Q4 2025 Soluna Holdings Inc Earnings Call
Speaker #1: Hello, and welcome to the 2025 annual and Q4 results and business update for Saluna Holdings. I'm John Belisare, CEO of Saluna Holdings, and I'm joined today by our CFO, David Michaels.
Speaker #1: This will be David's last 10K in Q presentation, as he heads off back to his seat on the board and he'll be replaced by Michael Pichy, who will be starting shortly here as CFO, taking over the reins for our next quarter presentation.
Speaker #1: As always, before we begin, I'd like to start with some legal preamble: the following content is completely qualified by the legal disclosures on the slide following this one.
Speaker #1: Our goal is to share with you some of our strategic thinking and financial analysis we are using to guide the growth of our business.
Speaker #1: The content is in line with our principles of being accountable and transparent, which shareholders. We operate in a hyper-dynamic economic environment; that's a fancy way of saying things change quickly.
Speaker #1: What we are telling you here is based on our estimates and assumptions, which are our best guess. We reserve the right to revise our point of view based on new information and changes in the business environment.
Speaker #1: Despite an uncertain dynamic environment, we must plan and make operating and investment decisions. This presentation lays some of that out for your review. We'll pause here for a moment for the legal disclosure and disclaimer.
Speaker #1: Before we begin, it's best to introduce folks of you who are new to Saluna to our business model and where we fit into the world.
Speaker #1: The way to look at our company is that we are really bridging the gap between two major confluences happening in the world. On the left side, on the one side, you have AI's momentum as it drives and grows exponentially.
Speaker #1: Its demand is growing from a computing perspective. Bitcoin is also scaling and becoming a mature enterprise institutional-level asset, and the miners that are securing that network prefer scalable, well-managed, and cost-advantaged hosting partners.
Speaker #1: On the right-hand side, you have clean energy which goes to waste due to curtailment. It is a large industry; despite recent changes in the marketplace, many of these assets have excess power that don't have sufficient load to allow them to generate revenue.
Speaker #1: What we do is we bridge these two gaps. Developing co-located data centers behind the meter at renewable power generation facilities which enables us to bypass long interconnection queues improving power economic and accelerating time to market for next-generation data centers.
Speaker #1: Now, our business strategy is to transform that clean energy into high-performance computing infrastructure. We do that in two ways. On the one hand, we develop and operate Bitcoin hosting data centers, where large hyperscale and creditworthy customers can come in and place their equipment to be hosted by our best-in-class team at our best-in-class facilities and taking advantage of top-tier power costs that enable them to ride the economic swings in the Bitcoin market.
Speaker #1: The second prong is AI. We've just entered this year a whole new push and definitive focus on AI. Here, we develop AI data center projects and form joint ventures with data center operators and deliver those facilities to creditworthy tenants, hyperscalers, and neoclouds to support the next generation of intelligence.
Speaker #1: This is all powered by an ever-growing pipeline: we have over 4.3 gigawatts now, more than 54% increase from last year, where we signed PPAs and acquire land, co-located with renewable energy projects with high curtailment, which feeds this entire business strategy.
Speaker #1: We call this strategy an approach renewable computing. Driving our mission to make renewable energy a global superpower, using computing as a catalyst. Last year was a banner year for Saluna.
Speaker #1: I'd like to take you through the operational highlights for 2025. Last year, I wrote a letter to you, our shareholders, outlining four key focus areas for our team.
Speaker #1: The first was growing our pipeline: we were focused on increasing the number of curtailed assessments, completed with power partners, advancing the projects to shovel readiness, status, and executing additional project term sheets, which allows us to grow the number of projects that can feed our strategy we just went through.
Speaker #1: We focused on optimizing our projects: we were focused on completing the energization of project Dorothy 2, enhancing the profitability and operational efficiency and customer mix of our operating data centers, while also improving overall customer satisfaction in those facilities.
Speaker #1: We were focused heavily on capital formation, pursuing financing opportunities to support key growth initiatives, including project Kadi, which broke ground last year, Rosa leveraging several of our strengthened areas such as cash flows and refinancing some of our projects, and as you'll see, we were very successful in capital formation in that area.
Speaker #1: And then, of course, developing a clear focused strategy on getting into the AI business. And here, our strategy was to form partnerships to harness the value of our considerable pipeline by leveraging partners that have AI and HPC data center expertise through joint ventures.
