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 Tunison, CFO of Soluna Holdings, Inc., answers shareholders’ and potential investors’ most-asked questions.
Learn how to submit your questions at the end of this AMA.
David asked: How does the subsidiary basis of Soluna Cloud impact my shares of Soluna?
Similar to how the equity ownership of our existing data centers like Project Dorothy resulted in accounting consolidation of the entity profitability and split of the project cash flows between partners/owners, Soluna Cloud will have similar dynamics to the extent there are other equity participants. There is no direct impact to your Soluna Holdings Inc (SLNH) shares.
Robin asked: What is the long-term growth goal for Soluna Clouds considering that the start is already expected to deliver 38-80m in revenue over the next three years?
Soluna Cloud represents an exciting and important component of our future growth. As we continue to develop our 2GW+ pipeline of renewable power projects, we will build HPC/AI-focused data centers under Soluna Cloud and BTC/Hosting-focused data centers under Soluna Digital, sometimes within the same project. Our goal is to continue to extend the size of our pipeline of projects, accelerate development of new projects and increase the total number of MW’s operating, including growing the share of HPC/AI-focused datacenters. Soluna Cloud will house our GPU Cloud and Co-location businesses. As AI takes hold in the enterprise there will be increasing demand for sustainable, scalable resources for aI training, tuning, and inference. We aim to be a key player in this vibrant ecosystem.
Stephen asked: Based on your public announcements there appears to be a solid pipeline of energy supply opportunities for Soluna to tap into. What is your projected growth rate (online AI/BTC MW) over the next 12 months? What are the main elements that will impact the growth rate on future data center / BTC projects?
Indeed our pipeline is growing. Our current goal is to more than double the number of MW’s operating to >150MW at the end of this year/early next year, driven primarily by the energization of Project Dorothy 2 and more Soluna Cloud projects. Our growth rate has been constrained by access to capital, but as you can see via recent announcements, we are accelerating the pace of development and size of projects successfully and look forward to sharing additional news on this in due course.
Frank asked: I’ve heard AI requires 100% uptime. How will you guys be able to sustain that?
There are actually multiple stages of the AI lifecycle. Training, Tuning, and Inference – some of which indeed require near 100% uptime and others that can be batchable. The training and fine tuning phases, specifically, are particularly well suited to compute environments that have less than 100% uptime – where a tradeoff to secure industry leading power and infrastructure cost (which is what Soluna is uniquely positioned to deliver) can easily be made. The innovation we are focusing on is placing this batchable portion of AI at renewable energy projects to deliver sustainable, scalable, and cost effective digital infrastructure to enterprises who care deeply about the ESG implications of AI.
Andrew asked: When will you resume the preferred dividend payments?
As we communicated in an earlier AMA, the Board continues to carefully evaluate the Company’s current and prospective financial and operating results as well as the interests of all of its equity holders when making a determination to pay or accrue its Series A Preferred dividends.
Anonymous asked: Can you briefly provide an overview of the various share classifications (preference shares type A & B) and provide the impact to the company in terms of conversion price? And, in terms of dividends, can you confirm what the level is payable for each class of preference shares and how and when they are paid/accrued?
Preferred A Series are perpetual, have a liquidation preference face value of $25/share, are not convertible, carry a 9% dividend on the face value which is currently being accrued, has no conversion right or price, and are paid upon a change of control at the lesser of the sum of accrued dividends plus face value or the share value. (conversion share value resets upon stock splits/reverse splits)
Preferred B Series may be redeemed if no Preferred A Series shares are outstanding after Convertible Notes have been retired and the 3rd anniversary date has passed (which occurs in 2025), have the same liquidation preference as Preferred Series A, carry a 10% dividend, which is $625,000, and is paid annually, and may be converted to shares of Common Equity at a conversion price of $27/share and are paid upon a change of control as shares of Common Equity or converted into new Preferred Shares of the new entity.
Anonymous asked: When will the company have positive cash flow and EBITDA for more than 2 quarters in a row?
Although we share forward looking statements from time to time regarding our projects and the company, we do not provide earnings or profit guidance that is specific. Your best resource is our Earnings Power Presentation that we update annually. The last update was in May of this year and is found here.
Anonymous asked: How has the Soluna Enterprise Value (EV) Changed?
We last shared an EV calculation via our update to the Introduction to Soluna Presentation on April 24, 2024 located here. This showed the calculation through the end of 2023. Below you can see the significant progress that has been made, and value that has been created, through the end of June 2024 – an increase of ~$43m from $64m to $107m.
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