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Fireside Chat Details of Near-Term Milestones for New Capacity That Will Drive the Next Phase of Growth

On June 4, 2024, we hosted CEO John Belizaire for a fireside chat, which included a discussion of the 48 MW expansion underway at Project Dorothy, the recently announced Power Purchase Agreement (PPA) with EDF Renewables for 166 MW at Project Kati, and the company’s path to profitability and addressing its legacy debt. This report contains a transcript of the conversation, which can be accessed on demand. The link is accessible in our full report. Project Dorothy 2 construction to begin this summer with project funding in place. Soluna has secured a $30 million commitment from Spring Lane Capital (~85% owner of Dorothy 1A) that will fully fund the 48 MW expansion. Construction should begin in early July, long lead time items have been ordered, and the initial energization is targeted for 4Q24. On the call, Belizaire explained that the project will replicate Dorothy 1A, with hosting top creditworthy miners (likely some of the same customers at D1) who look to take advantage of Project Dorothy’s low power costs and low carbon footprint. Details of the financing for the project are being finalized and will be released in the coming weeks but we expect Soluna will own ~50% of the project and the company has stated that it expects the project will have a superior waterfall structure and enhanced management and development fees compared with Dorothy 1A, allowing Soluna to benefit from substantial current income during the construction and operational phases. PPA signed for 166 MW Project Kati project has the potential to more than double to company’s capacity and earnings power. Soluna recently signed a PPA with EDF Renewables and the Abu Dhabi Future Energy Company (Masdar) for the 166 MW project at a wind farm in Texas. Belizaire stated that the company plans to develop the project in two 83 MW phases to allow for a faster path to operations, which gives more flexibility for project financing, partnerships, and data center applications. Project Kati has been moving through the ERCOT planning process and Soluna is working to finalize agreements for land leases and long lead time equipment. EBITDA growth to continue and accelerate into 2025 and 2026. Belizaire discussed the recently published Earning Power forecast, which shows adjusted EBITDA doubling in 2025 to ~$15 million and then growing another 30% in 2026 as the 48 MW at D2 ramps up. The company is conservatively assuming a consistent hashprice of $45/PH/s/day but noted the potential for upside at a $65 hashprice, 2026 EBITDA would increase ~45%. Further, the company’s forecast does not include any contributions from the 166 MW Project Kati. Recent and expected EBITDA growth expands options for addressing legacy balance sheet challenges. Soluna had $8.1 million in cash at 1Q24 (not including $2 million in restricted cash), up from $6.3 million at YE23, and expects ~$15 million in 2025 consolidated EBITDA (base case) with the contributions of the now funded Project Dorothy 2. On the call, Belizaire stated the company, along with its new CFO, are working on options to pay down the recently restructured convertible notes and address preferred shares.