Soluna Reports $24.4 million in Cryptocurrency Revenue in Full Year 2022, a 123% increase – Provides Operational Update

Hosting revenue of $4.1 million, BTC Equivalent Mined 883

ALBANY, N.Y.--()--Soluna Holdings, Inc. (“SHI” or the “Company”), (NASDAQ: SLNH), the parent company of Soluna Computing, Inc. (“SCI”), a developer of green data centers for Bitcoin mining and other intensive computing, announced financial results for the full year ended December 31, 2022.

Michael Toporek, CEO of Soluna Holdings, stated, “The last 18 months have proven to be challenging for the entire sector. Our team has risen to the occasion and repositioned the Company for future success and to not only have innovative low-cost facilities, but to drive to achieve the scale necessary to have meaningful corporate level Adjusted EBITDA once Project Dorothy is scaled.”

Toporek further added, “These accomplishments have come as we have reduced headcount and operating costs while focusing our resources to achieve maximum return on investment.”

Fiscal Year 2022 Financial and Recent Operational Highlights

  • Project Dorothy regulatory approval for 100MW, Energization expected in April.
  • Effectuated significant cost reductions through headcount reductions, efficiencies, and focusing resources.
  • Developed project pipeline to help more renewable energy power plants benefit from monetizing curtailed energy.
  • Fully ramped project Sophie by March of last year with an operational capacity of 25 MW.
  • Proprietary-mining produced 883 equivalent in Bitcoin for 2022.
  • Cryptocurrency mining revenue of $24.4 million for 2022.
  • Data hosting revenue of $4.1 million for 2022.

Fiscal Year 2022 Financial Results

Total revenue in 2022 increased by 99% to $28.5 million compared to $14.3 million in 2021. The increase is attributable to the significant increase in mining operations at the Project Sophie facility following the March 2022 full energization. Adjusted EBITDA was -$4.6 million for 2022 compared to $1.5 million in 2021.

The total cost of revenue excluding depreciation as a percentage of revenue increased to 62% in 2022 compared to 41% in 2021 primarily driven by a decline in Bitcoin pricing and increases in energy costs.

General and administrative expenses, exclusive of depreciation and amortization and stock-based compensation, for the year ending on December 31, 2022, increased by $8.2 million, or 115%, to $15.3 million from $7.1 million for the year ending on December 31, 2021. This increase was driven by an increase in personnel costs of $4.6 million during the year ending on December 31, 2022, compared to the year ending on December 31, 2021, driven by the acquisition and ramp of the Soluna Computing Inc. business unit. Stock-based compensation costs were $3.9 million for 2022 and $2.0 million for 2021 an increase of $1.9 million.

Legal fees increased by approximately $1.5 million during the year ending on December 31, 2022, compared to the year ending on December 31, 2021, due to legal expenses of approximately $1.2 million in relation to Project Dorothy. In addition, there was an increase of approximately $500 thousand in relation to general corporate matters associated with the growth of the business.

Consulting and professional services increased by $959 thousand during the year ending on December 31, 2022, compared to the year ending on December 31, 2021, due to required valuations of complex transactions, advisory fees for complex accounting research matters, and pipeline development project costs, in which the Company involves multiple consultants to help build out future plans.

The audited financial statements are available online.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Soluna Holdings, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials, and in oral statements made by its officers, directors, or employees to third parties. Statements that are not historical facts, including but not limited to statements about Soluna’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, further information regarding which is included in the Company's filings with the Securities and Exchange Commission. All information provided in this press release is as of the date of the press release, and Soluna Holdings, Inc. undertakes no duty to update such information, except as required under applicable law.

Non-GAAP Measures

In addition to financial measures calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), we also use “Adjusted EBITDA.” Adjusted EBITDA is a non-GAAP financial measure defined as net income (loss) from continuing operations before interest, taxes, depreciation, and amortization (“EBITDA”) adjusted to eliminate the effects of certain non-cash, non-recurring items, that we believe do not reflect our ongoing strategic business operations. Management believes that Adjusted EBITDA results in a performance measurement that represents a key indicator of the Company’s business operations of cryptocurrency mining and hosting customers engaged in cryptocurrency mining.

