, and as of December 31, 2025, we had over 900 MW of facilities in advanced development or near shovel-ready status.
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.
Block Rewards earned by the pool are distributed among participants based on each participant’s proportional contribution. We believe this model reduces revenue volatility as compared to operating on a solo mining basis. Mining operations are energy-intensive and require significant computational resources. We operate data centers using both proprietary and third-party hardware and software.
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.
Mining profitability is affected by several factors, 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, that reduces the Block Reward and may adversely affect future revenue.
We have also secured land for the project and have started capital formation activities. Project Rosa We are developing Project Rosa in Snyder, Texas, which is expected to be up to 187 MW of data center capacity for AI and Bitcoin Hosting and other computing-intensive applications. It will be co-located with a 242.5 MW wind farm in Texas.
Project Rosa We are developing Project Rosa in Snyder, Texas, which is expected to be up to 187 MW of data center capacity for AI and Bitcoin Hosting and other computing-intensive applications. It will be co-located with a 242.5 MW wind farm. We have signed term sheets for both power and land purchase agreements in connection with this project.
However, our ability to maintain and enforce our intellectual property rights may be subject to challenges, including the risk of third-party disputes, opposition proceedings, and evolving patent laws in various jurisdictions.
We also rely on trade secrets, proprietary know-how, and contractual agreements to protect our technology. However, our ability to maintain and enforce our intellectual property rights may be subject to challenges, including the risk of third-party disputes, opposition proceedings, and evolving patent laws in various jurisdictions.
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.
In total, our project pipeline includes approximately 4.3 gigawatts (GW) of renewable energy-powered data center developments. 9 Table of Contents A summary of our pipeline, current and anticipated operating locations are as follows (as of December 31, 2025): 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 Operating Bitcoin Hosting Wind Grace Silverton, TX 2 Development HPC Wind Kati 1 Willacy County, TX 83 In Construction Bitcoin Hosting Wind Kati 2 Willacy County, TX 100+ Development AI or HPC Wind Rosa Snyder, TX 187 Development Bitcoin Hosting / AI or HPC Wind Hedy Cameron County, TX 120 Development Bitcoin Hosting / AI or HPC Wind Ellen Cameron County, TX 100 Development Bitcoin Hosting / AI or HPC Wind Annie Lamar, TX 74 Development Bitcoin Hosting / AI or HPC Solar Fei Childress County, TX 100 Development Bitcoin Hosting / AI or HPC Solar Gladys Nueces County, TX 150 Development Bitcoin Hosting / AI or HPC Wind We manage our data center operations using MaestroOS.
We believe our renewable energy project pipeline—currently estimated at over 2.6 gigawatts (GW)—represents our most valuable strategic asset. We believe this pipeline has the potential to support the development of approximately 300 to 400 MW of new digital infrastructure annually over the next six to eight years.
Over time, we intend to increase our ownership stake in these projects to enhance long-term value. Our renewable energy project pipeline—currently estimated at over 4.3 gigawatts (GW)—represents our most valuable strategic asset. We believe this pipeline has the potential to support the development of over 300 MW of new digital infrastructure annually over the next six to eight years.
It contemplates new direct liquid cooling technologies, proprietary building and power designs – called Helix. Project Sophie Project Sophie is a 25 MW data center, based in Murray, Kentucky connected to the grid (“Sophie”).
It contemplates new direct liquid cooling technologies, proprietary building and power designs – called Helix. The Company is collaborating with Siemens, a leading technology company in electrification, automation and digitalization, to develop solutions addressing power demand fluctuations associated with AI workloads. Project Sophie Project Sophie is a 25 MW data center, based in Murray, Kentucky connected to the grid (“Sophie”).
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.
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.
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.
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.
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.
Operations and Project Pipeline As of December 31, 2025, we operate approximately 123 MW of capacity across two active sites located in Murray, Kentucky and Silverton, Texas.
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.
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. We believe this combination of low-cost power access, grid efficiency, and sustainability focus positions us as a differentiated provider in the digital infrastructure space.
The impact of future regulatory changes on our operations is uncertain and may vary by jurisdiction. A substantial portion of our operations, including our Project Dorothy facilities, are located in Texas, which has historically maintained a favorable regulatory environment for digital asset mining. In March 2022, ERCOT began requiring large-scale digital asset miners to apply for interconnection approval.
The impact of future legislation, rulemaking, market rules, or enforcement actions on our operations remains uncertain and may vary by jurisdiction. A substantial portion of our operations, including our Project Dorothy facilities, are located in Texas, which has historically maintained a comparatively favorable environment for digital asset mining and other large flexible loads.
We have signed term sheets for both power and land purchase agreements in connection with this project. Competition We operate in a highly competitive sector characterized by a growing number of participants and increasing capital investment. Our approach to sourcing renewable energy focuses on curtailed or underutilized power, which is typically priced below market rates.
Leveraging project-level financing and strategic capital partnerships to scale data center development while maintaining balance sheet flexibility. 13 Table of Contents Competition We operate in a highly competitive sector characterized by a growing number of participants and increasing capital investment. Our approach to sourcing renewable energy focuses on curtailed or underutilized power, which is typically priced below market rates.
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.
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.
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.
We offer three primary commercial structures: • Fixed-Fee Model – Customers pay a fixed fee based on energy consumed. • Profit-Share Model – Customers pay a share of the profits from their mining activity, with power costs generally passed through. • Fixed-Fee Service Agreement Model – Customers pay a fixed fee for managed Bitcoin mining capacity and hashrate over the term of the service agreement.
Our Growth Strategy Our growth strategy is focused on expanding our pipeline of renewable energy-powered data center projects and accelerating their development through joint ventures, co-ownership structures, and other strategic partnerships. Over time, we intend to increase our ownership stake in these projects to enhance long-term value.
The project is currently advancing through land acquisition, power contract negotiation, and ERCOT interconnection planning. Our Growth Strategy Our growth strategy is focused on expanding our pipeline of renewable energy-powered data center projects and accelerating their development through joint ventures, co-ownership structures, and other strategic partnerships.
While there is no assurance that our pending applications will result in issued patents, we believe that our intellectual property portfolio provides us with a competitive advantage in our industry. We also rely on trade secrets, proprietary know-how, and contractual agreements to protect our technology.
We maintain company policies requiring our employees, contractors, consultants and other third parties to enter into confidentiality and proprietary rights agreements to control access to our proprietary information. While there is no assurance that our pending applications will result in issued patents, we believe that our intellectual property portfolio provides us with a competitive advantage in our industry.
In January 2025, President Donald Trump issued an executive order establishing a presidential working group focused on regulatory clarity for digital assets, and on March 6, 2025, he signed an executive order establishing a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile.
In January 2025, President Trump issued an executive order directing a federal working group to recommend a regulatory framework for digital assets. In March 2025, the President issued an executive order establishing a Strategic Bitcoin Reserve and a United States Digital Asset Stockpile. In July 2025, the White House released the working group’s report on digital financial technology.
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.
We continue to monitor legislative, regulatory, and market-rule developments at the federal, state, and ERCOT levels. For additional information on regulatory risks, see the section titled “Risk Factors” in this Annual Report. Human Capital Resources As of December 31, 2025, we had fifty-five (55) employees, including fifty-one (51) full-time employees, one (1) part-time employee, and three (3) full-time consultants.
These assessments serve as a precursor to securing exclusive power purchase agreements (PPAs), acquiring or leasing land, and executing other pre-construction development activities necessary to advance projects to shovel-ready status. 10 In 2025, we are focused on advancing the following key initiatives: ● Power Pipeline Expansion – We plan to scale our operational footprint by energizing D2 and commencing construction of the 83 MW Bitcoin Hosting phase of Project Kati.
These assessments serve as a precursor to securing exclusive power purchase agreements (PPAs), acquiring or leasing land, and executing other pre-construction development activities necessary to advance projects to shovel-ready status.
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.
In 2025 and 2024, our Bitcoin Hosting Business accounted for approximately 57% and 50% of total revenue, respectively. Revenue in this business has been concentrated among a limited number of customers. In 2025, two customers accounted for 59% of hosting revenue and 34% of total revenue.
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.
After SLC achieves an 18% Internal Rate of Return hurdle, Soluna retains 50% of the profits on D1A. Project Dorothy 1B D1B is focused on proprietary Bitcoin Mining. D1B is co-owned by Navitas, which owns approximately 49% of D1B, while we own the remaining 51%.
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.
Pipeline Expansion – Increasing the number of curtailment assessments completed with power partners, advancing additional projects toward shovel-ready status, and executing further project term sheets. Launch HPC – Advancing our entry into the AI and HPC market through project development activities, customer engagement, and strategic infrastructure partnerships.
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.
Overview Our mission is to make renewable energy a global superpower by using computing as a catalyst. We develop, own, and operate digital infrastructure for energy-intensive computing applications by colocating data centers with renewable energy power plants. We refer to this model as Renewable Computing™.
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.
Following that termination, we refocused our HPC strategy on the development of dedicated data center infrastructure for third-party leasing and hosting. Demand Response Business We provide demand response services to grid operators and utilities by using our data centers as dispatchable energy resources.
We believe this combination of low-cost power access, grid efficiency, and sustainability focus positions us as a differentiated provider in the digital infrastructure space. 11 Our emerging HPC Business competes with leading NeoCloud companies such as Crusoe, CoreWeave, Lambda, and Nebius.
Our emerging HPC Business competes with leading data center firms such as Applied Digital, Digital Realty, NeoCloud companies such as Crusoe, CoreWeave, Lambda, FluidStack and Nebius.
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.
Our facilities are managed by MaestroOS™ (“MaestroOS”), our proprietary software platform, which analyzes factors such as local power pricing, weather conditions, grid demand, and market signals to optimize operating performance and power consumption across our operating assets. Our business model is intended to enhance the monetization of renewable generation assets while supporting scalable digital infrastructure growth.
We compete with public and private companies including: BitFuFu, Border, Blockstream, Blockware, Foundry, Compass Mining, Hut8, Bitdeer, and Core Scientific.
We compete with public and private companies including: BitFuFu, Canaan, Cango, Blockstream, Blockware (who we have a dual relationship with), Foundry, Compass Mining (who we have a dual relationship with), Hut 8, Bitdeer, and Core Scientific. Our success in our hosting operations depends on our ability high quality data center facilities, best-in-class services, and industry leading power prices.
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.
Capital Formation – Pursuing financing opportunities to support key growth initiatives, including Project Dorothy 2 (“D2”) and Project Kati. 7 Table of Contents Lines of Business Bitcoin Hosting Business We provide colocation and hosting services to third-party Bitcoin mining customers at our data centers. Customers typically contract for capacity based on their power requirements.
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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.
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Renewable Computing™ is designed to address two converging market conditions: increasing curtailment of renewable energy generation and growing demand for power-intensive computing applications, including artificial intelligence (“AI”), high-performance computing (“HPC”), and Bitcoin mining. By locating our data centers near renewable generation assets, we seek to convert underutilized energy into economically productive computing capacity.
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Our 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.
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We utilize two distinct data center designs to serve different computing markets. For our Bitcoin mining and hosting business, we deploy a modular data center design optimized for flexible, large-scale digital asset operations. For AI and HPC workloads, we are developing an AI-ready data center design intended to support higher-density compute environments and customer requirements associated with advanced computing infrastructure.
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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.
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We work with renewable energy developers and power partners to access low-cost or otherwise constrained energy resources. Our data centers operate on a behind-the-meter basis, enabling them to draw electricity directly from the co-located renewable power plant and from the grid through the plant’s existing interconnection and substation infrastructure.