Speaker #1: And we announced one at the end of the year with Metroblocks and driving more expertise joining our board in activities in that regard. As I said at the beginning of the presentation, last year was a banner year for Saluna.
Speaker #1: We raised over $142 million including a $100 million credit facility with Generate Capital. We also raised money from Galaxy as well. We launched a upsized ATM program.
Speaker #1: We restructured the business and exited certain debt relationships, including NYDIG, regained our NASDAQ compliance, exited partnerships that weren't as profitable, and we grew partnerships that have been extremely profitable, like Bidgigital and Compass Mining.
Speaker #1: We exceeded our hash rate by over 5x a hash last year, so we surpassed that number for the first time. We expanded significantly our long-term pipeline, growing it by up to 4.3 gigawatts by over 50%, and monetized a considerable amount of curtailed energy.
Speaker #1: Our project milestones were no less shabby. We launched project Dorothy, as I mentioned, we had a successful groundbreaking which was attended by our community partners, employees, and etc., very proud of that.
Speaker #1: We signed a 48-megawatt Galaxy digital partnership at Kadi. We had Dorothy 2, 48 megawatts, completed there. We signed 20-megawatt Canan deal, signed 3.3-megawatt partnership with Cooler, a new type of structure in our licensing and leasing models.
Speaker #1: And several term sheets: Rosa, Hetty, Ellen, Annie, and Gladys was combined allowed us to exceed over 1 gigawatt of clean computing projects that were either in development, construction, or operation.
Speaker #1: Let's take a look at our key operational metrics or highlights that we focused on. I mentioned our x-a-hash is over 5.2 now. We have 123 megawatts in operation, and as Kadi starts to ramp up, as you'll see in our future quarters, we may have a good chance of doubling that this year.
Speaker #1: Revenue for Q4 was $9.2 million. Continued up and at 17% rise quarter over quarter over the last several quarters, as you'll see in the financial section.
Speaker #1: Power costs hovered around $34 per megawatt-hour on average. Lots of curtailed energy consumed: 4.3 gigawatt pipeline, and our jewels per tera hash efficiency of the machines in our fleet also continued to stay well below 25 jewels per tera hash.
Speaker #1: We now have 55 employees, a strong employees helping us to continue to grow the business. And in Q4 alone, we raised over $57.5 million.
Speaker #1: Here's a look at our clean project pipeline. Dorothy 1A and B, over 50 megawatts partnership with Spring Lane and Generate. That's our operating projects.
Speaker #1: Sophie is rounds out the fleet. And Dorothy 2, which was completed last year, totals the full sort of 123 megawatt footprint. Kadi 1, as it's now ramping up, as you can see, we'll add another 83 megawatts to that operational footprint.
Speaker #1: And Kadi 2, which is our new growing AI campus, will essentially drive us to get into the AI business and expanding our footprint. And we're developing that project as we speak.
Speaker #1: And the rest of the projects are all in development. As you can see, Grace, Rosa, Hetty, hundreds of megawatts that are ready to either go into BTC hosting or AI, and as we develop those and mature those, we'll announce which ones they are.
Speaker #1: And now let's look at our development pipeline. As I said earlier, our pipeline grew significantly in 2025. We now have over 4.3 gigawatts of projects in our long-term pipeline that we're working to either develop as Bitcoin hosting opportunities or new AI data center opportunities.
Speaker #1: Over 3.3 gigawatts of that is in our assessed category. What that means is we're working with IPPs and some of our power partners performing curtailment assessments, completing those with power partners, and that is what sets us up for commercial arrangements with those power partners and get those projects into the planning process.
Speaker #1: We have over 800 megawatts in the planning and development process. That includes PPA negotiations that are either being written negotiated or signed. ERCOT planning processes, where we're submitting the projects into the ERCOT process.
Speaker #1: AI feasibility studies, where we're determining which projects are good for AI versus Bitcoin. And of course, land acquisition and processes, where we secure land for those projects.
Speaker #1: We have project Kadi under construction, so that's that 83 megawatts there. And of course, we have 123 megawatts operating. So as we scale the ramp-up of Kadi, as you can see, we will approach this year over 200 megawatts of operating capability.
