Launch of AI Cloud Service to Accelerate Additional Growth Opportunities
New subsidiary Soluna Cloud to partner with leading AI GPU-Server OEM to grow AI Cloud hosting service. The companies have signed an agreement to deliver an initial cluster of NVIDA H100 GPUs, which Soluna expects should represent substantial annual revenue for Soluna Cloud when deployed. In addition, the companies will partner to deliver powerful, energy-efficient supercomputers for large-scale AI projects. Partnership to accelerate Soluna’s Cloud initiative and expand its offering. Soluna will be able to leverage the partner’s renewable powered data centers and its comprehensive software solutions for AI pipelines. This will expand the company’s offering beyond the bare-metal data center infrastructure and help pave the way for Soluna’s AI-focused Helix data center design now in pilot development at Project Dorothy 2. Further, it will help to diversify the company’s revenue mix. Monthly operating update shows continued strong performance at existing project sites, driven by low power costs and high efficiency. The April hosted hash rate was 1,680 PH/s, up from the 1,543 PH/s average in 1Q24, while the monthly self-mining rate in April was 804 PH/s, up from the 785 PH/s average in 1Q24. Project Dorothy 1B produced 33 BTC in 1Q24, down from the 40 BTC monthly average mined in 1Q24, however BTC spot prices increased ~45 YTD. The use of curtailed energy reached 12,942 MWh in March, more than double the 6,199 MWh monthly average in 4Q23. We expect that 1Q results will benefit from lower power costs of curtailed energy as well as higher BTC prices, but we note that proprietary mining is only done at Project Dorothy 1B (a 51% owned JV) although some of the Project Sophie hosting agreements include a profit share component. New project update: 50 MW Project Dorothy 2 construction bids awarded, 166 MW Project Kati moving through ERCOT with PPA in final stages. We continue to see these projects as having the potential to generate significant EBITDA contributions, with Project Dorothy 2 having the potential to generate up to $14 million in annual project-level operating profit contributions to Soluna. While we expect the company to engage a partner to fund the capex similar to Project Dorothy 1, Soluna is in a much stronger position than it was when it negotiated partnerships for the first 50 MW at Project Dorothy.
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