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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.
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By accessing both sources of power, our facilities are able to meet their energy needs while maintaining operating flexibility. In certain markets, our facilities also participate in demand response programs that support grid reliability. A key element of our strategy is the colocation of data centers directly with renewable generation assets.
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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.
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By building behind the meter at renewable generation sites, we are able to access both on-site generation and existing grid interconnection infrastructure, which we believe can improve power economics and accelerate development timelines.
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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.
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With a repeatable development approach and an expanding pipeline of projects, we are seeking to scale a differentiated digital infrastructure platform that supports renewable power utilization, flexible computing capacity, and long-term value creation. 6 Table of Contents We operate across multiple business lines and currently or plan to generate revenue from four primary sources: Bitcoin Mining Business – We mine Bitcoin through proprietary operations and joint ventures at our data centers.
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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.
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Bitcoin Hosting Business – We provide hosting and colocation services to third-party Bitcoin mining customers at our modular data centers.
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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.
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HPC Business – Through Soluna HPC, Inc., we are developing AI-ready data center leasing and hosting capabilities for AI and HPC workloads, beginning with Project Kati 2, which is being engineered for more than 300 MW of capacity in partnership with Metrobloks, LLC ("Metrobloks").
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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.
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Demand Response Business – We leverage our data center infrastructure to provide demand response services to grid operators and utilities. In 2025, our execution strategy was centered around four key initiatives: Project Optimization – Enhancing the profitability, operating efficiency, and customer mix of our operating data centers, while improving customer satisfaction.
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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.
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Our customer base includes several large-scale Bitcoin mining operators. Contracts generally range from 12 to 24 months in duration.
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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.
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In 2024, one customer accounted for 56% of hosting revenue and 28% of total revenue. That customer terminated its agreement during the fourth quarter of 2024. As of March 2025, we had replaced 100% of the lost hosting capacity with minimal operational disruption.
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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.
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For the years ended December 31, 2025 and 2024, our Bitcoin Mining Business represented approximately 38% and 45% of total revenue, respectively.
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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.
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High Performance Computing Business Our HPC business is being developed through Soluna HPC, Inc. and is focused on data center leasing and hosting solutions for AI and other HPC workloads, with an initial target customer base of Hyperscalers and Neoclouds, and enterprise customers over time. 8 Table of Contents Unlike our Bitcoin mining and hosting operations, which use a modular data center design, our HPC business is based on an AI-ready data center design intended to support higher-density compute environments and the infrastructure requirements of AI and HPC customers.
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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.
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We are currently advancing infrastructure projects intended to support AI and HPC workloads. These activities include site and feasibility studies, power and land procurement, engineering and design work, customer engagement, and evaluation of potential financing and partnership structures.
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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.
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Our first planned large-scale HPC development is Project Kati 2, which is being engineered for more than 300 MW of capacity in partnership with Metrobloks. We expect Project Kati 2 to serve as the initial platform for Soluna HPC, Inc.’s leasing and hosting business.
Removed
As a result, the facility ranks among the lowest-cost operators in the sector. Since registration, Project Dorothy has successfully fulfilled its obligations in the Winter, Spring, and Summer DRS periods, and is currently enrolled in the Fall standby period.
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We are also advancing additional projects from our development pipeline that are in various stages of evaluation, engineering, and development. In March 2025, we terminated our prior agreement with Hewlett Packard Enterprise Company (“HPE”), which had supported our earlier GPU-as-a-Service offering.
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Project Dorothy 2 We began planning for the 48 MW expansion of Project Dorothy in 2023 – known as Project Dorothy 2. We partnered with SLC who agreed to finance up to $30 million of the project cost.
Added
In certain markets in which we operate, our data centers participate in ancillary services and other demand response programs that support grid reliability. Under these programs, we commit to reduce a facility’s power consumption to a predetermined level when called upon by the grid operator.
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We closed the initial financing contribution and operation agreement with SLC in July 2024 and broke ground in the third quarter of 2024. Initial energization and ramp-up is expected by the end of the second quarter of 2025.
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In return, we receive compensation for maintaining this dispatch capability, provided we satisfy applicable performance requirements. These requirements typically include minimum uptime and availability thresholds during a measurement period, which is often monthly. For the years ended December 31, 2025 and 2024, our Demand Response Business represented approximately 4% and 6% of total revenue, respectively.
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The data center generates revenue via a combination of fixed services fees and profit share, while energy cost is passed through. For the year ended December 31, 2024, there are approximately 9,300 Bitcoin miners installed, resulting in an installed hashrate of approximately 1.03 EH/s and achieved a PUE of 1.03.
Added
On July 22, 2025, SLC committed $20.0 million for the first phase of the construction on Project Kati, subject to customary conditions. • Navitas West Texas Investments SPV, LLC (“Navitas”) – an investment vehicle organized by Navitas Global, a private equity firm focused on sustainable Bitcoin mining.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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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.
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.
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.
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 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 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.
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. 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.
It could also result in the loss of customers or increased security and insurance expenses. Even with insurance coverage, the financial and reputational impact of a significant cybersecurity incident could materially affect our business and financial results. 35 Our risk management process may not identify all risks that we are subject to and will not eliminate all risk.
It could also result in the loss of customers or increased security and insurance expenses. Even with insurance coverage, the financial and reputational impact of a significant cybersecurity incident could materially affect our business and financial results. Our risk management process may not identify all risks that we are subject to and will not eliminate all risk.
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.
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 and irreversible transactions could result in the loss of our cryptocurrencies.
Together, declining rewards, uncertain transaction fee dynamics, and network forks pose significant risks to our mining business, which could materially impact our revenue, profitability, and overall financial condition. 28 Climate change and evolving regulations could adversely impact our business. Our operations depend heavily on access to reliable and cost-effective electricity.
Together, declining rewards, uncertain transaction fee dynamics, and network forks pose significant risks to our mining business, which could materially impact our revenue, profitability, and overall financial condition. Climate change and evolving regulations could adversely impact our business. Our operations depend heavily on access to reliable and cost-effective electricity.
Any of the foregoing could have a material adverse effect on our results of operations and financial condition. 33 We could incur significant costs related to environmental matters, including from government regulation, private litigation, and existing conditions at some of our properties.
Any of the foregoing could have a material adverse effect on our results of operations and financial condition. We could incur significant costs related to environmental matters, including from government regulation, private litigation, and existing conditions at some of our properties.
Such developments could adversely affect our profit margins and financial position, leading to a negative impact on our revenue and operating results. 30 Failure to attract, grow and retain a diverse and balanced customer base, including key magnet customers, could harm our business and operating results.
Such developments could adversely affect our profit margins and financial position, leading to a negative impact on our revenue and operating results. Failure to attract, grow and retain a diverse and balanced customer base, including key magnet customers, could harm our business and operating results.
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.
The Office of Foreign 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.
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.
Any of these issues—supply failures, price increases, or contract imbalances—could materially affect our business, operations, and financial results. 31 Table of Contents 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.
Due to the termination of the HPE Agreement, we reduced our prepaid assets and other long-term assets by approximately $8.6 million, increased termination liability by approximately $20.0 million and recorded a loss on contract of approximately $28.6 million for the year ended December 31, 2024 to account for the termination and our contractual payments.
Due to the termination of the HPE Agreement, prepaid assets and other long-term assets were reduced by approximately $8.6 million, increased termination liability by approximately $20.0 million and recorded a loss on contract of approximately $28.6 million for the year ended December 31, 2024 to account for the termination and our contractual payments.
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.
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, Navitas, Galaxy and Generate or any future partnerships, must be well-managed to avoid harming our operations or results.
We have concentrated our operations and, thus, are particularly exposed to changes in the regulatory environment, market conditions and natural disasters in the state of Texas where our data centers are located. We currently operate data centers in Texas, which generated the majority of our revenue in both 2023 and 2024.
We have concentrated our operations and, thus, are particularly exposed to changes in the regulatory environment, market conditions and natural disasters in the state of Texas where our data centers are located. We currently operate data centers in Texas, which generated the majority of our revenue in both 2024 and 2025.
Our inability to successfully execute and manage our joint venture/joint owner/strategic partner arrangements could also significantly impact our expansion strategy as we are heavily dependent on these arrangements to finance the expansion of our operations . We may not be able to timely complete our future strategic growth initiatives or within our anticipated costs estimates, if at all.
Our inability to successfully execute and manage our joint venture/joint owner/strategic partner arrangements could also significantly impact our expansion strategy as we are heavily dependent on these arrangements to finance the expansion of our operations . 21 Table of Contents We may not be able to timely complete our future strategic growth initiatives or within our anticipated costs estimates, if at all.
U.S. environmental laws, like Comprehensive Environmental Response, Compensation, and Liability Act of 1980, can hold current or past property owners liable for contamination, regardless of fault, and these costs can be significant. That said, we typically conduct environmental assessments on our project sites, and to date, we have not identified any material issues.
U.S. environmental laws, like 33 Table of Contents Comprehensive Environmental Response, Compensation, and Liability Act of 1980, can hold current or past property owners liable for contamination, regardless of fault, and these costs can be significant. That said, we typically conduct environmental assessments on our project sites, and to date, we have not identified any material issues.
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.
If the aggregate computing power or hash 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.
Upon liquidation, dissolution or winding up of our affairs, the holders of shares of our Series A Preferred Stock are entitled to receive a liquidation preference of the stated value per share of $25 and the holders of shares of our Series B Preferred Stock are entitled to receive a liquidation preference of the stated value per share of $100, plus all accrued but unpaid dividends, prior and in preference to any distribution to the holders of shares of our common stock or any other class of our equity securities junior to the Preferred Stock.
Upon liquidation, dissolution or winding up of our affairs, the holders of shares of our Series A Preferred Stock are entitled to receive a liquidation preference of the stated value per share of $25 and the holders of shares of our Series B Preferred Stock are entitled to receive a liquidation preference of the stated value per share of $100, plus all accrued but unpaid dividends, prior and in preference to any 39 Table of Contents distribution to the holders of shares of our common stock or any other class of our equity securities junior to the Preferred Stock.
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.
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 32 Table of Contents unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all.
In accordance with the terms of the HPE Agreement, upon our notice of termination for convenience, our obligations under the HPE Agreement accelerated and the remaining payments of $19.3 million owed by us became immediately due and payable, including all upfront payments and monthly charges, plus any fees incurred for the terminated Services (as defined in the HPE Agreement).
In accordance with the terms of the HPE Agreement, upon our notice of termination for convenience, the obligations under the HPE Agreement accelerated and the remaining payments of $19.3 million became immediately due and payable, including all upfront payments and monthly charges, plus any fees incurred for the terminated Services (as defined in the HPE Agreement).
Sales of a substantial number of shares of our common stock in the public market or other issuances of shares of our common stock, or the perception that these sales or issuances could occur, could cause the market price of our common stock to decline and may make it more difficult for you to sell your shares at a time and price that you deem appropriate.
Sales of a substantial number of shares of our common stock in the public market or other issuances of shares of our common stock, 40 Table of Contents or the perception that these sales or issuances could occur, could cause the market price of our common stock to decline and may make it more difficult for you to sell your shares at a time and price that you deem appropriate.
