Soluna Closes $30M Funding from Spring Lane Capital for Project Dorothy 2

Rhea-AI Summary

Soluna Holdings (NASDAQ: SLNH) has secured $30 million in funding from Spring Lane Capital for the expansion of its Project Dorothy data center. This financing will enable the construction of Dorothy 2, a 48 MW expansion of Soluna's Texas flagship facility, primarily focused on Bitcoin mining hosting. The project includes plans for a 2 MW AI data center called Helix.

Key points:

• Construction to begin in Q3 2024, with initial energization expected by Q1 2025
• Capacity for approximately 13,700 next-generation Bitcoin mining rigs
• Soluna will have early profit participation, carried interest, and the right to invest up to 49% equity in the project
• The combined Dorothy 1 and 2 sites will double the consumption of curtailed energy
• Project is fully shovel-ready with necessary approvals

Positive

• Secured $30 million funding for Project Dorothy 2 expansion
• 48 MW increase in Bitcoin mining hosting capacity
• Plans for 2 MW AI data center (Helix)
• Early profit participation and carried interest for Soluna
• Right to invest up to 49% equity in the project
• Doubling of curtailed energy consumption
• All necessary approvals obtained, project is shovel-ready

Negative

• None.

Insights

Financial Analyst

The closure of the $30 million funding round for Project Dorothy 2 is a significant milestone for Soluna Holdings. This capital infusion will double the capacity of their Bitcoin hosting site, firmly positioning the company for future growth. From an investment perspective, this expansion not only enhances Soluna's operational scale but also diversifies their revenue streams by including AI data center capabilities. However, it's essential to note the long lead time for construction and the projected ramp-up by Q1 2025, which introduces a medium-term horizon for realizing these gains. Investors should consider the potential for increased profitability against any operational or construction risks.

Tech Expert

The technological implications of Project Dorothy 2 are noteworthy. The expansion will accommodate approximately 13,700 next-generation Bitcoin mining rigs, each with a power consumption of about 3.5 kW. This setup indicates a robust infrastructure capable of handling significant computing power. Moreover, dedicating 2 MW to an AI data center aligns with the growing demand for AI-driven solutions. This dual-focus on Bitcoin and AI not only exhibits Soluna's adaptability to evolving tech trends but also underscores their commitment to sustainable computing solutions. This strategic move is likely to enhance their market position as a leader in green data centers.

Market Research Analyst

Market-wise, Soluna's expansion through Project Dorothy 2 is timely. The demand for Bitcoin hosting services remains high and the integration of AI data center capabilities taps into a rapidly growing sector. The Texas electricity grid's current challenges also present an opportunity for Soluna to contribute to grid stability through their curtailed energy consumption model. Additionally, the financing from Spring Lane Capital, a firm specializing in sustainability solutions, reinforces the environmental and economic viability of this project. This alignment with sustainable finance principles could attract ESG-minded investors, further boosting Soluna's market appeal.

This Milestone Mobilizes Construction for Bitcoin Mining Hosting and Paves the Way for an AI Data Center

ALBANY, N.Y.--(BUSINESS WIRE)-- Soluna Holdings, Inc. (“Soluna” or the “Company”), (NASDAQ: SLNH), a developer of green data centers for intensive computing applications including Bitcoin mining and AI, announced today it has closed its latest round of financing from Spring Lane Capital (“SLC”) for a 48 MW expansion of Soluna’s flagship behind-the-meter data center, Project Dorothy, (“Dorothy 2”) facility. SLC, a private equity firm providing hybrid project capital for sustainability solutions, has agreed to lead the financing round of $30 million.

The Future Site of Soluna's Project Dorothy 2 and Helix Data Center (Photo: Business Wire)

John Belizaire, CEO of Soluna, stated, “This significant investment from Spring Lane Capital propels our mission to scale our operational assets under management. Project Dorothy, our premier Bitcoin Hosting site, will double in size through this partnership with SLC. We look forward to working with the industry’s top Bitcoin miners to deliver sustainable hosting and best in class services.”

“We are excited about Soluna’s continued momentum over the last two years and, in particular, Project Dorothy 2’s progress. The expansion comes at a time when solutions for the Texas electricity grid are gravely needed while simultaneously we are at an inflection point with AI and its effect on climate,” said Robert Day, Co-founding Partner at Spring Lane Capital. “We believe the success of Soluna’s model reflects the first truly positive solution when it comes to AI, computing and climate and we are proud to continue to support their breakthrough developments in the green data center sector.”

