Welcome to another installment of Soluna’s AMA (Ask Me Anything) series, where you — our readers and our followers on Twitter and LinkedIn — can get your questions answered.
In this Q&A, John Belizaire, CEO of Soluna Holdings, Inc., answers shareholders’ and potential investors’ most-asked questions.
Learn how to submit your questions at the end of this AMA.
Peter Merkel asked: How is the suspected bitcoin halving later this year likely to affect the profitability of the mining partnerships and revenue-sharing ventures? Will they likely want to consume less energy if their potential payout is less? Will this affect the 8.8MW hosting contract at Project Sophie? Why is that contract only for a year? How much does Soluna’s revenue change based on the bitcoin price? In your earnings power presentation (June 2023) SLNH has a BTC price of $26,500. What does the earnings potential look like at BTC $20k, $30k, $40k, $50k?
Shortly after our 10-K is released we expect to publish a revised earnings power illustration with different scenarios along with an update on profitability. Hashprice does not affect most of our hosting relationships. The profit share relationships at Project Sophie are affected, but we have sought to sign deals with customers who are using more efficient machines. Shorter term contracts at Project Sophie allow us to require that customers place updated machines with us or to refresh the agreements to ensure we maximize the profit of the facility. Project Dorothy 1B is 100% proprietary mining and its profitability is directly related to Hashprice. However, with the combination of our machine efficiency and our power price, we expect to weather the effects of the halving.
Michael asked: What is the date that Q4 2023 financials are to be reported? I am calculating that your revenue might exceed last summer’s projections. 2024 is looking to be quite exciting.
Our Q4 2023 financials are scheduled to be released on or before April 1, 2024.
Sid Gold asked: How about a comment on SLNHP? It’s a preferred in arrears that is cumulative! If they default it’s worth zero, if they are an ongoing concern then $25 + all payments in arrears.
Yes, SLNHP’s dividend continues to accrue. The Company’s Board is aware that the preferred dividend obligation accumulates and expects to pay a current dividend and the accumulated dividends when the company’s earnings support such payments. While the Board of Directors has not declared a dividend for 2024 it continues to monitor the Company’s earnings and weigh a variety of growth and operating capital needs when making dividend payment decisions.
Can asked: Why is management not buying shares of Soluna at these levels? Is there a Soluna internal code of conduct or other compliance rules, that have prohibited insider buying for the last 3 months?
There are strict windows where management can trade in the company’s stock. And, these windows become more restrictive when management has access to material non-public information. This makes buying or selling difficult for management. Our Insider Trading Policy can be found here.
Jack asked: Market is rewarding miners buying S21/T21 machines from Bitmain. Would you consider purchasing these (even a token amount for market recognition)?
Soluna has focused its strategy on designing and building high-quality facilities where we source low-cost, low-carbon power. We believe the company is a market leader in this strategy and expect that this will drive significant shareholder returns as we continue to grow out and invest in this business. The underlying project economics are outstanding as we discussed in a MicroCap Conference presentation which can be found here.
Will asked: How does the noise level of your data centers compare to other data center designs?
Our data centers are systematically designed. We have designed our data centers to be very quiet relative to some of the industry. This is critical for us as we seek to be good neighbors and partners with the local community. We also take care to locate our data centers away from population centers.
The patented orientation of our sites directs the loudest part of the facility towards inner corridors, protecting the neighboring properties and community. This greatly reduces the noise levels. For example, at Project Sophie, we measured 78 decibels (“dB”) at the loudest part of our site, and we measured 60 dB at the security gate (closest perimeter point).
60 dB is well within the bounds of any local zoning laws. And is significantly lower than recent reports in the press about other facilities from other players in the industry. These facilities apparently measure 100 dB, 100 feet away from the loud site. That is a 40 dB difference between Soluna sites. A 100 dB level means the noise heard by neighbors is 16 times louder than a 60 dB level.
Daniel asked: Does Soluna anticipate that the bitcoin halving will increase Soluna’s ability to gain more hosting contracts? Does Soluna anticipate larger less efficient miners to seek out lower energy cost sources from the plants you have partnerships with? If so, will increased demand increase the profit margins of these hosting contracts?
The upcoming Bitcoin halving underscores the strategic advantage of Soluna’s business model. Historically, halving events have led to increased interest in cost efficiencies among miners and offer a “stress test” to the variety of business models in the space.
Our unique positioning, co-locating crypto mining operations with renewable energy plants and access to low-cost power, not only sets us apart but also aligns us with the evolving dynamics of the crypto mining industry.
Thanks to these efforts, we believe we are insulated from the upcoming shock, and – as evidenced by recent hosting contracts at Project Sophie – we are signing up opportunities with larger miners seeking to enhance their operations’ profitability and scale.
This could lead to an increase in hosting contracts for Soluna, leveraging our operational efficiencies and renewable energy sources to provide a compelling value proposition to miners looking to optimize their costs.
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