Summary Risk Factors ● Our recurring losses from operations have raised substantial doubt regarding our ability to continue as a going concern, and we will require additional capital to support our business and objectives and grow our business. ● We have a limited operating history, and we may not recognize operating income in the future. ● We have financed our strategic growth primarily by issuing new shares of our common stock in public offerings and the issuance of debt, and plan to raise additional capital through similar offerings in the future, and our inability to do so on favorable terms may adversely affect our operations and the market price of our securities. ● If we cannot achieve or maintain profitability, stockholders could lose all or part of their investment. ● Our level of existing debt may negatively impact our liquidity, restrict our operations and ability to respond to business opportunities, and increase our vulnerability to adverse economic and industry conditions. ● We may be unable to meet our remaining obligations under the terminated HPE Agreement (as defined below) which could lead to a default under that agreement. ● Joint ventures, joint ownership and strategic partner arrangements and other projects pose unique challenges, and we may not be able to fully implement or realize synergies, expected returns or other anticipated benefits associated with such projects. ● We may not be able to timely complete our future strategic growth initiatives or within our anticipated costs estimates, if at all. ● 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. ● We are subject to risks associated with our need for significant electrical power. ● Global economic and geopolitical events, policies and conflicts may adversely affect our business, financial condition and results of operations. ● 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. ● If we fail to effectively manage our growth, our business, financial condition, and results of operations could be harmed. ● Our new services and changes to existing services could fail to attract or retain users or generate revenue and profits, or otherwise adversely affect our business. ● We have concentrated our operations and, thus, are particularly exposed to changes in the regulatory environment, market conditions and natural disasters in the state of Texas where our data centers are located. ● Our success depends on external factors affecting the Bitcoin industry. ● Our profitability depends on Bitcoin prices and the stability of Digital Asset markets, which are highly volatile and largely unregulated. 15 ● 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. ● Security breaches and irreversible transactions could result in the loss of our cryptocurrencies. ● Uncertainty around the adoption, use, and global demand for cryptocurrencies could adversely affect our business. ● 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. ● Our data center business could be harmed by prolonged power outages, power and fuel shortages, capacity constraints and increases in power costs. ● 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. ● Our reliance on a third-party pool service provider for our mining revenue payouts may have a negative impact on our operations.
Summary Risk Factors • Our recurring losses from operations will require additional capital to support our business and objectives and grow our business. • We have a limited operating history, and we may not recognize operating income in the future. • We have financed our strategic growth primarily by issuing new shares of our common stock in public offerings and the issuance of debt, and plan to raise additional capital through similar offerings in the future, and our inability to do so on favorable terms may adversely affect our operations and the market price of our securities. • If we cannot achieve or maintain profitability, stockholders could lose all or part of their investment. • Our level of existing debt may negatively impact our liquidity, restrict our operations and ability to respond to business opportunities, and increase our vulnerability to adverse economic and industry conditions. • We may be unable to meet our remaining obligations under the terminated HPE Agreement (as defined below) which could lead to a default under that agreement. • Joint ventures, joint ownership and strategic partner arrangements and other projects pose unique challenges, and we may not be able to fully implement or realize synergies, expected returns or other anticipated benefits associated with such projects. • We may not be able to timely complete our future strategic growth initiatives or within our anticipated costs estimates, if at all. • 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. • We are subject to risks associated with our need for significant electrical power. • Global economic and geopolitical events, policies and conflicts may adversely affect our business, financial condition and results of operations. • 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. • If we fail to effectively manage our growth, our business, financial condition, and results of operations could be harmed. • Our new services and changes to existing services could fail to attract or retain users or generate revenue and profits, or otherwise adversely affect our business. • We have concentrated our operations and, thus, are particularly exposed to changes in the regulatory environment, market conditions and natural disasters in the state of Texas where our data centers are located. 17 Table of Contents • Our success depends on external factors affecting the Bitcoin industry. • Our profitability depends in-part on Bitcoin prices and the stability of Digital Asset markets, which are highly volatile and largely unregulated. • 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. • Security breaches and irreversible transactions could result in the loss of our cryptocurrencies. • Uncertainty around the adoption, use, and global demand for cryptocurrencies could adversely affect our business. • 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. • Our data center business could be harmed by prolonged power outages, power and fuel shortages, capacity constraints and increases in power costs. • Our reliance on a third-party pool service provider for our mining revenue payouts may have a negative impact on our operations.
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.
Even well-intentioned or positive regulatory initiatives could have unintended consequences that negatively affect our operations, financial condition, or growth prospects. 25 Table of Contents 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.
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.
Furthermore, we and many other Bitcoin miners 27 Table of Contents 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.
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.
The concentration of our customer base increases risks related to the financial condition of our 30 Table of Contents 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.
While we believe our current offerings—including Bitcoin hosting, renewable energy curtailment, demand response services, and GPU-as-a-Service —do not infringe on others’ intellectual property, there is a risk that third parties could claim otherwise.
While we believe our current offerings—including Bitcoin hosting, renewable energy curtailment, and demand response services—do not infringe on others’ intellectual property, there is a risk that third parties could claim otherwise.
There is no guarantee that any acquisition or alliance will achieve its intended goals or deliver the expected return, and differences in cost structures could cause fluctuations in our financial performance. We are subject to risks associated with our need for significant electrical power.
There is no guarantee that any acquisition or alliance will achieve its intended goals or deliver the expected return, and differences in cost structures could cause fluctuations in our financial performance. 22 Table of Contents We are subject to risks associated with our need for significant electrical power.
Furthermore, as we engage in debt financing, in the event of bankruptcy, the holders of any debt we issue would likely have priority over the holders of shares of our common stock in terms of order of payment preference.
Furthermore, as we engage 19 Table of Contents in debt financing, in the event of bankruptcy, the holders of any debt we issue would likely have priority over the holders of shares of our common stock in terms of order of payment preference.
In January 2025, President Trump issued an executive order to create a federal framework for digital assets, and Congress has formed bipartisan working groups to pursue legislation on the topic. Discussions have included creating a national digital asset reserve that could include Bitcoin, and multiple states have proposed similar reserves.
In January 2025, President Trump issued an executive order to create a federal framework for digital assets, and Congress has formed bipartisan working groups to pursue legislation on the topic. Discussions have included creating a national digital asset reserve that could include Bitcoin, and multiple states have proposed similar reserves. Additionally, in March 2025, the U.S. established the U.S.
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.
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 as we expand our business to implement our strategy to move into the cloud service business and HPC/AI hosting business.
Such circumstances could have a material adverse effect on our business, prospects, or operations. Our new services and changes to existing services could fail to attract or retain users or generate revenue and profits, or otherwise adversely affect our business.
Such circumstances could have a material adverse effect on our business, prospects, or operations. 23 Table of Contents Our new services and changes to existing services could fail to attract or retain users or generate revenue and profits, or otherwise adversely affect our business.
The regulatory environment for cryptocurrencies is evolving and uncertain. Governments around the world have taken varied approaches—some banning cryptocurrencies entirely, others permitting them with little restriction, and many (including the U.S.) applying complex and changing rules to mining, ownership, and trading. In the U.S., regulatory momentum has increased.
Governments around the world have taken varied approaches—some banning cryptocurrencies entirely, others permitting them with little restriction, and many (including the U.S.) applying complex and changing rules to mining, ownership, and trading. In the U.S., regulatory momentum has increased.
Our 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.
Our 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.
Attending to such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability or require us to change our business practices.
Attending to such matters can be time-consuming, divert management’s attention and resources, cause us to incur 36 Table of Contents significant expenses or liability or require us to change our business practices.
Therefore, our mining and hosting operations focus primarily on mining Bitcoin, and our revenue is largely based on the value of Bitcoin.
Therefore, our mining and hosting operations focus primarily on mining Bitcoin, and our 26 Table of Contents revenue is largely based on the value of Bitcoin.
Under the HPE Agreement, we agreed to pay HPE an aggregate of $34 million payable over 36 months beginning June 2024, with $10.3 million pre-paid in June 2024 at contract execution and monthly payments of $667 thousand due until June 2027.
(“CloudCo”), and HPE (together with the associated Statement of Work, the “HPE Agreement”). Under the HPE Agreement, we agreed to pay HPE an aggregate of $34 million payable over 36 months beginning June 2024, with $10.3 million pre-paid in June 2024 at contract execution and monthly payments of $667 thousand due until June 2027.
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 have 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 our business is subject to all the risks inherent in a business with limited operating history in a rapidly developing and changing industry.
The same may be true in the case of our hosted customers. ● Declining block rewards, reliance on transaction fees, and network forks could adversely affect our mining operations. ● Climate change and evolving regulations could adversely impact our business. ● We may be affected by price fluctuations in the wholesale and retail power markets. ● The development and acceptance of competing blockchain platforms or technologies may cause consumers to use alternative distributed ledgers or other alternatives. ● Our business has and is expected to continue to have significant customer concentration. ● Failure to attract, grow and retain a diverse and balanced customer base, including key magnet customers, could harm our business and operating results. ● 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 depend upon third-party suppliers for power, and we are vulnerable to service failures and price increases by such suppliers and to volatility in the supply and price of power in the open market. ● Our business model depends upon the demand for data centers. ● Insiders continue to have substantial control over the Company. ● We are subject to complex environmental, health and safety laws and regulations that may expose us to significant liabilities for penalties, damages or costs of remediation or compliance. ● Provisions in our Articles (as defined below), our Bylaws (as defined below), and Nevada law may discourage a takeover attempt even if a takeover might be beneficial to our stockholders. 16 ● 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. ● We incur significant costs as a result of operating as a public company. ● We may become involved in litigation arising in the ordinary course of our business that may materially adversely affect us. ● The market price of our securities is likely to be volatile, which may cause investment losses for our shareholders. ● Because there has been limited precedent set for financial accounting of Bitcoin and other cryptocurrency assets, the determination that we have made for how to account for cryptocurrency assets transactions may be subject to change. ● 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. ● Substantial blocks of our common stock may be sold into the market as a result of our being party to the SEPA and you may experience immediate and substantial dilution in the net tangible book value per share of our common stock. ● It is not possible to predict the actual number of shares we will sell under the SEPA, or the actual gross proceeds resulting from those sales.
The same may be true in the case of our hosted customers. • Declining block rewards, reliance on transaction fees, and network forks could adversely affect our mining operations. • Climate change and evolving regulations could adversely impact our business. • We may be affected by price fluctuations in the wholesale and retail power markets. • The development and acceptance of competing blockchain platforms or technologies may cause consumers to use alternative distributed ledgers or other alternatives. • We may be unable to secure, develop, finance, construct, commission and operate HPC and AI data center projects on the timetable or economics we expect. • Our HPC and AI data center business is subject to rapid changes in customer requirements, technology standards and infrastructure design, which may increase costs, delay development or make our facilities less competitive. • We may be unable to procure, install or integrate specialized equipment required for HPC and AI workloads, including electrical, cooling, networking and other long-lead-time components, on acceptable terms or at all. • Tariffs, trade restrictions, import duties, export controls and other changes in trade policy may increase our capital costs, disrupt our supply chain and adversely affect the development and operation of our data centers.. • Our business has and is expected to continue to have significant customer concentration. • Failure to attract, grow and retain a diverse and balanced customer base, including key magnet customers, could harm our business and operating results. • 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 depend upon third-party suppliers for power, and we are vulnerable to service failures and price increases by such suppliers and to volatility in the supply and price of power in the open market. • Our business model depends upon the demand for data centers. • Insiders continue to have substantial control over the Company. • We are subject to complex environmental, health and safety laws and regulations that may expose us to significant liabilities for penalties, damages or costs of remediation or compliance. • Provisions in our Articles (as defined below), our Bylaws (as defined below), and Nevada law may discourage a takeover attempt even if a takeover might be beneficial to our stockholders. • 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. • We incur significant costs as a result of operating as a public company. • We may become involved in litigation arising in the ordinary course of our business that may materially adversely affect us. • The market price of our securities is likely to be volatile, which may cause investment losses for our shareholders. • Because there has been limited precedent set for financial accounting of Bitcoin and other cryptocurrency assets, the determination that we have made for how to account for cryptocurrency assets transactions may be subject to change. • 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. • Substantial blocks of our common stock may be sold into the market as a result of our being party to the SEPA (as defined below) and you may experience immediate and substantial dilution in the net tangible book value per share of our common stock. 18 Table of Contents • It is not possible to predict the actual number of shares we will sell under the SEPA, or the actual gross proceeds resulting from those sales.
