January Corporate Update Shows Further Progress on Multiple Fronts
Soluna’s AI datacenter initiative advancing. Progress continues on the ‘Helix’ AI pilot that is part of Project Dorothy 2, with its engineering team working on the new design with a leading datacenter design firm. In addition, Soluna has retained BitOoda Technologies LLC as a financial advisor to assist with raising capital for the new AI business venture that we expect will house the company’s AI-related assets going forward. We continue to see AI as driving the next phase in Soluna’s growth, opening it to a market opportunity well in excess of the still-growing Bitcoin mining market. Project Dorothy 2 well along in the construction phase. The 50MW Phase 2, which was announced in 4Q23, has finalized its design with long-lead equipment being procured. Construction bids are planned for later in 1Q24. Project Dorothy 2 will also include a scalable pilot for high-performance computing, which Soluna expects will be used to run AI workloads for future customers. The 166MW Project Kati is on track to exit the ERCOT planning phase before the end of 1Q24. After the planning phase, the project will move into the ‘modeling phase’, which is typically no more than 90 days, and should give Soluna a line of sight to an energization date. The PPA agreements are expected to be finalized in 1Q24. Initial ancillary services tested successfully; look for revenue contributions to begin in mid-2024. Soluna announced that it passed its first demand response test, with MaestroOS seamlessly ramping down the site’s power consumption within the time requirements and then ramping up again. We continue to see ancillary services as having the potential to diversify and boost revenue contributions from Project Dorothy. Progress on debt reduction. Soluna announced that $4.1 million of the principal of convertible debt has been converted to equity since 3Q23, with $8.1 million of the principal remaining outstanding. The company is now in a much stronger position today than it has been in the past year, which we expect will give it more attractive options as it looks to shape its future capital structure at both the project and corporate level. At 3Q23, cash stood at $5.6 million, up from $1.1 million at YE22. The company was adjusted EBITDA positive in 3Q23, has a track record of developing and financing multiple projects, and has a robust near- and long-term project pipeline.
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