Speaker #1: And some of that brings us to the 4.3. Okay. Let's look at the project highlights for Q4 2025 and beyond. Before we jump in, here are key metrics across all of our operating sites.
Speaker #1: As you can see here, we've touched on the fact that we have 123 megawatts up and operating, 123 of those is related to Bitcoin operations, and of course, we've got project Grace.
Speaker #1: It's 2 megawatts. We have 25 megawatts of that 121 that's focused to proprietary mining. That's D1B. 98 megawatts is hosting across a number of leading partners; all of them hyperscale miners, credit-worthy counterparties, long-time partners, and they've all grown with us over time.
Speaker #1: We have deployed over 38,000 mining rigs across our sites. We had over 4.4 x-a-hash as of December 31, and that has grown as you can see in the other slides.
Speaker #1: Our fleet efficiency is at the 25 level. Uptime is 92% in operational hours. 28 full-time roles have been created across the communities that we have our sites deployed at.
Speaker #1: And of course, we have 150 megawatts of wind, where our projects are integrated. And of course, with the project Kadi site, that will grow and increase as well.
Speaker #1: The number of wind farms and the amount of wind power we're using. So exciting metrics as you look across the site. We were busy at project Dorothy 1A.
Speaker #1: We deployed 20 megawatts of Canaan and Blockware at the site, replacing existing customers and setting up the site for new performance benchmarks. We delivered strong weather reliability, sustaining over 90% uptime through extreme cold and ERCOT demand response periods.
Speaker #1: And we completed power infrastructure upgrades for next-generation monitor installations at that site. Project Dorothy 1B, we streamlined the proprietary mining fleet to maximize capacity and improve utilization.
Speaker #1: We also completed hosting agreements in Q1 to support 3.3 megawatts of Blockware expansion in place of proprietary mining consolidation efforts we were doing at the site.
Speaker #1: And we also delivered strong weather reliability, high uptime as well, in the face of cold and extreme ERCOT demand response. Continuing on to the newest member of the Dorothy fleet, Dorothy 2.
Speaker #1: We maintained 100% hosting capacity with existing partners, including Blockware, Compass Mining, and another major hyperscale miner. We delivered strong weather reliability as well. Much like the rest of the Dorothies, and we executed phase three energization of the site, bringing it to full operation in October.
Speaker #1: 2025. All right. Project Kadi. Kadi 1 is our largest project to date, over 83 megawatts under construction in Southeast Texas. There we received ERCOT approval to energize in February of this year, and we began commissioning.
Speaker #1: We reached substantial completion of K1A, phase one, and two, which is the first 36 megawatts as well in the first quarter. Of course, we completed a 48-megawatt hosting deployment with project with Galaxy Digital, one of Soluna's largest to date.
Speaker #1: Kadi 1, as I mentioned before, broke ground in the summer of 2025 and started energization toward the latter part of the year, early into this year.
Speaker #1: Fastest deployment to date, largest project to date. Now let's talk about project Kadi 2. This is an exciting project. This is an AI facility that we are developing in partnership with Metroblocks to co-develop 100 megawatts plus of AI and HPC capacity with a path up to 300 plus megawatts at that location.
Speaker #1: We've completed a test fit for the data center design for the latest NVIDIA GPUs, and we've also attracted strong inbound interest from NeoClouds and hyperscalers validating that the site is great for an AI infrastructure destination also validating our behind-the-meter model integrated with renewables to create a destination for next-generation computing.
Speaker #1: And last but not least, Sophie, our first greenfield project, setting up the platform that you have seen grow over the last few years. We achieved record hash rate there at 1.1 x-a-hash, following fleet expansion, setting a new performance benchmark.
Speaker #1: We added 6.6 megawatts through new partnerships, diversifying the customer base and expanding the site's renewable-powered computing footprint. We also completed annual preventative maintenance and electrical infrastructure to enhance safety and also help prevent future downtime at the site.
Speaker #1: Before we move on, I want to dig in more into the AI campus we're building at project Kadi 2. As I mentioned earlier, it is a joint venture between Soluna and Metroblocks.
Speaker #1: It's a co-development joint venture combining Soluna's renewable-powered Texas campus with Metroblocks' hyperscale AI design and operations platform. As I mentioned, we'll start with an initial 100 megawatt target for IT, so that means larger than 100 megawatts gross.