From time to time, and as we expand our operations into the cloud and HPC/AI hosting business, we may be involved in strategic joint ventures and other joint ownership and strategic partnership arrangements. As of December 31, 2024, we had two primary project-level partners: SLC and Navitas.
From time to time, and as we expand our operations into the cloud and HPC/AI hosting business, we may be involved in strategic joint ventures and other joint ownership and strategic partnership arrangements. As of December 31, 2025, we had four primary project-level capital partners: SLC (equity), Navitas (equity), Galaxy (debt) and Generate (debt).
These broad market fluctuations may adversely affect the market price of our securities. Finally, our relatively small public float and daily trading volume have in the past caused, and may in the future result in, significant volatility in the price of our securities.
Finally, our relatively small public float and daily trading volume have in the past caused, and may in the future result in, significant volatility in the price of our securities.
Although we were able to quickly address the loss of this customer without a substantial impact on our revenue, there can be no assurance that if we lose a major customer in the future, we will be able to successfully replace such customer in a timely manner, or at all, without any significant impact to our results of operations.
There can be no assurance that if we lose a major customer in the future, we will be able to successfully replace such customer in a timely manner, or at all, without any significant impact to our results of operations.
Insiders continue to have substantial control over the Company. As of December 31, 2024, the Company’s directors and executive officers held the current right to vote approximately 28% of the Company’s outstanding voting stock.
Insiders continue to have substantial control over the Company. As of December 31, 2025, the Company’s directors and executive officers held the current right to vote approximat ely 23% of the Company’s outstanding voting stock.
We also provide guarantees for certain subsidiary debts. If called upon, we may need to cover those obligations, which could impact our cash position and require us to seek additional funding—potentially on unfavorable terms. To manage our debt, we may pursue refinancing options, which could include issuing new shares or convertible securities.
If called upon, we may need to cover those obligations, which could impact our cash position and require us to seek additional funding—potentially on unfavorable terms. 20 Table of Contents To manage our debt, we may pursue refinancing options, which could include issuing new shares or convertible securities.
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.
All construction-related projects depend on the skill, experience, and attentiveness of our personnel throughout the design and construction process. 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 obligations to the holders of Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.
Our obligations to the holders of Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition. The preferential rights could also result in divergent interests between the holders of Preferred Stock and holders of our common stock.
Among other things, we are required to: ● maintain and evaluate a system of internal controls over financial reporting in compliance with the requirements of Section 404(a) of the Sarbanes-Oxley Act and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board; ● maintain policies relating to disclosure controls and procedures; ● prepare and distribute periodic reports in compliance with our obligations under federal securities laws; institute a more comprehensive compliance function, including with respect to corporate governance; and ● involve, to a greater degree, our outside legal counsel, and accountants in the above activities. 36 The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders is expensive and compliance with these rules and regulations involves a material increase in regulatory, legal, and accounting expenses and the attention of our board of directors and management.
Among other things, we are required to: • maintain and evaluate a system of internal controls over financial reporting in compliance with the requirements of Section 404(a) of the Sarbanes-Oxley Act and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board; • maintain policies relating to disclosure controls and procedures; • prepare and distribute periodic reports in compliance with our obligations under federal securities laws; institute a more comprehensive compliance function, including with respect to corporate governance; and • involve, to a greater degree, our outside legal counsel, and accountants in the above activities.
Cash dividends have never been declared or paid on our common stock, and we do not anticipate such a declaration or payment for the foreseeable future.
We do not anticipate paying dividends on our common stock, and investors may lose the entire amount of their investment. Cash dividends have never been declared or paid on our common stock, and we do not anticipate such a declaration or payment for the foreseeable future.
As of December 31, 2024, we had approximately 7,646,277 shares of our common stock outstanding held by non-affiliates and 3,161,356 shares of our 9.0% Series A Cumulative Perpetual Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), outstanding held by non-affiliates.
As of December 31, 2025, we had approximately 75,063,284 shares of our common stock outstanding held by non-affiliates and 3,239,854 shares of our 9.0% Series A Cumulative Perpetual Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), outstanding held by non-affiliates.
This could dilute existing stockholders and reduce the market value of our stock. We may be unable to meet our remaining obligations under the terminated HPE Agreement which could lead to a default under that agreement.
This could dilute existing stockholders and reduce the market value of our stock. Soluna AL CloudCo, LLC, a wholly owned subsidiary of Soluna Cloud, Inc. may be unable to meet its remaining obligations under the terminated HPE Agreement which could lead to a default under that agreement.
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 .
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 .
Thus, the Company may not have access to the right to sell the full $25 million of shares of common stock to YA. 41
Thus, the Company may not have access to the right to sell the full $25 million of shares of common stock to YA. Item 1B: Unresolved Staff Comments Not applicable.
We are currently in the process of renegotiating the HPE Agreement, but this is not considered probable to occur. 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.
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.
On March 24, 2025, we notified HPE of our termination of the HPC & AI Cloud Services Agreement and HPE-Soluna Greenlake Statement of Work, dated June 18, 2024, entered into between Soluna AL CloudCo, LLC, a subsidiary of Soluna Cloud (“CloudCo”), and HPE (together with the associated Statement of Work, the “HPE Agreement”).
On March 24, 2025, Soluna AL CloudCo, LLC. notified Hewlett Packard Enterprise Company ("HPE") of its termination of the HPC & AI Cloud Services Agreement and HPE-Soluna Greenlake Statement of Work, dated June 18, 2024, entered into between Soluna AL CloudCo, LLC, a subsidiary of Soluna Cloud, Inc.
For example, assumptions we have made about the regulatory landscape—such as for our Dorothy facility—may change, resulting in unexpected costs or challenges in execution. In Texas, we currently participate in demand response programs to reduce strain on the grid during high-demand periods. While beneficial today, future regulatory changes could impact our ability to participate in or benefit from such programs.
Additionally, future regulatory changes could affect our business planning and capital investment decisions. For example, assumptions we have made about the regulatory landscape—such as for our Dorothy facility—may change, resulting in unexpected costs or challenges in execution. In Texas, we currently participate in demand response programs to reduce 28 Table of Contents strain on the grid during high-demand periods.
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.
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.
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.
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. 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.
This default could result in a range of actions that could include legal or collections actions by HPE against CloudCo, any and all of which could have a material adverse effect on our business, financial condition, and results of operations. 19 We may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness.
This default could result in a range of actions that could include legal or collections actions by HPE against CloudCo, any and all of which could have a material adverse effect on our business, financial condition, and results of operations.
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.
Our daily trading volume for the year ended December 31, 2025, averaged approximately 5,166,232 shares of common stock and 18,012 shares of Series A Preferred Stock.
A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected and corrected on a timely basis. 37 Our management evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15 and 15d-15(e) under the Exchange Act, as of December 31, 2024.
A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected and corrected on a timely basis.
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.
We are also obligated to advance expenses as they are incurred by a director or officer in defending an action or proceeding prior to final disposition upon receipt of an undertaking by the applicable person to repay such advanced amount if the advancement is ultimately found to not be permitted by law or otherwise. 35 Table of Contents 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.
Risks Related to our Company Generally Our business has and is expected to continue to have significant customer concentration . We generate a large portion of our revenue from a small number of customers. If we were to lose one or more of our large customers, our operating results could suffer dramatically.
We generate a large portion of our revenue from a small number of customers. If we were to lose one or more of our large customers, our operating results could suffer dramatically.
Alternatively, in times of global instability or economic downturns, investors may shift away from volatile assets like cryptocurrencies toward more traditional safe-haven investments, weakening demand further.
Alternatively, in times of global instability or economic downturns, investors may shift away from volatile assets like cryptocurrencies toward more traditional safe-haven investments, weakening demand further. Taken together, these factors could materially impact our business, financial condition, and the long-term sustainability of our operations.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2024.
Our management evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15 and 15d-15(e) under the Exchange Act, as of December 31, 2025. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective at a reasonable assurance level as of December 31, 2025.
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.
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.
Our success is closely tied to the health of the Bitcoin market, which is influenced by factors beyond our control.
Risks Related to our Bitcoin Mining and Hosting Business Our success depends on external factors affecting the Bitcoin industry. Our success is closely tied to the health of the Bitcoin market, which is influenced by factors beyond our control.
In addition, Bitcoin has a fixed supply of 21 million coins, with about 19.8 million already mined. As block rewards decline through scheduled “halvings” and eventually phase out, our revenue from mining will increasingly rely on transaction fees. While these fees have grown, there is no guarantee they will be sufficient to support profitability in the long term.
In addition, Bitcoin has a fixed supply of 21 million coins, with about 20.0 million already mined as of December 31, 2025. As block rewards decline through scheduled “halvings” and eventually phase out, our revenue from mining will increasingly rely on transaction fees.
Until such time as we can generate substantial revenue, we expect to finance our working capital requirements through a combination of equity offerings and debt financing.
We anticipate operating losses to continue for the foreseeable future as we grow our business, and it is possible we will never achieve profitability. Until such time as we can generate substantial revenue, we expect to finance our working capital requirements through a combination of equity offerings and debt financing.
There can be no assurance that we will ever operate profitably, and if we do, there can be no assurance that we would be able to maintain profitability.
There can be no assurance that we will ever operate profitably, and if we do, there can be no assurance that we would be able to maintain profitability. If we cannot achieve or maintain profitability, our stockholders could lose all or a part of their investment.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of investors, resulting in a decline in the market price of our common stock.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of investors, resulting in a decline in the market price of our common stock. 37 Table of Contents Public health crises, such as pandemics, epidemics, or widespread outbreaks of infectious disease, have had, and could in the future have, an adverse effect on our business, financial condition, and results of operations.
If Texas were to change its policies, increase taxes, or reduce its support for Bitcoin mining, our concentration in the state could significantly affect our business, financial condition, and results of operations. 22 Risks Related to our Bitcoin Mining and Hosting Business Our success depends on external factors affecting the Bitcoin industry.
This has led to delays for some miners in getting energized, and we could face similar delays in the future. If Texas were to change its policies, increase taxes, or reduce its support for Bitcoin mining, our concentration in the state could significantly affect our business, financial condition, and results of operations.
Future pandemics and similar events could materially increase our costs, severely negatively impact business development, net income, and other results of operations, and impact our liquidity position.
Future pandemics and similar events could materially increase our costs, severely negatively impact business development, net income, and other results of operations, and impact our liquidity position. The duration of any such impacts cannot be predicted, and such impacts may also have the effect of heightening many of the other material risks we face.
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.
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. In addition, increased labor costs and the unavailability of skilled workers could hurt our business, financial condition, and results of operations.
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.
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. We currently rely on Luxor’s mining pool that supports Bitcoin to receive our mining rewards and fees from the network.
Over the past year, the market prices for power have generally been increasing, driven in part by the price increases in various commodities, including natural gas.
