Soluna Announces Monthly Business Update

Rhea-AI Summary

Soluna Holdings, a developer of green data centers, has provided updates for June regarding its operations and project developments. The company highlighted a Generative AI agreement, securing NVIDIA GPUs for $80M revenue over the next three years. Additionally, Soluna closed a $12.5M credit facility to fund this initiative. Convertible Loan Note balances have been reduced from $7.7M to $4.5M through conversions to common shares, increasing outstanding shares to 5,381,104 as of July 8th. Key projects like Dorothy 1A and 1B, Sophie, and Kati are undergoing infrastructure optimizations and fleet upgrades to enhance efficiency and protection against summer heat. Project Dorothy 2's construction is set to begin by late July, with a phased commissioning schedule. The company also responded to investor questions in its latest AMA.

Positive

• Secured agreements for NVIDIA GPUs worth $80M in revenue over the next three years.
• Closed a $12.5M credit facility to fund GPU contracts and startup costs.
• Convertible Loan Note balance reduced from $7.7M to $4.5M, decreasing debt.
• Core network equipment upgrades completed, enhancing site infrastructure.

Negative

• Increase in curtailed operations due to the Four Coincident Peak Program.
• Convertible Loan Note conversions increased common shares outstanding from 3,921,503 to 5,381,104, potentially diluting shareholders.

Insights

Financial Analyst

Soluna Holdings, Inc. has taken several steps that could have significant impacts on its financial health and stock performance. The most remarkable update is the $12.5M secured credit facility which aims to fund GPU contract and startup costs for Soluna Cloud. Access to credit facilities magnifies their ability to scale operations, particularly in the burgeoning field of Generative AI. Over the next three years, the company projects $80M in revenue from these generative AI workloads. This indicates a promising growth trajectory, but retail investors should maintain a cautious optimism due to the volatility and unpredictability in both the AI and cryptocurrency sectors.

Another noteworthy financial maneuver is the reduction of Convertible Loan Note balances from $7.7M to $4.5M and the exercise of $2M in warrants. This reduces debt burden and improves the liquidity position. However, it's important to note the increase in common shares from 3,921,503 to 5,381,104. While this dilution could negatively impact current shareholders, it does provide the company with necessary capital for expansion and strategic initiatives.

In summary, while Soluna shows potential for growth through its strategic initiatives, the increased share dilution and high reliance on projected revenues warrant a cautious approach.

Tech Expert

The launch of Soluna Cloud supported by NVIDIA GPUs marks a transformative step for Soluna Holdings. Hosting generative AI workloads speaks to an evolving business model that integrates high-performance computing with green energy. NVIDIA GPUs are industry-standard for AI applications, offering substantial computational power that supports AI model training and inference.

An important aspect here is that Soluna’s approach to using green data centers should appeal to environmentally-conscious investors as well as corporate clients looking to reduce their carbon footprint. This aligns with broader industry trends where sustainability is gaining prominence. However, the effectiveness and efficiency of these green data centers in managing such intensive computing workloads will need to be monitored closely over time to ensure competitive performance levels.

Upscaling infrastructure to handle environmental stressors like heat through upgrades like miner heat shielding and building insulation is a prudent move. Such optimizations suggest a forward-thinking approach in maintaining operational efficiency and equipment longevity. Investors should keep an eye on the deployment and performance metrics of these implementations.

Market Research Analyst

The strategic pivot towards Generative AI and the expected revenue of $80M over the next three years indicate Soluna’s aim to tap into a lucrative and fast-growing market. Generative AI, which includes applications like AI-generated content, poses significant market opportunities given its rising demand across various industries.

However, the competitive landscape is intense, with major players like Google, Microsoft and OpenAI dominating the field. Soluna’s alliance with a Strategic OEM Partner to secure NVIDIA GPUs provides a competitive edge, yet the market's saturation and rapid technological advancements mean that continuous innovation and strategic agility will be crucial.

Moreover, while the shift towards AI is promising, the company’s ongoing commitments to Bitcoin mining and other intensive computing applications should also be considered. The periodic operational curtailments due to environmental programs like the Four Coincident Peak Program could affect mining outputs and profitability. Investors should weigh these trade-offs when considering the long-term sustainability and scalability of Soluna's dual focus on AI and Bitcoin mining.

ALBANY, N.Y.--(BUSINESS WIRE)-- Soluna Holdings, Inc. (“SHI” or the “Company”), (NASDAQ: SLNH), a developer of green data centers for intensive computing applications including Bitcoin mining and AI, announced its June project site-level operations, developments, and updates.

The Company has provided the following Corporate and Site Updates.

Key Company Metrics:

The monthly metrics are now available here.

