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Major Milestones Reached in Expansion; Next Phase of Growth Now Well Underway

214MW of new projects to more than double the existing 75MW in operation and further builds on Soluna’s impressive corporate turnaround. In the past year, Soluna has launched its flagship Project Dorothy with both hosting (1A) and propriety mining (1B), moved to more profitable hosting contracts at its 25MW Project Sophie, began diversifying revenue through AI hosting at Project Sophie, and launched a new AI cloud venture and the Helix AI datacenter design. In addition, the company has been adjusted EBITDA positive for the past two quarters, while the balance sheet has improved. We see Soluna as being well positioned to execute on these growth opportunities with its leading suite of technological offerings and a team with a track record of execution. Funding now in place for Project Dorothy 2, with initial energization targeted for 4Q24. Soluna announced that it has secured a $30 million commitment from Spring Lane Capital (~85% owner of Dorothy 1A) that will fully fund the 48MW expansion (2MW is for the Helix AI data center pilot). Construction will begin in the coming month and ERCOT approval has already been received. While final details have not been released, Soluna will have the right to own up to 49% of the project, but Soluna has stated that the agreement has 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. We note that the March 2023 financing for Project Dorothy 1A was made when Soluna was in a difficult financial position and did not have the proven track record that Project Dorothy 1A and 1B have delivered in the past year. 166MW Project Kati signs Power Purchase Agreement (PPA) with EDF Renewables and moves the project closer construction. Soluna signed a definitive PPA with EDF Renewables and the Abu Dhabi Future Energy Company (Masdar) for the 166MW project at a wind farm in Texas. The project, which was announced in 2H23, has been moving through the ERCOT planning process and Soluna is working to finalize agreements for the land lease and long-lead time equipment. The company plans to develop the project in two 83MW phases, which we see as providing a faster path to operations and gives more flexibility for project financing, partnerships, and data center applications. Continued strong operating results. Soluna reported 1Q24 adjusted EBITDA of $5.1 million, up from $1 million in 4Q23 and negative $2.9 million in 1Q23, driven by another quarter of solid performance at the operating project level and ongoing cost reductions at the parent company level. As highlighted in its monthly operating updates, Projects Sophie and Dorothy 1A & 1B benefit from very low power costs and high operating efficiency. Cash as of March 31 increased to $8.4 million (not including $2 million in restricted cash) and the company continues to make progress with its note holders, having recently reached a fourth amendment. Fireside chat with CEO John Belizaire on June 4, 2024, at 1:00 pm ET. Link to register is accessible in our full report.