Speaker #1: And developing a full campus to over 350 megawatts with an expansion target in that range. Because of the way we're structuring the power, getting access to power from the Las Majadas wind farm, and other sources, and the grid, it allows us to keep the power in this sort of 43 cents per kilowatt or 43 dollars per megawatt range.
Speaker #1: The project is in Willisee County, near McAllen, Texas, which puts it in a very exciting location for data centers given network connectivity, power range, wind profile, and land availability to develop a site like this.
Speaker #1: And it's a dual-fed power and clustering model. I've talked about the concept of clustering in previous presentations, and now you can see the benefits of that taking shape in project Kadi 2.
Speaker #1: So how are we going to get to 350-plus Tier 3 AI campus? Well, here's the plan. There's four key elements to this plan. The first is it's developed in a two-phase AI-optimized data center design with approximately 100 megawatts of critical IT load targeted for service in 27, and at least 200 megawatts more anticipated in 28.
Speaker #1: The master plan includes up to seven 50-megawatt data center buildings designed for high-density racks and the latest NVIDIA chips. And that's also supported by a hybrid liquid and air cooling architecture.
Speaker #1: Let's talk about the on-site power generation. The campus power plan is expected to include at least 50 to 180 megawatts of gross on-site natural gas generation for primary and backup power.
Speaker #1: And we're going to include that, of course, with supplemental diesel backup, including as part of the resiliency design for the data center. And we're going to have a renewable clustering strategy here and that's where we're using grid power for the campus from other wind farms in the area.
Speaker #1: So we'll start with Las Majadas wind facility and then we'll integrate other wind generation facilities that are operated by IPP partners with transmission within transmission range of the site.
Speaker #1: And then finally, grid stabilization infrastructure. We've mentioned often the importance of designing capabilities at these sites to protect the grid or shield the grid from the fluctuating power needs of the AI architecture.
Speaker #1: So the campus is designed will include a utility scale bez to support stability and provide supplemental backup power as well to the site. It's a 50-megawatt block design, so every building is 50 megawatts.
Speaker #1: So you'll have at least two to start for the initial phase and that will grow over time to over 7 blocks on a 500-plus acre site.
Speaker #1: And now I want to turn the presentation over to David Michaels, who will take us through the financial highlights for 2025, both for the year and the last quarter, Q4, 2025.
Speaker #1: David?
Speaker #2: Thank you, John. 2025 was a year of transformation. Aimed at building a strong foundation for growth. We focused our efforts in two broad areas: our balance sheet and our revenue base.
Speaker #2: We'll get into more details later, but there's no better place to see the results of those efforts than our balance sheet. It has been transformed from weak to strong.
Speaker #2: And the turnaround has been nothing short of remarkable. We did this through a combination of attracting new project-level equity and credit partners, new sources of top co-public equity, and we settled a few old liabilities.
Speaker #2: We also took a hard look at our revenue portfolio and made some tough decisions designed to enhance, diversify, and de-risk our revenue stack. Bitcoin hash price declined more than 30% during the year, negatively impacting our revenue.
Speaker #2: We adapted. We invested a portion of our new capital in improving existing operations, completing our Dorothy 2 project, and investing in our newest projects, Kati 1 and 2.
Speaker #2: Now let's take a closer look at our revenue portfolio, starting with Bitcoin mining. This is where we started. Where we built our core competencies and strategies that ultimately enabled us to diversify our revenue streams and is still an important source of revenue for us.
Speaker #2: As the Bitcoin mining economic environment evolved, we adapted. We leveraged our core competencies and added hosting services diversifying our revenue stream reducing our capital requirements and lowering our exposure to Bitcoin volatility.
Speaker #2: Those same competencies and project development, infrastructure, behind-the-meter. Power sourcing, and flexible load operations uniquely qualified us for another high-margin source of revenue. Providing demand response ancillary services to the grid and ultimately high-performance computing, AI.
Speaker #2: Pivoting to the balance sheet. Note that the bar chart on the left represents total assets and on the right, total liabilities. Looking at total assets first, the first set of bars current assets jump off the page.
Speaker #2: The bulk of this change results from an increase in cash from our capital formation activities. Which provided a significant cash resources for future investments.
Speaker #2: But not all of the capital that we raised was reserved for future investments, as illustrated by the next two bars, a significant share of the capital we raised was invested in property, plant, and equipment for existing and new projects.
