10-K: Soluna posts 2025 loss, bolsters cash and pipeline

Soluna reported lower 2025 revenue and a wider net loss but ended the year with $76.4M cash, secured new project financing, advanced key data centers, and added a $250M equity facility in March 2026.

Summary

• Revenue was $29.7M in 2025 (down ~22% YoY from $38.0M): Data Hosting $17.0M, Cryptocurrency Mining $11.4M, Demand Response $1.3M, and HPC $28K.
• Net loss was $57.0M; net loss attributable to Soluna was $53.4M; Adjusted EBITDA was $(13.2)M.
• Cash at 12/31/25 was $76.4M (restricted cash $12.4M); working capital was $42.9M; total debt was $26.8M; stockholders’ equity was $110.9M.
• Operating loss was $(33.7)M; 2025 results include a prior-year HPE contract termination creating a $19.3M remaining liability and 2024 loss on contract of ~$28.6M.
• Project Dorothy 2 (48 MW) was fully commissioned by Nov 2025 and operated at full capacity in Dec; Project Kati 1 (83 MW) began construction Sept 18, 2025; ERCOT approved initial energization in Feb 2026.
• Total operating capacity ~123 MW (KY and TX) with 83 MW under construction and 100+ MW in development at Kati; advanced development exceeds 900 MW; total pipeline ~4.3 GW.
• 2025 financing: $100M Generate Capital facility ($17M drawn by YE), $5M Galaxy term loan (Mar 12, 2025), ATM proceeds ~$34.2M, SEPA draws ~$6.2M, July 2025 offering $5.0M plus ~$10.0M from warrant exercises, Dec 2025 offering ~$32.0M.
• Settled legacy NYDIG equipment financing in Sept 2025 (recognized gain on extinguishment); converted all remaining 2021 convertible notes by Dec 2024.
• Series A preferred dividends in arrears totaled ~$29.6M at 12/31/25; Series B dividends in arrears totaled ~$1.6M.
• Material weakness: controls over balance sheet classification and presentation were not effective as of 12/31/25; remediation underway.
• Shares outstanding: 102,531,089 at 12/31/25; 111,381,064 at 3/20/26; common (SLNH) and Series A preferred (SLNHP) listed on Nasdaq.
• Management: Michael Picchi appointed CFO/Treasurer on 1/19/26 (effective 4/1/26); interim CFO David Michaels to resign upon effectiveness.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as balanced: results weakened and dilution/covenant risks persist, but liquidity is strong, financing access improved, and key projects advanced, giving the company a tangible near-term growth path.

Positives

• Strong liquidity: $76.4M cash (plus $12.4M restricted) at 12/31/25 supports 2026 build-out and operations.
• Secured scalable financing: up to $100.0M credit with Generate ($17.0M drawn by YE) and a $5.0M Galaxy five-year term loan.
• Capital access demonstrated: ~$34.2M ATM proceeds, ~$6.2M SEPA draws, $5.0M July 2025 equity and ~$32.0M December 2025 offering; ~ $10.0M warrant exercise proceeds.
• Operational milestones: Dorothy 2 completed and fully online by Nov–Dec 2025; Project Kati 1 (83 MW) under construction with ERCOT energization approval in Feb 2026.
• Pipeline scale and positioning: 4.3 GW renewable-powered data center pipeline, 900+ MW in advanced development, behind-the-meter model at wind/solar sites.
• Demand response participation at ERCOT adds incremental revenue and power cost offset; 2025 DR revenue $1.285M.
• Legacy overhang reduced: NYDIG settlement (Sept 2025) removed litigation risk and obligations.
• Customer capacity replaced after 2024 termination, limiting hosting revenue disruption.

Negatives

• Revenue declined to $29.7M from $38.0M in 2024; mining and hosting pressured by the April 2024 Bitcoin halving and prior customer termination.
• Net loss of $57.0M; Adjusted EBITDA of $(13.2)M; operating loss $(33.7)M.
• HPE agreement termination left a $19.3M outstanding contract liability as of 12/31/25; 2024 recorded a ~$28.6M loss on contract.
• Dilution risk: significant 2025 equity issuances, ATM, SEPA usage, warrant exercises, and a new $250M SEPA (3/24/26).
• Internal control material weakness over balance sheet classification and presentation as of 12/31/25.
• Debt covenant breach on Generate facility (Forward Contracted DSCR) as of 12/31/25; limited waiver received 3/26/26.
• Series A preferred dividends in arrears ~$29.6M and Series B ~$1.6M constrain capital allocation; potential pressure from preferred rights.
• Customer concentration remains high; hosting revenue concentrated in a few counterparties.
• Exposure to Texas power markets and ERCOT rulemaking adds operational and permitting risk.

Risks

• Bitcoin price and network dynamics (including the April 2024 halving) materially impact mining profitability and hosted customer economics.
• Regulatory and market changes in ERCOT and PUCT processes could delay interconnection, add costs, or limit operating flexibility.
• Concentration in Texas exposes the business to regional weather, grid events, regulatory changes, and market power volatility.
• Outstanding HPE termination liability of ~$19.3M as of 12/31/25 may lead to future cash outflows; no formal legal proceedings commenced as of YE.
• Debt covenant non-compliance under the Generate Credit Agreement (Forward Contracted DSCR) as of 12/31/25; waiver granted on 3/26/26 but future compliance is not assured.
• Internal control over financial reporting had a material weakness as of 12/31/25; remediation is in progress but effectiveness is not guaranteed.
• Customer concentration risk: in 2025, two customers accounted for 59% of hosting revenue and 34% of total revenue.
• Series A preferred dividends in arrears (~$29.6M) and Series B (~$1.6M) create claims senior to common shareholders and liquidity demands.
• Power price volatility and capacity constraints can impair margins; long lead-time infrastructure and specialized equipment may face supply chain risk.
• Significant future capital needs for construction and development may require additional equity/debt and could be dilutive or costly.