Furthermore, a portion of our power and hosting arrangements includes merchant power prices, or power prices reflecting market movements. Market prices for power, generation capacity and ancillary services are unpredictable. Over the past year, the market prices for power have generally been increasing, driven in part by the price increases in various commodities, including natural gas.
We currently use debt as part of our capital structure and may take on more debt in the future. On June 20, 2024, we issued a $12.5 million secured promissory note, with approximately $11.8 million of principal outstanding as of December 31, 2024. This note, along with accrued interest, is due on June 20, 2027 .
On June 20, 2024, we issued a $12.5 million secured promissory note, with approximately $7.8 million of principal outstanding as of December 31, 2025. This note, along with accrued interest, is due on June 20, 2027. On March 12, 2025, Soluna SW, LLC, a subsidiary of Soluna Digital, Inc.
Our ability to achieve and maintain profitability is closely tied to the market price of Bitcoin, which has historically been highly volatile and influenced by factors beyond our control. These include market speculation, global economic and political events, regulatory changes, energy prices, activity by large holders (“whales”), and technical or operational issues at major exchanges.
Our ability to achieve and maintain profitability is closely tied to the market price of Bitcoin, which has historically been highly volatile and influenced by factors beyond our control.
Risks Relating to the Company and its Growth Strategy Our recurring losses from operations have raised substantial doubt regarding our ability to continue as a going concern, and we will require additional capital to support our business and objectives and grow our business.
Risks Relating to the Company and its Growth Strategy Our recurring losses from operations will require additional capital to support our business and objectives and grow our business. We have incurred recurring losses since inception and, as of December 31, 2025, had an accumulated deficit of approximately $367.7 million.
If we cannot achieve or maintain profitability, our stockholders could lose all or a part of their investment. 18 Our level of existing debt may negatively impact our liquidity, restrict our operations and ability to respond to business opportunities, and increase our vulnerability to adverse economic and industry conditions.
Our level of existing debt may negatively impact our liquidity, restrict our operations and ability to respond to business opportunities, and increase our vulnerability to adverse economic and industry conditions. We currently use debt as part of our capital structure and may take on more debt in the future.
(“SSW”), entered into a $5 million term loan with Galaxy Digital LLC under a loan agreement that matures on March 12, 2030. Our current level of debt could limit our flexibility and pose risks to our business.
(“SSW”), entered into a $5 million term loan with Galaxy Digital LLC under a loan agreement that matures on March 12, 2030, with approximately $4.6 million of principal outstanding as of December 31, 2025.
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.
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. The regulatory environment for cryptocurrencies is evolving and uncertain.
The duration of any such impacts cannot be predicted, and such impacts may also have the effect of heightening many of the other material risks we face. 38 Changes in accounting rules and regulations, or interpretations thereof, could result in unfavorable accounting charges or require us to change our compensation policies.
Changes in accounting rules and regulations, or interpretations thereof, could result in unfavorable accounting charges or require us to change our compensation policies.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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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.
Governance Under the direction of the Company’s VP of Engineering and Director of Information Technology, with oversight from the Board, we maintain a security governance structure to evaluate and address cyber risk. The VP of Engineering and the Director of 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. The Director of IT regularly oversees the Company’s cybersecurity program.
Our VP of Engineering 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.
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 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.
We have invested in IT security, encompassing various strategies such as enhanced end-user training, implementing layered defense systems, identifying and safeguarding critical assets, bolstering monitoring and alert capabilities, and consulting with expert advisors. On the management front, our IT security team diligently oversees alert systems and routinely convenes to evaluate current threat levels, analyze trends, and strategize effective remediation methods.
We have invested in IT security, encompassing various strategies such as enhanced end-user training, implementing layered defense systems, identifying and safeguarding critical assets, bolstering monitoring and alert capabilities, and consulting with expert advisors.
In addition to assessing our own cybersecurity preparedness, we also consider and evaluate cybersecurity risks associated with the use of third-party vendors and service providers. The internal business owners of the hosted applications are required to review user access at least annually and provide a System and Organization Controls (“SOC”) 1 or SOC 2 report from the vendor.
The internal business owners of the hosted applications are required to review user access at least annually and provide a System and Organization Controls (“SOC”) 1 or SOC 2 report from the vendor.
Added
On the management front, our IT security team diligently oversees alert systems and routinely convenes to evaluate current threat levels, analyze trends, and strategize effective remediation methods. 41 Table of Contents In addition to assessing our own cybersecurity preparedness, we also consider and evaluate cybersecurity risks associated with the use of third-party vendors and service providers.
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The internal IT team also subscribes to various threat intelligence services to evaluate our security strategy or defense mechanism against such threats.

Item 2. Properties

Properties — owned and leased real estate

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On March 4, 2021, SSW acquired a 3.2-acre tract of real property located in Murray, Kentucky on which it has built an energy-efficient cryptocurrency mining facility, Project Sophie, that includes 22 buildings for data facility hosting or mining. On February 24, 2023, DVSV entered into a lease agreement for a 33.19-acre tract of land in Silverton, Texas.
On March 4, 2021, Soluna SW, LLC acquired a 3.2-acre tract of real property located in Murray, Kentucky on which it has built an energy-efficient cryptocurrency mining facility, Project Sophie, that includes 22 buildings for data facility hosting. On February 24, 2023, Soluna DV Services, LLC entered into a lease agreement for a 33.19-acre tract of land in Silverton, Texas.
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.
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.
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.
The agreement has an initial five-year term with the right to extend the term of the agreement for five additional one-year terms. The lease is associated with our Dorothy facilities for the purpose of constructing, installing, operating and maintaining modular data centers.
Added
On April 3, 2025, Soluna KK Energy ServiceCo, LLC entered into a lease agreement for 50 acres of property located in Willacy County, Texas, for the purpose of constructing, installing, operating, and maintaining modular data centers and related facilities for a term of twenty-two years. This leased agreement will be used for Project Kati 1.
Added
On October 1, 2025, Soluna KK Energy ServiceCo, LLC purchased 50 acres of property located in Willacy County, Texas for the purpose of constructing, installing, operating, and maintaining modular data centers and related facilities. This purchase of land will be used for Project Kati 2.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Item 3: Legal Proceedings At any point in time, we may be involved in various lawsuits or other legal proceedings. Such lawsuits could arise from the sale of products or services or from other matters relating to our regular business activities, compliance with various governmental regulations and requirements, or other transactions or circumstances.
Such lawsuits could arise from the sale of products or services or from other matters relating to our regular business activities, compliance with various governmental regulations and requirements, or other transactions or circumstances. 42 Table of Contents Item 4: Mine Safety Disclosures Not applicable. 43 Table of Contents PART II
Removed
On 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.
Added
Item 3: Legal Proceedings At any point in time, we may be involved in various lawsuits or other legal proceedings.
Removed
On February 23, 2023, NYDIG proceeded to foreclose on all of the collateral securing the MEFA and repossessed the collateralized assets.
Removed
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.
Removed
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
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
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
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.
Removed
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.
Removed
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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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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.
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 375,000,000 shares of common stock.
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.
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. Item 6: [Reserved].
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.
Dividends As of December 31, 2025, we had 4,928,545 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.
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.
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 through December 31, 2025.
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.
As such, we have accumulated approximately $1.6 million 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.
The number of shareholders of record does not reflect the number of persons whose shares are held in nominee or “street” name accounts through brokers.
The number of sha reholders of record does not reflect the number of persons whose shares are held in nominee or “street” name accounts through brokers.
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.
Our board of directors had not declared any Series A Preferred Stock dividends beginning October 2022 through December 31, 2024, as such the Company has accumulated approximately $18.5 million of dividends in arrears on the Series A Preferred Stock through December 31, 2024, and an additional $11.1 million of dividends in arrears for the year ended December 31, 2025, for a total of approximately $29.6 million.
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.
Each share of our common stock is entitled to one vote on all matters submitted to shareholders. As of December 31, 2025, there were 102,531,089 shares of common stock issued and outstanding. As of March 9, 2026, there were approximately 123 shareholders of record of our common stock.

Item 7. Management's Discussion & Analysis

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

64 edited+87 added−74 removed53 unchanged
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.
Accordingly, the Company recognizes monthly revenue based on the proportion of committed stand-ready capacity obligation that has been fulfilled to date. 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.
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 valuation provisions apply to new awards and to awards that are outstanding on the effective date and subsequently modified. 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.
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.
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), which was recorded as a deferred tax liability and this amount will be amortized over the life of the asset.
The Soluna CloudCo Secured Note accrues interest at a rate 9.0% per annum, subject to adjustment upon an event of default. The Soluna CloudCo Secured Note matures on June 20, 2027. On July 12, 2024, the Company, CloudCo, Soluna Cloud, and the Existing Investor entered into a First Amendment to the Note Purchase Agreement.
The Green Cloud Secured Note accrues interest at a rate 9.0% per annum, subject to adjustment upon an event of default. The Green Cloud Secured Note matures on June 20, 2027. On July 12, 2024, the Company, CloudCo, Soluna Cloud, and the Investor entered into a First Amendment to the Note Purchase Agreement.
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.
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.
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.
Depreciation and Amortization associated with general and administrative expenses: Depreciation and amortization expense was comparable for the year ended December 31, 2025 and the year ended December 31, 2024 in which the balances totaled approximately $9.6 million and $9.6 million, respectively. The balances mainly related to amortization expense related to the strategic pipeline contract that was acquired in October 2021.
The change in assets and liabilities is mainly due to an increase in prepaid expenses and other long term assets by $8.1 million due to a prepayment of an arrangement with HPE of $10.3 million that was being amortized over the life of the agreement and a decrease in customer deposits of $1.4 million due to timing of deposits applied in December 2024, offset by an increase in accrued expenses and accounts payable of approximately $5.5 million in relation to NYDIG interest, and related bills associated with Project Dorothy 2 and Project Kati.
The change in assets and liabilities is mainly due to an increase in prepaid expenses and other long term assets by $8.1 million due to a prepayment of an arrangement with HPE of $10.3 million that was being amortized over the life of the agreement and a decrease in customer deposits and other liabilities of $1.7 million due to timing of deposits applied in December 2024, offset by an increase in accrued expenses and accounts payable of approximately $5.5 million in relation to NYDIG interest, and related bills associated with D2 and Project Kati.
Loss on contract: Due to CloudCo’s termination of the HPE Agreement on March 24, 2025, and HPE’s subsequent termination of the HPE Agreement on March 26, 2025, and the acceleration of the remaining unpaid amounts of the contract in accordance with Section 8(h)(ii) of the HPE Agreement, a Type 1 Subsequent Event, we have recognized a liability for the remainder of the HPE Agreement on the consolidated balance sheet of our subsidiary CloudCo, and corresponding loss on contract on our consolidated income statement, in line with the terms and conditions of the HPE Agreement and relevant accounting standards.
Loss on contract: Due to CloudCo’s termination of the HPE Agreement on March 24, 2025, and HPE’s subsequent termination of the HPE Agreement on March 26, 2025, and the acceleration of the remaining unpaid amounts of the contract in accordance with Section 8(h)(ii) of the HPE Agreement, a Type 1 Subsequent Event for the year ended December 31, 2024, we have recognized a liability for the remainder of the HPE Agreement on the consolidated balance sheet of our subsidiary CloudCo, and corresponding loss on contract on our consolidated income statement, in line with the terms and conditions of the HPE Agreement and relevant accounting standards.
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.