We believe Adjusted EBITDA can be an important financial measure because it allows management, investors, and the Board to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period to period by making such adjustments. Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with U.S. GAAP. For example, we expect that stock-based compensation costs, which is excluded from the non-GAAP financial measures, will continue to be a significant recurring expense over the coming years and is an important part of the compensation provided to certain employees, officers, and directors. Similarly, we expect that depreciation and amortization of fixed assets will continue to be a recurring expense over the term of the useful life of the assets.

Adjusted EBITDA is provided in addition to and should not be considered to be a substitute for, or superior to net income, the comparable measure calculated in accordance with U.S. GAAP. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted earnings per share or any other performance measure calculated in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under U.S. GAAP.

Reconciliations of Adjusted EBITDA to net income from continuing operations, the most comparable U.S. GAAP financial metric, are presented in the table following the financial statements prepared according to U.S. GAAP.

About Soluna Holdings, Inc (SLNH)

Soluna Holdings, Inc. is the leading developer of green data centers that convert excess renewable energy into global computing resources. Soluna builds modular, scalable data centers for computing intensive, batchable applications such as Bitcoin mining, AI, and machine learning. Soluna provides a cost-effective alternative to battery storage or transmission lines. Soluna uses technology and intentional design to solve complex, real-world challenges. Up to 30% of the power of renewable energy projects can go to waste. Soluna’s data centers enable clean electricity asset owners to ‘Sell. Every. Megawatt.’

Soluna Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

As of December 31, 2022 and December 31, 2021

(Dollars in thousands, except per share)

 

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash

 

$

1,136

 

 

$

10,258

 

Restricted cash

 

 

685

 

 

 

 

Accounts receivable

 

 

320

 

 

 

531

 

Prepaid expenses and other current assets

 

 

1,326

 

 

 

977

 

Deposits on equipment

 

 

1,175

 

 

 

10,188

 

Current assets associated with discontinued operations

 

 

 

 

 

3,028

 

Total Current Assets

 

 

4,642

 

 

 

24,982

 

Other assets

 

 

1,150

 

 

 

1,121

 

Equity investment

 

 

 

 

 

750

 

Property, plant and equipment, net

 

 

42,504

 

 

 

44,597

 

Intangible assets, net

 

 

36,432

 

 

 

45,839

 

Operating lease right-of-use assets

 

 

233

 

 

 

405

 

Total Assets

 

$

84,961

 

 

$

117,694

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,548

 

 

$

2,958

 

Accrued liabilities

 

 

2,721

 

 

 

2,859

 

Line of credit

 

 

350

 

 

 

1,000

 

Convertible notes payable

 

 

11,737

 

 

 

7,121

 

Current portion of debt

 

 

10,546

 

 

 

 

Deferred revenue

 

 

453

 

 

 

316

 

Operating lease liability

 

 

161

 

 

 

184

 

Income taxes payable

 

 

 

 

 

2

 

Current liabilities associated with discontinued operations

 

 

 

 

 

1,243

 

Total Current Liabilities

 

 

29,516

 

 

 

15,683

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

203

 

 

 

509

 

Long term debt

 

 

 

 

 

 

Operating lease liability

 

 

84

 

 

 

237

 

Deferred tax liability, net

 

 

8,886

 

 

 

10,277

 

Total Liabilities

 

 

38,689

 

 

 

26,706

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

9.0% Series A Cumulative Perpetual Preferred Stock, par value $0.001 per share, $25.00 liquidation preference; authorized 6,040,000; 3,061,245 shares issued and outstanding as of December 31, 2022 and 1,252,299 shares issued and outstanding as of December 31, 2021

 

 

3

 

 

 

1

 

Series B Preferred Stock, par value $0.0001 per share, authorized 187,500; 62,500 shares issued and outstanding as of December 31, 2022 and 0 shares issued and outstanding as of December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $0.001 per share, authorized 75,000,000; 19,712,722 shares issued and 18,694,206 shares issued and outstanding as of December 31, 2022 and 14,769,699 shares issued and 13,754,206 shares issued and outstanding as of December 31, 2021

