Soluna Secures $30M from Spring Lane Capital to Fuel Project Dorothy 2
Soluna Holdings has secured up to $30 million from Spring Lane Capital to expand its Texas-based data center, Project Dorothy, by 48 MW. The new facility, Dorothy 2, will begin construction in Q2 2024 and will host approximately 13,700 Bitcoin mining rigs. The expansion is fully funded and includes $1 million for long-term equipment purchases. Dorothy 2 has all necessary ERCOT approvals and aims to double the site's energy consumption. Soluna plans to allocate the remaining 2 MW of wind power to its Helix AI data center. This partnership underscores Soluna's commitment to sustainable energy and high-performance computing.
- Secured up to $30M from Spring Lane Capital for Dorothy 2 expansion.
- Dorothy 2 will add 48 MW of capacity, hosting about 13,700 Bitcoin mining rigs.
- Fully funded project with $1M in Development Expenditure financing for equipment.
- Project Dorothy 2 has all necessary ERCOT approvals.
- Expansion aims to double the site's energy consumption capacity.
- Plans to allocate 2 MW of wind power to Helix AI data center.
- Enhanced management and development fees compared to Dorothy 1A.
- Potential for substantial current income during construction and operational phases.
- No specific completion date provided for Dorothy 2; potential for construction delays.
- High dependency on Bitcoin mining market, which is volatile and could impact profitability.
- Financial commitment relies heavily on a single partner, increasing risk if partnership falters.
Insights
The announcement of $30 million in financing from Spring Lane Capital for the expansion of Project Dorothy is a strong indicator of Soluna's growth trajectory. A key point to note is that this funding fully covers the project's expenses, including working capital. The financial structure appears favorable, with enhanced management and development fees compared to Dorothy 1A. This can result in substantial current income during both the construction and operational phases, improving Soluna’s overall cash flow and financial health.
The timing of construction starting in Q2 2024 and initial energization by Q4 2024 indicates that investors can expect to see the impact on revenue within a relatively short timeframe. Additionally, the 48 MW expansion would significantly boost their Bitcoin hosting capacity, enhancing revenue potential from Bitcoin mining—a sector known for its high, albeit volatile, profitability.
Considering the above, this financing round represents a solid backing from a strategic partner, potentially leading to improved financial stability and growth opportunities for Soluna.
From an energy perspective, the expansion of Project Dorothy to a 48 MW facility will nearly double Soluna's capacity to utilize curtailed energy resources. Curtailed energy refers to surplus energy, often from renewable sources, which otherwise goes unused. Integrating such energy into high-performance computing applications like Bitcoin mining is an innovative approach to mitigate waste and improve efficiency.
The project already has all necessary ERCOT approvals, ensuring compliance with regional energy regulations and reducing potential project risks. Notably, reserving 2 MW for Soluna's planned Helix AI data center diversifies their application of renewable energy beyond Bitcoin mining, potentially opening new revenue streams.
Overall, this project positions Soluna at the intersection of renewable energy and high-performance computing, aligning with market trends towards sustainability and efficient energy use.
The expansion of Project Dorothy will accommodate around 13,700 next-generation Bitcoin mining rigs, each consuming approximately 3.5 kW. This highlights Soluna’s commitment to leveraging cutting-edge technology to maximize efficiency and output. Next-generation mining rigs typically feature enhanced performance metrics, potentially leading to higher mining yields and profitability.
The inclusion of a superior waterfall structure in the financial setup indicates an optimized approach to resource allocation and risk management. Moreover, the provision of $1 million in Development Expenditure financing for long-term equipment purchases suggests a strategic focus on ensuring the latest technology is available for sustained operational excellence.
In summary, the technological advancements and financial strategies in place for Project Dorothy 2 could lead to improved operational efficiency and profitability for Soluna, reinforcing its position in the competitive Bitcoin mining industry.
New Construction to Begin in Q2 2024, Expands Bitcoin Mining Capacity
John Belizaire, CEO of Soluna, stated, "Spring Lane Capital has proven to be the company’s most strategic partner. We are honored to partner with them again on Project Dorothy 2. This continues our momentum of bringing more projects to shovel-ready status and beyond as we grow our assets under management."
“We continue to be very excited about what Soluna is bringing to the market around sustainable, high-performance computing,” stated Robert Day, Co-founding Partner at Spring Lane Capital. “After years of working with the Soluna team, and seeing the early operations at Project Dorothy 1, we are encouraged about the opportunity the company has to not only deploy additional attractive projects but also potentially make an important and positive impact on the high-profile challenge of data center demand and climate change solutions.”
Key Details:
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Soluna Unveils Financing Plan for Dorothy 2: 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. - Construction Timeline: The parties are set to complete definitive documentation and commence Dorothy 2 construction in Q2 2024, with the goal of achieving initial energization and ramp-up by Q4 2024.
- 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).
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SLC's Expanded Financial Support: SLC is deploying capital from its second private equity fund, Spring Lane Capital Fund II, which is twice the size of its initial fund. The firm will also provide
$1 million -
Financial Structure and Equity Ownership: Soluna will secure up to
$30 million - 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.
- AI data center: The remaining 2 MW of the site’s wind power will be reserved for Soluna’s planned Helix AI data center.
- Project Approvals: Dorothy 2 already has all the necessary ERCOT approvals, including the planning phase. The wind project’s sponsors are on track to provide their approval later this quarter.
“This strategic partnership and the forthcoming construction of Project Dorothy 2 mark significant milestones in Soluna's mission to harness sustainable energy for high-performance computing needs. The innovative financing approach and robust project design underscore Soluna’s commitment to expanding its footprint in the renewable energy sector and advancing the scale of its Bitcoin Hosting services,” John Belizaire continued.
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
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/20240521033134/en/
Sam Sova
Partner and CEO
SOVA
Sam@letsgosova.com
Source: Soluna Holdings, Inc.
FAQ
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