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, $1.6 million of loss on debt extinguishment and revaluation, $5.7 million in fair value adjustment losses, $2.0 million in debt issuance costs, $760 thousand in provision for credit losses, and $351 thousand amortized deferred financing costs.
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.
As of December 31, 2025, and 2024, 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. 63 Table of Contents Share-Based Payments We award restricted stock to our employees and directors under the 2021 Plan and the Soluna Holdings, Inc.
Developments in an audit, litigation, or in applicable laws, regulations, administrative practices, principles, and interpretations could have a material effect on our operating results or cash flows in the period or periods in which such developments occur, as well as for prior and in subsequent periods.
Developments in an audit, litigation, or in applicable laws, regulations, administrative practices, 64 Table of Contents principles, and interpretations could have a material effect on our operating results or cash flows in the period or periods in which such developments occur, as well as for prior and in subsequent periods.
“Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation costs, loss on sale of fixed assets, loss on debt extinguishment and revaluation, placement agent release expense, loss on contract, provision for credit losses, convertible note inducement expense and impairment on fixed assets .
“Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation costs, loss on sale of fixed assets and credit on deposit, loss on debt extinguishment and revaluation, fair value adjustments, placement agent release expense, loss on contract, provision for credit losses, convertible note inducement expense and impairment on fixed assets.
If the Company is unable to meet its financial obligations, it could be forced to restructure or refinance, seek additional equity capital or sell its assets. The Company might then be unable to obtain such financing or capital or sell its assets on satisfactory terms.
If the Company is unable to meet its financial obligations, it could be forced to restructure or refinance, seek additional equity 57 Table of Contents capital or sell its assets. The Company might then be unable to obtain such financing or capital or sell its assets on satisfactory terms.
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.
As of December 31, 2025, we had $76.4 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.
The Equipment Loan Agreement provides for Borrower to borrow, from time to time, up to $1.0 million, and further amended on February 28, 2025 to $4.0 million to be used to purchase necessary equipment for the progression of Project Dorothy 2 and Project Kati.
The Equipment Loan Agreement provides for the SDI Borrower to borrow, from time to time, up to $4.0 million , as further amended on February 28, 2025, to be used to purchase necessary equipment for the progression of D2 and Project Kati.
June SPA Modification On June 20, 2024, pursuant to the terms and subject to the conditions of a Note Purchase Agreement (the “June SPA”) by and among (i) Soluna AL CloudCo, LLC, a Delaware limited liability company (“CloudCo”), and indirect wholly owned subsidiary of the Company, (ii) Soluna Cloud, Inc., a Nevada corporation, indirect wholly owned subsidiary of the Company, and parent of CloudCo (“Soluna Cloud”), (iii) the Company and (iv) the accredited investor named therein (the “Investor” and collectively, the “Note Parties), CloudCo issued to the Investor a secured promissory note in a principal amount equal to $12.5 million (the “Note”).
On June 20, 2024, pursuant to the terms and subject to the conditions of a Note Purchase Agreement (the "June SPA") by and among (i) Soluna AL CloudCo, LLC, a Delaware limited liability company (" CloudCo") and indirect wholly owned subsidiary of the Company, (ii) Soluna Cloud, Inc., a Nevada corporation, indirect wholly owned subsidiary of the Company, and parent of CloudCo ("Soluna Cloud"), (iii) the Company and (iv) the accredited investor named therein (the "Investor"), CloudCo issued to the Investor a secured promissory note in a principal amount equal to $12.5 million (the “Green Cloud Secured Note”).
The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.
The Company is dependent on generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.
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.
The following table summarizes changes in the various components of our net loss during the year ended December 31, 2025 compared to the year ended December 31, 2024.
Additional Notes were issued for $1,250,000 (“Soluna CloudCo Additional Secured Note”) on July 12, 2024 and are subject to the same terms and conditions as the June SPA financing.
Additional Notes were issued to additional accredited investors (the “Additional Investors”) for $1.25 million (“Soluna CloudCo Additional Secured Note”) on July 12, 2024 and are subject to the same terms and conditions as the June SPA financing.
In addition, due to CloudCo’s termination of the HPE Agreement on March 24, 2025, and HPE’s termination of the HPE Agreement on March 26, 2025, and the acceleration of the remaining unpaid amounts of the contract in accordance with Section 8(h)(ii) of the HPE Agreement, a Type 1 Subsequent Event, we have recognized a liability for the remainder of the HPE Agreement on the balance sheet of our subsidiary, CloudCo, of approximately $20.0 million , net of a prepaid deposit of $8.6 million.
I n addition, due to CloudCo’s termination of the HPE Agreement on March 24, 2025, and HPE’s termination of the HPE Agreement on March 26, 2025, and the acceleration of the remaining unpaid amounts of the contract in accordance with Section 8(h)(ii) of the HPE Agreement, we have recognized a liability for the remainder of the HPE Agreement on the balance sheet of our subsidiary, CloudCo, of approximately $19.3 million.
As of December 31, 2024, we had total debt outstanding of approximately $21.5 million as summarized further below in the Debt table. In addition, we had outstanding commitments related to Soluna Digital Inc. (“SDI”) of approximately $8.5 million in capital expenditures related to Project Dorothy 2.
As of December 31, 2025, we had total debt outstanding of approximately $26.8 million as summarized further below in the Debt table. In addition, we had outstanding commitments related to Soluna Digital Inc. (“SDI”) of approximately $27.0 million in capital expenditures related to Project Kati.
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.
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.
The increase in other expense, net, for the year ended December 31, 2024 was primarily as a result of $1.0 million general release agreement with our former placement agent; approximately $1.9 million in consent fees, waiver fees, and other financing expenses in relation to the SEPA and related consents for the SEPA on October 1, 2024; a conversion debt inducement expense of approximately $388 thousand; and an extension fee expense of approximately $325 thousand, partially offset by a gain on settlement of litigation with Atlas of approximately $254 thousand.
For the year ended December 31, 2024, other financing expense totaled approximately $3.7 million which was comprised primarily of a $1.0 million general release agreement with our former placement agent; approximately $1.9 million in consent fees, waiver fees, and other financing expenses in relation to the SEPA and related consents for the SEPA on October 1, 2024; a conversion debt inducement expense of approximately $388 thousand; and an extension fee expense of approximately $325 thousand.
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.
Income Tax Benefit: Income tax benefit for the year ended December 31, 2025 was approximately $2.3 million, compared to approximately $2.5 million for the year ended December 31, 2024.
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.
Gain (loss) on Debt Extinguishment and Revaluation, net : For the year ended December 31, 2025, we recognized a net gain on extinguishment of debt of approximately $10.7 million.
(Dollars in thousands) Three months ended March 31, 2024 Three months ended June 30, 2024 Three months ended September 30, 2024 Three months ended December 31, 2024 Year ended December 31, 2024 Net loss from continuing operations $ (2,544 ) $ (9,145 ) $ (8,093 ) $ (38,518 ) $ (58,300 ) Interest expense, net 424 449 821 833 2,527 Income tax (benefit) expense from continuing operations (548 ) (649 ) (547 ) (743 ) (2,487 ) Depreciation and amortization 3,926 3,909 3,916 3,889 15,640 EBITDA 1,258 (5,436 ) (3,903 ) (34,539 ) (42,620 ) Adjustments: Non-cash items Stock-based compensation costs 661 1,368 1,257 2,025 5,311 Loss on sale of fixed assets 1 21 - 9 31 Provision for credit losses - 244 367 149 760 Convertible note inducement expense - - - 388 388 Placement agent release expense - - - 1,000 1,000 Loss on contract - - - 28,593 28,593 Impairment on fixed assets 130 - - - 130 Loss on debt extinguishment and revaluation, net 3,097 5,600 (1,203 ) (145 ) 7,349 Adjusted EBITDA $ 5,147 $ 1,797 $ (3,482 ) $ (2,520 ) $ 942 53 The following table represents the EBITDA and Adjusted EBITDA activity between each three-month period from January 1, 2023 through December 31, 2023.
(Dollars in thousands) Three months ended March 31, 2024 Three months ended June 30, 2024 Three months ended September 30, 2024 Three months ended December 31, 2024 Year ended December 31, 2024 Net loss from continuing operations $ (2,544) $ (9,145) $ (8,093) $ (38,518) $ (58,300) Interest expense, net 424 449 821 833 2,527 Income tax (benefit) expense from continuing operations (548) (649) (547) (743) (2,487) Depreciation and amortization 3,926 3,909 3,916 3,889 15,640 EBITDA 1,258 (5,436) (3,903) (34,539) (42,620) Adjustments: Non-cash items Stock-based compensation costs 661 1,368 1,257 2,025 5,311 Loss on sale of fixed assets 1 21 — 9 31 Provision for credit losses — 244 367 149 760 Convertible note inducement expense — — — 388 388 Placement agent release expense — — — 1,000 1,000 Loss on contract — — — 28,593 28,593 Impairment on fixed assets 130 — — — 130 Fair value loss (gain) adjustment 4,333 1,600 (328) 100 5,705 (Gain) loss on debt extinguishment and revaluation, net (1,236) 4,000 (875) (245) 1,644 Adjusted EBITDA $ 5,147 $ 1,797 $ (3,482) $ (2,520) $ 942 Adjusted EBITDA decreased for the year ended December 31, 2025 compared to December 31, 2024 primarily driven by increases in general and administrative expenses, exclusive of depreciation, stock-based compensation costs, and provision for credit losses of approximately $7.4 million for the comparable periods.
The fair value of the modified preferred stock considered the conversion price of the preferred stock, assumption on the lockup expiration date, and closing price of the common stock on the lockup expiration date using daily volatility.
We recorded a deemed dividend between the fair value of the modified preferred stock against the carrying value of the original preferred stock. The fair value of the modified preferred stock considered the conversion price of the preferred stock, assumption on the lockup expiration date, and closing price of the common stock on the lockup expiration date using daily volatility.
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.
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. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Not applicable.
We believe that these non-GAAP financial measures, when considered together with our GAAP financial results, provide management and investors with an additional understanding of our business operating results regarding factors and trends affecting our business and provide a reasonable basis for comparing our ongoing results of operations . 51 These non-GAAP financial measures are provided as supplemental measures to our performance measures calculated in accordance with GAAP and therefore, are not intended to be considered in isolation or as a substitute for comparable GAAP measures.
We believe that these non-GAAP financial measures, when considered together with our GAAP financial results, provide management and investors with an additional understanding of our business operating results regarding factors and trends affecting our business and provide a reasonable basis for comparing our ongoing results of operations .
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.
We had warrants issued during 2024 and 2025 for purposes of equity financing and debt exchanges. Some of the warrants were considered freestanding equity-classified instruments due to their detachable and separately exercisable features and meet the indexation criteria within derivative accounting. Accordingly, those warrants were presented as a component of Stockholders’ Equity in accordance with derivative accounting.
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.
These factors collectively resulted in lower capacity bids and decreased total revenue from curtailment services. 49 Table of Contents 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 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.
Cost of Data Hosting Revenue, exclusive of depreciation: Cost of data hosting revenue includes utility charges, site overhead expenses, and other charges. Cost of data hosting revenue decreased for the year ended December 31, 2025, compared to 2024.
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.