Speaker #2: Total liabilities also increased, but by a much lower amount. And primarily due to increases in project-level debt offset in part by the elimination of the nine-dig liability.
Speaker #2: Let's take a look at where that capital came from. The small ring graph on the left shows the size and mix of our 2024 capital formation activities.
Speaker #2: Most of this capital came from two sources. Project-level equity partners and debt. Now look at the large ring graph on the right. The size is obviously bigger, and the dollars are larger, but more importantly, the mix of sources is meaningfully different.
Speaker #2: The primary source of capital raised during 2025 was from public source investments in Soluna Holdings, Inc. This is important because it means that we will be able to own more of our project equity and future cash flows.
Speaker #2: Now, what did we do with all this new capital? Let's take a look. We invested $49 million in our active projects, bringing Dorothy 2 to full capacity and making substantial progress on Kati 1.
Speaker #2: With smaller amounts invested in Dorothy 1A and B, the balance will be used for new pipeline project development and other investment change in gross profit by quarter is a good measure of the impacts of our revenue enhancement and diversification efforts.
Speaker #2: Take a look at the first two columns on this slide and note that revenue while high in Q4, 2024, is lower than the cost of generating that revenue.
Speaker #2: Resulting in negative gross profit. This was obviously not sustainable and was a catalyst for change. We accelerated our transition to hosting and restructured our existing hosting contracts and the results were dramatic.
Speaker #2: The first quarter, 2025 revenue dropped considerably, but the cost of generating that revenue fell more and the gross profit went from negative to positive.
Speaker #2: As the transition accelerated, revenue began to grow again, at a 17% rate, faster than our cost of revenue. Resulting in higher gross profit. 2025 adjusted EBITDA declined overall due to a combination of higher SG&A expenses, including stock compensation expenses, employee costs, and legal fees.
Speaker #2: And a decline in revenue partially offset by a $6 million decline in the cost of revenue, driven mainly by the absence of cost for high-performance computing services during 2025.
Speaker #2: Q3 and Q4 were negatively impacted by financing costs associated with our equity raise and people costs associated with growth initiatives. With this slide, we take a deeper dive down to project-level results to illustrate the impact of market forces and the changes made to our revenue and profit mix.
Speaker #2: Column 1, Dorothy 1B, is our proprietary mining site. The next three columns, Dorothy 1A, Dorothy 2, and Sophie are hosting sites. Downward pressure on revenue due to a significant decline in Bitcoin hash price continued throughout the year, resulting in a decline in revenue from $38 million in 2024 to $29.7 million.
Speaker #2: In 2025, nearly $22%. The decline was mitigated in part by a $6 million reduction in the cost of revenue, but still a significant impact on our gross profit.
Speaker #2: Two big takeaways from this slide are one, that despite declining hash price conditions, all projects were profitable, and two, hosting projects were more profitable than our prop mining projects, demonstrating the effectiveness of reduced exposure and sensitivity to Bitcoin volatility.
Speaker #2: This last slide, a summary balance sheet fleshes out the discussion with more balance sheet detail and a year-over-year comparison to really bring it home.
Speaker #2: Compared to prior year, assets increased $213%, liabilities increased $24%, and shareholders' equity increased a whopping $397%. And that's not all. We finished 2025 with total assets $2.4 times greater than total liabilities and a current ratio of 1.9 times.
Speaker #2: This is a strong balance sheet. Positioned for growth. Mission accomplished. Thank you for listening to this review of Soluna's 2025 financial highlights. For more information, I encourage you to read our press release and form 10-K.
Speaker #2: John? Back to you.
Speaker #1: If you'd like more information on Soluna, I encourage you to download this slide and click on this slide. It'll take you to our core investor presentation.
Speaker #1: I encourage you to follow the links in the show notes here and download this presentation. There's a lot more content in the deck. We have lots more to share about the future of our business, so definitely keep in touch with us.
Speaker #1: We're on X. You can follow us at Soluna Holdings. You can also follow the company page on LinkedIn. We're Soluna Holdings. And if you're not a subscriber to our newsletter, please subscribe.
Speaker #1: We share lots of great updates and content and I think it will be very helpful to your research and understanding what makes Soluna special and where we're going on our journey to make renewable energy a global superpower using computing as a catalyst and implementing our renewable computing strategy.