Key Details:

• Financing Plan for Dorothy 2 Secured: The financing will facilitate the construction of the Dorothy 2 facility, which expands Soluna’s Texas flagship data center by 48 MW in Bitcoin Hosting.
• AI data center: The remaining 2 MW of the site’s wind power will be reserved for Soluna’s planned Helix AI data center.
• Construction Timeline: Now that the parties have completed definitive documentation, Dorothy 2 construction will commence in Q3 2024, with the goal of achieving initial energization and ramp-up by Q1 2025.
• Capacity and Technology: The new facility will accommodate approximately 13,700 next-generation Bitcoin mining rigs, each with a power consumption of around 3.5 kW, totaling 48,000 kW (48 MW).
• SLC's Expanded Financial Support: SLC is deploying capital from its second private equity fund, Spring Lane Capital Fund II, which is approximately twice the size of its initial fund. The $1 million Development Expenditure financing was repaid as part of the closing. Long lead equipment orders have been placed for Dorothy 2.
• Financial Structure and Equity Ownership: Soluna will secure up to $30 million from SLC, fully covering the project's funding needs, including working capital. Dorothy 2 features a superior waterfall structure that includes:
  • Early Profit Participation – Soluna will enjoy a percentage of the cash flows from the start of the project.
  • Carried Interest – Soluna will continue to receive 50% of the cash flows after the equity hurdle rate is achieved.
  • Developer Profit – Soluna will receive a $1.2M payment for developing the project, payable after certain milestones have been met.
  • O&M and Admin Services – Soluna will be the operator of the site and provide O&M and administrative services for a fee.
  • Equity Investment – Soluna will have the right to invest and own up to 49% of the equity of the project.
  • Soluna Equity Carry Items - Soluna may elect to roll certain fees and prepaid expenses into the project as equity.
• Energy and Capacity Enhancements: The new combined sites (Dorothy 1 and Dorothy 2) will consume up to double the amount of curtailed energy as before.
• Project Approvals: Dorothy 2 is fully shovel ready. It already has all the necessary ERCOT approvals, including the planning phase. The wind project and local utilities have also approved the expansion of the project.

“SLC’s innovative financing approach and robust project design supports Soluna’s commitment to expanding its footprint in the renewable energy sector and advancing the scale of its Bitcoin Hosting services,” John Belizaire continued.

More information about the financing can be found in the Company’s upcoming 8-K.

The Dorothy Name

Soluna continues its tradition of naming its data centers after women scientists who help(ed) catalyze major innovation. Project Dorothy is named after Dorothy Vaughan, an African American mathematician and “human computer” who worked for the National Advisory Committee for Aeronautics and NASA in 1939. Learn more about Project Dorothy here.

About Spring Lane Capital:

Spring Lane Capital is a private equity firm based in Boston, MA and Montreal, QC focused on providing hybrid project capital for sustainability solutions in the energy, food, water, waste, and transportation industries. The firm’s structured financial model seeks to tap into some of the fastest-growing segments of these markets that more traditional forms of project capital cannot access due to their scale and the limitations of existing investment models – the so-called ‘Missing Middle’. Spring Lane’s pioneering “Developer U” is a first of its kind effort to build the ecosystem of developers of sustainable infrastructure projects. For more information, please visit www.springlanecapital.com.

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/20240724972952/en/

Sam Sova

Partner and CEO

SOVA

Sam@letsgosova.com

Source: Soluna Holdings, Inc.

FAQ

What is the funding amount Soluna (SLNH) secured for Project Dorothy 2?

Soluna Holdings (SLNH) secured $30 million in funding from Spring Lane Capital for the expansion of Project Dorothy 2.

When is the construction of Soluna's (SLNH) Dorothy 2 facility expected to begin?

Construction of Soluna's (SLNH) Dorothy 2 facility is expected to begin in Q3 2024.

What is the planned capacity of Soluna's (SLNH) Dorothy 2 expansion?

Soluna's (SLNH) Dorothy 2 expansion will add 48 MW of capacity, primarily for Bitcoin mining hosting, with 2 MW reserved for an AI data center.

How many Bitcoin mining rigs will Soluna's (SLNH) Dorothy 2 facility accommodate?

Soluna's (SLNH) Dorothy 2 facility will accommodate approximately 13,700 next-generation Bitcoin mining rigs.

What is the expected timeline for Soluna's (SLNH) Dorothy 2 facility to become operational?

Soluna's (SLNH) Dorothy 2 facility is expected to achieve initial energization and ramp-up by Q1 2025.