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, 2025 2024 Net loss from continuing operations $ (56,991) $ (58,300) Interest expense 4,835 2,527 Income tax (benefit) expense (2,316) (2,487) Depreciation and amortization 16,345 15,640 EBITDA (38,127) (42,620) Adjustments: Non-cash items Stock-based compensation costs 10,566 5,311 Loss on sale of fixed assets and credit on equipment deposit 1,151 31 (Gain) loss on debt extinguishment and revaluation, net (10,658) 1,644 Placement agent release expense — 1,000 Fair value on placement agent warrant 146 — Fair value adjustment loss 23,681 5,705 Loss on contract — 28,593 Provision for credit losses — 760 Convertible note inducement expense — 388 Impairment on fixed assets 12 130 Adjusted EBITDA $ (13,229) $ 942 54 Table of Contents The following table represents the EBITDA and Adjusted EBITDA activity between each three-month period from January 1, 2025 through December 31, 2025.
We have also recognized a loss on the termination of the HPE Agreement for $28.6 million representing the remaining obligations, and a contract liability in the same amount. In addition, the outstanding balance of the prepaid deposit of $8.6 million was offset to the liability, leaving a net liability balance of $20.0 million as of December 31, 2024.
CloudCo also recognized a loss on the termination of the HPE Agreement for $28.6 million representing the remaining obligations for the year ended December 31, 2024, and a contract liability in the same amount.
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.
On December 20, 2022, Soluna MC Borrowing 2021-1 LLC (“Borrower”), an indirect subsidiary of the Company, received a Notice of Acceleration and Repossession (the “NYDIG Notice”) from NYDIG with respect to the MEFA Obligations under the MEFA were ring-fenced to the Borrower and its direct parent, Soluna MC LLC, and the Company was not party to any guaranty or other support agreement.
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.
Operating Activities Net cash used in operating activities from operations was approximately $9.1 million for the year ended December 31, 2025. We had a net loss of approximately $57.0 million, which was offset by non-cash items of approximately $40.2 million.
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.
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. 53 Table of Contents 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.
As of December 31, 2024, the Company has an outstanding principal balance of approximately $13.0 million in relation to the Soluna CloudCo Secured Note and Soluna CloudCo Additional Secured Note. 56 On January 14, 2022, the Company effected an initial drawdown under the Master Equipment Finance Agreement (“MEFA”) with NYDIG in the aggregate principal amount of approximately $4.6 million that bore interest at 14%.
On January 14, 2022, the Company effected an initial drawdown under the Master Equipment Finance Agreement (“MEFA”) with NYDIG in the aggregate principal amount of approximately $4.6 million at 14% interest, followed by an additional drawdown of $9.8 million on January 26, 2022.
Galaxy Note On March 12, 2025, Soluna SW LLC (the “SW Borrower”), a Delaware limited liability company and a subsidiary of Soluna SW Holdings LLC (“SW Holdings”), a Delaware limited liability company and a subsidiary of Soluna Digital, Inc. (“SDI”), a Nevada corporation and a subsidiary of Soluna Holdings, Inc.
On March 12, 2025, the SW Borrower, a Delaware limited liability company and subsidiary of SW Holdings, itself a subsidiary of SDI, a Nevada corporation and wholly owned subsidiary of the Company, entered into the Galaxy Loan Agreement with SW Holdings and Galaxy Digital LLC.
Cost of High-Performance Computing Services: Cost of high-performance computing services include operating expenses related to high performance computing services. 49 General and Administrative Expenses, exclusive of depreciation and amortization: General and administrative expenses, exclusive of depreciation and amortization include cash and non-cash compensation, benefits, and related costs in support of our general corporate operations, including general management, finance and accounting, human resources, marketing, information technology, corporate development, and legal services. ● We had an increase of approximately $600 thousand in wages, bonus and employee related expenses for the year ended December 31, 2024 compared to the year ended December 31 2023, due to an increase in resources and salaries. ● Stock based compensation expense was $5.2 million in 2024, of which $4.0 million was related to a modification for the cancellation of stock options granted and replaced with new awards of restricted stock in April 2024, which created incremental compensation costs.
General and Administrative Expenses, exclusive of depreciation and amortization: General and administrative expenses, exclusive of depreciation and amortization include cash and non-cash compensation, benefits, and related costs in support of our general corporate operations, including general management, finance and accounting, human resources, marketing, information technology, corporate development, and legal services. . • Stock-based compensation expense increased by $5.2 million to approximately $10.4 million for the year ended December 31, 2025.
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.
For the years ended December 31, 2025 and 2024, we amortized approximately $2.2 million in each year, respectively. Net income attributable to non-controlling interest: We incurred a net loss attributable to non-controlling interest for the year ended December 31, 2025 compared to a net income attributable to non-controlling interest for the year ended December 31, 2024.
The Company believes that an output measure based on the monthly contractual MW stand-ready obligation is the best representation of the “transfer of value” to the customer.
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. The Company believes that an output measure based on the monthly contractual MW stand-ready obligation is the best representation of the “transfer of value” to the customer.
The Term Loan Facility bears interest at 15.0% per annum, unless an Event of Default (as defined therein) has occurred and is continuing, in which case the Galaxy Term Loan Facility shall bear interest at a rate of 5% above the then applicable interest rate.
The Galaxy Loan Agreement provides for a term loan facility in the principal amount of $5.0 million (the “Term Loan Facility”). The Term Loan Facility bears interest at a rate of 15.0% per annum, subject to an increase of 5.0% (for a total of 20.0%) in the event an Event of Default has occurred and is continuing.
We are providing these non-GAAP financial measures to disclose additional information to facilitate the comparison of past and present operations by providing perspective on results absent one-time or significant non-cash items. We utilize these measures in the business planning process to understand expected operating performance and to evaluate results against those expectations.
Non-GAAP Measures To supplement our consolidated financial statements included in this Annual Report presented under U.S. generally accepted accounting principles (“GAAP”), we are presenting certain non-GAAP financial measures. We are providing these non-GAAP financial measures to disclose additional information to facilitate the comparison of past and present operations by providing perspective on results absent one-time or significant non-cash items.
The Convertible Notes were revalued again on September 30, 2024, as a result of which we recorded a gain of approximately $2.3 million due mainly to the change in the price or our common stock offsetting the previous quarter assessments.
The convertible notes were remeasured again as of September 30, 2024, resulting in a gain of approximately $2.3 million, primarily due to the decline in the Company’s stock price, which offset prior-quarter fair value losses.
In addition to the revaluation of the Convertible Notes and warrants, we also recorded an additional loss on debt extinguishment of approximately $1.4 million due to the satisfaction and redemption of the Dorothy 2 equipment loan through issuance of Class B Membership interests in the Dorothy 2 project valued at three times the borrowing amount (i.e., $2.16 million). 50 We incurred a loss on debt extinguishment and revaluation of approximately $3.9 million for the year ended December 31, 2023.
In addition to these fair value adjustments, we recognized a loss on debt extinguishment of approximately $1.4 million related to the satisfaction and redemption of the D2 equipment loan through the issuance of Class B Membership Interests in the D2 project, which were valued at approximately three times the original borrowing amount.
On October 1, 2024, we modified the Series B Preferred Stock Agreement, in order to obtain consent from holders, which led to extinguishment accounting. We recorded a deemed dividend between the fair value of the modified preferred stock against the carrying value of the original preferred stock.
Inherent in a Black-Scholes simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. On October 1, 2024, we modified the Series B Preferred Stock Agreement, in order to obtain consent from holders, which led to extinguishment accounting.
Cryptocurrencies are earned through participation with mining pool operators where the company provides hash rate services to the mining pool. The consideration received is payable in BitCoin based on a published formula Cryptocurrency is converted to U.S. dollars on a daily basis.
Cryptocurrencies are earned through participation with mining pool operators where the company provides hash rate services to the mining pool.
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.
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. 44 Table of Contents Recent Developments Appointment of Chief Financial Officer On January 19, 2026, Michael Picchi was appointed as the CFO and Treasurer of the Company, effective April 1, 2026 (the “Effective Date”).
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 foreclosed on the collateral, repossessing assets valued at approximately $3.4 million, of which approximately $560 thousand was first used to pay off accrued interest and penalties. On December 7, 2023, NYDIG filed a motion for summary judgment seeking approximately $10.3 million for unpaid principal, interest, and penalties.
Pursuant to the terms of the SEPA, we agreed to issue and sell to YA, from time to time, and YA agreed to purchase from us, up to $25 million of shares of our common stock (the “SEPA Shares”).
In accordance with the terms of the SEPA, YA has agreed to purchase up to $25 million in aggregate gross purchase price of newly issued fully paid shares of our common stock from time to time subject to the limits and the conditions of the SEPA.
We are focused on developing and monetizing green, zero-carbon computing and cryptocurrency mining facilities, as well as facilities capable of hosting customers engaged in cryptocurrency mining, and data centers to provide specialized AI Cloud and colocation services. 54 We plan to continue funding operations, including working capital and operating deficits, from operating cash flows and cash flow debt and equity financings, including the YA SEPA and others to be closed as needed consistent with management’s plans.
We plan to continue funding operations, including working capital and operating deficits, from operating cash flows and cash flow debt and equity financings, including the ATM Agreement, SEPA, July 2025 financing, December 2025 financing, and others to be closed as needed consistent with management’s plans.
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.
The other changes in assets and liabilities were not material. Investing Activities Net cash used in investing activities during the year ended December 31, 2025 was approximately $31.9 million consisting mainly of capital expenditures of $28.1 million, which consist of additions to property, plant, and equipment offset with transfers from deposits on equipment, and $3.7 million deposit on equipment purchases.
We also performed a fair value assessment of the Convertible Notes as of June 30, 2024, as a result of which we recorded a loss on revaluation of approximately $4.0 million due to factors including assumptions on conversions and payouts, annual volatility, and stock price conditions on the dates of revaluations compared to what the noteholders could convert at as of June 30, 2024.
A subsequent fair value assessment as of June 30, 2024 resulted in a loss on revaluation of approximately $4.0 million, reflecting changes in conversion and payout assumptions and stock price volatility compared to conversion terms available to noteholders at that date.
Liquidity and Capital Resources Several key indicators of our liquidity are summarized in the following table: Years Ended December 31, (Dollars in thousands) 2024 2023 Cash $ 7,843 $ 6,368 Restricted cash 2,610 3,999 Working deficit (34,378 ) (13,891 ) Net loss from continuing operations (58,300 ) (27,703 ) Net cash used in operating activities (5,069 ) (2,987 ) Purchase of property, plant and equipment (9,160 ) (12,705 ) As of December 31, 2024, we had a consolidated accumulated deficit of approximately $314.3 million and we had negative working capital of approximately $34.4 million.
In addition, for the year ended December 31, 2025 compared to year ended December 31, 2024 , there was a decrease in revenue of approximately $8.3 million primarily in Cryptocurrency mining and data hosting revenue following the April 2024 Bitcoin halving and a customer ramp-up of 20 MW through the first quarter of 2025, partially offset by approximately $6.1 million decline in cost of revenue, excluding depreciation, largely due to no costs associated with high-performance computing services for 2025. 56 Table of Contents Liquidity and Capital Resources Several key indicators of our liquidity are summarized in the following table: Years Ended December 31, (Dollars in thousands) 2025 2024 Cash $ 76,423 $ 7,843 Restricted cash 12,420 2,610 Working capital (deficit) 42,938 (34,378) Net loss (56,991) (58,300) Net cash used in operating activities (9,149) (5,069) Purchase of property, plant and equipment and deposits on equipment (31,719) (13,277) As of December 31, 2025, we had a consolidated accumulated deficit of approximately $367.7 million and we had positive working capital of approximately $42.9 million.
(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.