Future Outlook

Management plans to energize the 83 MW Kati 1 site in phases through 1H 2026, advance Kati 2 (100+ MW AI/HPC) with Metrobloks to tenant-ready status, continue customer deployments at Dorothy 2, and use the Generate facility, ATM, and SEPA selectively to fund the 4.3 GW pipeline while remediating internal control weaknesses and maintaining covenant compliance.

Management Comments

• 2025 execution centered on project optimization, pipeline expansion, launching HPC, and capital formation.
• Crossed 1 GW of renewable-powered computing in operation, construction, and development; pipeline expanded to 4.3 GW.
• Project Dorothy 2 fully commissioned in 2025; Project Kati 1 construction began with Spring Lane Capital support and an initial customer commitment.
• Focus in 2026 on energizing Kati 1, advancing Kati 2 for AI/HPC, optimizing uptime and costs, and disciplined capital strategy.

Industry Context

StockSavvy.ai notes the April 2024 Bitcoin halving compressed block rewards across the mining sector, pressuring self-mining and hosting yields, while power-intensive AI/HPC demand has accelerated. Soluna’s behind-the-meter model and ERCOT participation mirror approaches by peers like Applied Digital and Crusoe, but its smaller scale versus Riot, Marathon, and Core Scientific means execution and financing discipline remain paramount.

Comparison to Industry Standards

• Compared to large miners (Riot Platforms, Marathon Digital, Core Scientific, CleanSpark), Soluna’s ~$29.7M revenue and 123 MW operating capacity are small; however, its $76.4M year-end cash and $100M credit facility provide outsized liquidity relative to scale.
• Hosting peers (Core Scientific, Bitdeer, Applied Digital) operate larger contracted footprints; Soluna’s full contracting of Dorothy 2 and backfilling of lost 2024 hosting capacity is directionally consistent with industry norms.
• AI/HPC push (e.g., Applied Digital, CoreWeave partnerships) is a key sector trend; Soluna’s Kati 2 (100+ MW) joint development with Metrobloks targets competitive density and speed-to-power, though the project is earlier stage than some hyperscale peers.
• Demand response participation in ERCOT is an established miner playbook (e.g., Riot); Soluna’s $1.3M DR revenue indicates integration but at a smaller absolute scale.

Management Changes

Corporate Governance

Legal Proceedings

• NYDIG equipment financing dispute settled on September 29, 2025; obligations fully satisfied; gain on extinguishment recorded.
• HPE Agreement terminated in March 2025; ~$19.3M outstanding contract liability as of 12/31/25; no formal legal proceedings commenced as of year-end.

Related Party Transactions

• Ongoing relationships with Harmattan Energy Ltd. (HEL) including issuance of contingent merger shares; certain directors have affiliations with HEL.
• Project-level joint venture arrangements with Spring Lane Capital (equity) and Navitas (equity) include related party considerations disclosed.

Stakeholder Impact

• Common shareholders face dilution risk from ATM, SEPA, and offerings, as well as senior dividend arrears on Series A and Series B preferred.
• Preferred shareholders (SLNHP) accumulate significant unpaid dividends (~$29.6M for Series A), increasing claims ahead of common.
• Employees and contractors benefit from project expansion and pipeline growth but must adhere to enhanced insider trading policy.
• Customers (hosting and DR) benefit from added capacity at Dorothy 2 and upcoming Kati 1, though grid and regulatory volatility remain factors.
• Creditors receive enhanced security through project-level facilities; covenant compliance and waivers can affect cash deployment.

Next Steps

• Phase energization and ramp of Project Kati 1 through 1H 2026 following ERCOT approval.
• Advance Project Kati 2 (100+ MW AI/HPC) with Metrobloks to tenant-ready and secure customer commitments.
• Continue customer deployments and optimization at Dorothy 2 and Sophie; enhance DR participation.
• Utilize Generate facility, ATM, and SEPA selectively to fund construction and growth.
• Remediate internal control material weakness and strengthen financial reporting.
• Manage and resolve HPE termination liability and maintain covenant compliance.

Key Dates

Recommendation

Solid year-end liquidity, a scalable $100M credit line, and tangible project progress (Dorothy 2 completed; Kati 1 energizing in 1H26) offset weakened financials, control issues, and dilution risk. Execution at Kati and AI/HPC traction are needed catalysts; maintain a neutral stance pending proof of ramp, resolution of liabilities, and control remediation.

Keywords

Soluna, SLNH, Bitcoin mining, Data center hosting, ERCOT, Renewable computing, Project Dorothy, Project Kati, Generate Capital, Spring Lane Capital, Galaxy Digital loan, SEPA, ATM offering, Nasdaq SLNHP, Demand response, HPC, AI data center, Texas wind power