Corporate Highlights:

• Generative AI Agreement – on June 24th, the Company announced the launch of its Soluna Cloud business and entered into various agreements with its Strategic OEM Partner. The agreements secure its first batch of NVIDIA GPUs sustainably hosted for Generative AI workloads. The Company is eyeing up to $80M of Revenue over the next three years. See details in the 8K filing here.
• Soluna Cloud Secured Credit Facility – on June 24th, Soluna announced that it had closed a $12.5M secured credit facility to fund the GPU contract and Soluna Cloud startup costs. See details in the press release here and Soluna’s 8K filing here.
• Significant Reduction in Convertible Loan Note Balance – As of July 8th, Convertible Loan Note Holders have reduced their balances from $7.7M to $4.5M by converting to Common Shares. Warrant Holders have also exercised $2.0M. Consequently, the Company’s Common Shares Issued and Outstanding have increased from 3,921,503 as of May 9th, 2024, to 5,381,104 as of July 8th. These figures include stock grants to the Board of Directors, employees, and management.
• AMA – The Company published responses to investor questions in its monthly AMA for May. View the responses here.

Key Project Updates:

Project Dorothy 1A (25 MW, Hosting) / Project Dorothy 1B (25 MW, Prop-Mining):

• The onset of the Four Coincident Peak Program from June to September resulted in an increase in curtailed operations over previous months.
• Infrastructure optimization efforts are underway to protect equipment against the severe summer heat including miner heat shielding, building insulation upgrades, and transformer fan kit installations.
• Core network equipment upgrades have been completed in an effort to modernize adding additional capabilities and resiliency to site infrastructure.

Project Dorothy 2 (50 MW):

• Project schedule finalized and construction is planned to mobilize by late July. Commissioning of the buildings dedicated to Bitcoin Hosting will be completed in a phased approach at 6, 9, and 12-month milestone dates.
• Power partner’s approval process is in its final stages.
• Spring Lane’s definitive documentation on recent financing is nearing completion.

Project Sophie (25 MW, Bitcoin Hosting with Profit Share, AI Hosting):

• Fleet upgrades are underway for several customers to improve efficiency and utilize additional available capacity.
• Infrastructure optimization efforts are also underway similar to Project Dorothy to protect against the severe summer heat including miner heat shielding, building insulation upgrades, and transformer fan kits installations.

Project Kati (166 MW):

• ERCOT planning continues to progress with new edits made on one key study.
• Negotiations continue with landowners for the site land leases.

View Soluna’s recent AMA here.

View Soluna 2024 Earnings Power Presentation here.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Soluna Holdings, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Soluna’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, further information regarding which is included in the Company's filings with the Securities and Exchange Commission. All information provided in this press release is as of the date of the press release, and Soluna Holdings, Inc. undertakes no duty to update such information, except as required under applicable law.

Non-GAAP Measures

In addition to figures prepared in accordance with GAAP, Soluna from time to time presents alternative non-GAAP performance measures, e.g., EBITDA, adjusted EBITDA, adjusted net profit/loss, adjusted earnings per share, free cash flow, both on a company basis and on a project-level basis. Project-level measures may not take into account a full allocation of corporate expenses. These measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. Alternative performance measures are not subject to GAAP or any other generally accepted accounting principle. Other companies may define these terms in different ways. See our annual report on Form 10-K for the year ended December 31, 2023 for an explanation of how management uses these measures in evaluating its operations.

About Soluna Holdings, Inc (SLNH)

Soluna is on a mission to make renewable energy a global superpower using computing as a catalyst. The company designs, develops, and operates digital infrastructure that transforms surplus renewable energy into global computing resources. Soluna’s pioneering data centers are strategically co-located with wind, solar, or hydroelectric power plants to support high-performance computing applications including Bitcoin Mining, Generative AI, and other compute-intensive applications. Soluna’s proprietary software MaestroOS(™) helps energize a greener grid while delivering cost-effective and sustainable computing solutions, and superior returns. To learn more visit solunacomputing.com. Follow us on X (formerly Twitter) at @SolunaHoldings.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240709976119/en/

Sam Sova

Partner and CEO

SOVA

Sam@letsgosova.com

Source: Soluna Holdings, Inc.

FAQ

What is the revenue expectation for Soluna's Generative AI agreement?

Soluna expects up to $80M in revenue over the next three years from the Generative AI agreement.

How much did Soluna secure in its credit facility for the GPU contract?

Soluna closed a $12.5M secured credit facility to fund the GPU contract and startup costs.

What is the new balance of Soluna's Convertible Loan Note as of July 8th?

The Convertible Loan Note balance has been reduced from $7.7M to $4.5M as of July 8th.

How many common shares are outstanding for Soluna as of July 8th?

The number of outstanding common shares for Soluna increased to 5,381,104 as of July 8th.

What operational challenges did Soluna face due to the Four Coincident Peak Program?

Soluna experienced an increase in curtailed operations from June to September due to the Four Coincident Peak Program.

When is the construction of Project Dorothy 2 expected to start?

Construction for Project Dorothy 2 is planned to mobilize by late July.

What infrastructure improvements are being made to Soluna's project sites?

Soluna is optimizing infrastructure with heat shielding, building insulation upgrades, and transformer fan kit installations to protect against severe summer heat.