(Dollars in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024 $ Change % Change Cryptocurrency mining revenue $ 11,406 $ 17,027 (5,621) (33 %) Data hosting revenue 16,998 18,838 (1,840) (10 %) High-performance computing service revenue 28 16 12 75 % Demand response service revenue 1,285 2,140 (855) (40 %) Operating costs and expenses: Cost of cryptocurrency mining revenue, exclusive of depreciation 7,411 7,499 (88) (1 %) Cost of data hosting revenue, exclusive of depreciation 9,104 9,377 (273) (3 %) Cost of high-performance computing service revenue 7 5,724 (5,717) (100 %) Cost of cryptocurrency mining revenue- depreciation 4,304 4,292 12 — % Cost of data hosting revenue- depreciation 2,433 1,735 698 40 % General and administrative expenses, exclusive of depreciation and amortization 30,519 18,581 11,938 64 % Depreciation and amortization associated with general and administrative expenses 9,608 9,613 (5) — % Loss on contract — 28,593 (28,593) (100 %) Impairment on fixed assets 12 130 (118) (91) % Operating loss (33,681) (47,523) 13,842 (29 %) Other (expense) income, net (700) 304 (1,004) (330 %) Interest expense (4,835) (2,527) (2,308) 91 % Loss on sale of fixed assets and credit on equipment deposit (1,151) (31) (1,120) 3613 % Other finance expense (5,917) (3,661) (2,256) 62 % Fair value adjustment loss (23,681) (5,705) (17,976) 315 % Gain (loss) on debt extinguishment and revaluation, net 10,658 (1,644) 12,302 (748 %) Loss before income taxes (59,307) (60,787) 1,480 (2 %) Income tax benefit, net 2,316 2,487 (171) (7 %) Net loss (56,991) (58,300) 1,309 (2 %) Net loss (income) attributable to non-controlling interest, net 3,580 (5,034) 8,614 (171 %) Net loss attributable to Soluna Holdings, Inc. $ (53,411) $ (63,334) 9,923 (16 %) 47 Table of Contents 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, 2025: Soluna Digital Soluna Cloud (Dollars in thousands) Project Dorothy 1B Project Dorothy 1A Project Dorothy 2 Project Sophie Other Soluna Digital Subtotal Project Ada Total Cryptocurrency mining revenue $ 11,406 $ — $ — $ — $ — $ 11,406 $ — $ 11,406 Data hosting revenue — 6,176 5,662 5,160 — 16,998 — 16,998 High-performance computing services — — — — — — 28 28 Demand response services 561 579 145 — — 1,285 — 1,285 Total revenue 11,967 6,755 5,807 5,160 — 29,689 28 29,717 Cost of cryptocurrency mining, exclusive of depreciation $ 7,411 $ — $ — $ — $ — $ 7,411 $ — $ 7,411 Cost of data hosting revenue, exclusive of depreciation — 3,064 3,852 1,629 559 9,104 — 9,104 Cost of high-performance computing service revenue — — — — — — 7 7 Cost of cryptocurrency mining revenue- depreciation 4,304 — — — — 4,304 — 4,304 Cost of data hosting revenue- depreciation — 1,099 864 470 — 2,433 — 2,433 Total cost of revenue 11,715 4,163 4,716 2,099 559 23,252 7 23,259 Gross profit (loss) $ 252 $ 2,592 $ 1,091 $ 3,061 $ (559) $ 6,437 $ 21 $ 6,458 48 Table of Contents 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 Dorothy 2 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 152 139 — — 1,849 2,140 — 2,140 Total revenue 17,179 13,881 — 5,096 1,849 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) $ 5,388 $ 5,467 $ — $ 2,464 $ 1,783 $ 15,102 $ (5,708) $ 9,394 Cryptocurrency Mining Revenue : Cryptocurrency mining revenue decreased during the year ended December 31, 2025, compared to 2024, primarily driven by the April 2024 halving event which reduced block rewards by 50%.
See Note 8 to our consolidated financial statements included in this Annual Report for further details. Other expense, net: For the year ended December 31, 2024, other expense, net was approximately $3.4 million respectively, compared to $1.5 million for the year ended December 31, 2023.
Interest expense: Interest expense for the year ended December 31, 2025, was approximately $4.8 million, compared to approximately $2.5 million for the year ended December 31, 2024.
The redemption of debt through equity created approximately a $1.4 million loss on debt extinguishment for the year ended December 31, 2024. In addition, the Borrower deferred financing costs associated with the Loan of approximately $163 thousand.
For the year ended December 31, 2024, D2 had a loss on non-controlling interest due to the satisfaction in an equipment loan creating a loss of approximately $1.4 million and additional costs of $500 thousand.
There was also approximately $4.3 million in stock-based compensation expenses, $3.9 million on loss on debt extinguishment and revaluation, and additional $1.2 million in relation to fixed asset impairments, loss on sale of fixed assets, and amortization of operating lease assets. The non-cash items were offset with a $1.1 million deferred income tax benefit.
Non-cash items included approximately $6.9 million of depreciation expense, $9.5 million of amortization expenses, $23.7 million in fair value adjustments mainly related to warrants being exercised, and $10.6 million of stock compensation expenses. These non-cash items were offset with a deferred tax benefit of $2.3 million and gain on extinguishment of debt of approximately $10.7 million.
(the “Borrower”), entered into a loan agreement (the “Equipment Loan Agreement” or the “Loan”) with Soluna2 SLC Fund II Project Holdco LLC (the “Lender”).
On May 16, 2024, the SL Borrowing – 1, LLC, an affiliate of the Company (the “SDI Borrower"), entered into a loan (the "Equipment Loan Agreement" and the "Loan") with Soluna2 SLC Fund II Project Holdco LLC (the "Lender").
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.
The consideration received is payable in BitCoin based on a published formula Cryptocurrency is converted to U.S. dollars on a daily basis. 62 Table of Contents Starting in December 2023, we began providing emergency demand response solutions to ERCOT pursuant to a contractual commitment over defined service delivery periods.
The issuance and reprice of warrants created a loss on extinguishment of debt of approximately $5.8 million, which was partially offset by a gain on debt revaluation of the convertible debt of approximately $1.3 million as of February 28, 2024 (date of the Fourth Amendment) and March 31, 2024 due to several factors including assumptions on conversions and payouts, annual volatility, and stock price conditions on the dates of revaluations.
As a result, the Company recorded a gain on revaluation of convertible notes of approximately $1.3 million during the first quarter of 2024 (as of February 28 and March 31, 2024), primarily driven by changes in conversion assumptions, payout features, annualized volatility, and stock price conditions at the respective valuation dates.
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%.
The unpaid principal balance of the Term Loan shall bear interest at per annum rate equal to 15%. As of December 31, 2025, the Navitas loan has been fully paid off.
Net cash used in investing activities during the year ended December 31, 2023 was approximately $10.3 million consisting mainly of capital expenditures of $12.7 million, primarily related to the completion of the build of Project Dorothy 1A and 1B, less cash proceeds from sale of equipment of $2.3 million, primarily from the sale of miners located at Project Sophie in connection with the decision to convert to a hosting facility. 55 Financing Activities (Dollars in thousands) Years Ended December 31, 2024 2023 Proceeds from debt issuance $ 14,470 $ 3,100 Payments on debt (4,949 ) (1,407 ) Contributions from non-controlling interest 14,735 20,365 Distributions to non-controlling interest (8,270 ) (1,002 ) Proceeds from warrant exercises 2,332 - Net proceeds from common stock securities purchase offering - 807 Net cash provided by financing activities $ 18,318 $ 21,863 For fiscal year 2024, funds from financing activities were used to fund an initial deposit for the HPE Agreement, fund construction of D2, continued project pipeline development and general operating cash.
Net cash used in investing activities during the year ended December 31, 2024 was approximately $13.2 million consisting mainly of capital expenditures of $8.9 million and increase in deposits on equipment of $4.4 million, primarily related to the development of D2. 58 Table of Contents Financing Activities (Dollars in thousands) Years Ended December 31, 2025 2024 Gross Proceeds Reductions Net Proceeds Gross Proceeds Reductions Net Proceeds Debt issuance and principal payments $ 23,885 $ (9,466) $ 14,419 $ 14,470 $ (4,949) $ 9,521 Contributions from non-controlling interest 29,559 — 29,559 14,735 — 14,735 Distributions to non-controlling interest (8,654) (8,654) — (8,270) (8,270) Proceeds from warrant exercises 10,272 — 10,272 2,332 — 2,332 Payment on warrant redemption — (452) (452) — — — Payment on finance lease liability — (118) (118) — — — Payment on cost to acquire stock — (75) (75) — — — July and December SPA 36,988 (2,876) 34,112 — — — ATM and SEPA 41,664 (1,335) 40,329 — — — Net cash provided by financing activities $ 142,368 $ (22,976) $ 119,392 $ 31,537 $ (13,219) $ 18,318 Net cash provided by financing activities was approximately $119.4 million for the year ended December 31, 2025 consisting mainly of $23.9 million of debt issuance proceeds, $40.3 million of net proceeds from SEPA draws and ATM Agreement settlements, net proceeds of $34.1 million from the July and December financings , $10.3 million net proceeds from warrant exercises, and $29.6 million of contributions from non-controlling interest, offset with cash distributions to non-controlling interest members of approximately $8.7 million and payments on debt and deferred financing costs of approximately $9.5 million to the Green Cloud secured loan, Generate principal and debt issuance costs, Galaxy principal and deferred financing costs, CloudCo additional secured loan, and the Navitas term loan.
Removed
(“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.
Added
Mr. Picchi began his employment with the Company on March 2, 2026, in the role of Head of Finance.
Removed
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”).
Added
In conjunction with the appointment of a new CFO and Treasurer, the Company will accept David Michaels’ resignation from his position as interim CFO and Treasurer of the Company, effective immediately upon the effectiveness of the appointment of a new CFO and Treasurer. 2026 SEPA On March 24, 2026, we entered into a Standby Equity Purchase Agreement (the “2026 SEPA”) with YA II PN, LTD., a Cayman Islands exempt limited company (“YA”).
Removed
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.
Added
In accordance with the terms of the SEPA, YA has agreed to purchase up to an aggregate of $250.0 million of shares of common stock (the “2026 SEPA Shares”) from time to time subject to the limits and the conditions of the 2026 SEPA.
Removed
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.
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Pursuant to the 2026 SEPA, we issued to YA a commitment fee of $250 thousand of shares of common stock (the “Commitment Shares”). Project Specific Developments Project Kati 1 In February 2026, we received approval from the Electric Reliability Council of Texas (“ERCOT”) to commence the initial energization and phased commissioning of Project Kati 1.
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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.
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This milestone represents the transition of the project from the development phase to operational status. The Company expects to begin recognizing hosting and/or mining revenue from this facility as capacity is ramped up throughout the first half of 2026.
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Revenues were first recognized in December 2024, with modest growth in early 2025.
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Project Kati 1 is the Company’s 83 MW wind-powered data center campus located in South Texas, specifically designed for high-density Bitcoin mining operations. The site’s energization is structured in two primary blocks: Kati 1A (48 MW) and Kati 1B (35 MW).
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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.
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Both blocks are being deployed utilizing a three-phase commissioning approach, with full energization of the 83 MW campus expected to be completed during 2026. Kati 1B includes a 12 MW deployment with Cormint Data Systems ("Cormint"), where Cormint will design, procure, and deliver eight modular data center units to enable efficient deployment by minimizing on-site labor and accelerating energization timelines.
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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.
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Powered entirely by the Las Majadas wind energy project, Project Kati represents one of Soluna’s largest sites to date and is designed to scale efficiently to support large industrial compute workloads.

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