 

 

20

 

 

 

15

 

Additional paid-in capital

 

 

277,410

 

 

 

227,790

 

Accumulated deficit

 

 

(221,769

)

 

 

(123,054

)

Common stock in treasury, at cost, 1,018,516 shares at December 31, 2022 and 1,015,493 shares at December 31, 2021

 

 

(13,798

)

 

 

(13,764

)

Total Soluna Holdings, Inc. Stockholders’ Equity

 

 

41,866

 

 

 

90,988

 

Non-Controlling Interest

 

 

4,406

 

 

 

 

Total Stockholders’ Equity

 

 

46,272

 

 

 

90,988

 

Total Liabilities and Stockholders’ Equity

 

$

84,961

 

 

$

117,694

 

Soluna Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations

For the Years Ended December 31, 2022 and 2021

(Dollars in thousands, except per share)

 

 

 

 

 

 

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Cryptocurrency mining revenue

 

$

24,409

 

 

$

10,932

 

Data hosting revenue

 

 

4,138

 

 

 

3,413

 

Total revenue

 

 

28,547

 

 

 

14,345

 

Operating costs:

 

 

 

 

 

 

 

 

Cost of cryptocurrency mining revenue, exclusive of depreciation

 

 

14,281

 

 

 

3,504

 

Depreciation costs associated with cryptocurrency mining

 

 

18,708

 

 

 

2,122

 

Total cost of cryptocurrency mining revenue

 

 

32,989

 

 

 

5,626

 

Cost of data hosting revenue

 

 

3,517

 

 

 

2,444

 

Operating expenses:

 

 

 

 

 

 

 

 

General and administrative expenses, exclusive of depreciation and amortization

 

 

19,203

 

 

 

9,170

 

Depreciation and amortization associated with general and administrative expenses

 

 

9,506

 

 

 

1,581

 

Total general and administrative expenses

 

 

28,709

 

 

 

10,751

 

Impairment on equity investment

 

 

750

 

 

 

-

 

Impairment on fixed assets

 

 

47,372

 

 

 

-

 

Operating loss

 

 

(84,790

)

 

 

(4,476

)

Interest expense

 

 

(8,375

)

 

 

(1,879

)

Loss on debt extinguishment and revaluation, net

 

 

(11,130

)

 

 

-

 

Loss on sale of fixed assets

 

 

(4,089

)

 

 

-

 

Other income, net

 

 

22

 

 

 

11

 

Loss before income taxes from continuing operations

 

 

(108,362

)

 

 

(6,344

)

Income tax benefit (expense) from continuing operations

 

 

1,346

 

 

 

(44

)

Net loss from continuing operations

 

 

(107,016

)

 

 

(6,388

)

Income before income taxes from discontinued operations (including gain on sale of MTI Instruments of $7,751 for year ended December 31, 2022)

 

 

7,921

 

 

 

1,087

 

Income tax benefit from discontinued operations

 

 

-

 

 

 

40

 

Net income from discontinued operations

 

 

7,921

 

 

 

1,127

 

Net loss

 

 

(99,095

)

 

 

(5,261

)

(Less) Net loss attributable to non-controlling interest

 

 

380

 

 

 

-

 

Net loss attributable to Soluna Holdings, Inc.

 

$

(98,715

)

 

$

(5,261

)

 

 

 

 

 

 

 

 

 

Basic and Diluted (loss) earnings per common share:

 

 

 

 

 

 

 

 

Net loss from continuing operations per share (Basic & Diluted)

 

$

(7.42

)

 

$

(0.59

)

Net income from discontinued operations per share (Basic & Diluted)

 

$

0.53

 

 

$

0.09

 

Basic & Diluted loss per share

 

$

(6.89

)

 

$

(0.50

)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding (Basic and Diluted)

 

 

14,982,510

 

 

 

11,840,242

 

Soluna Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Year Ended December 31, 2022 and 2021

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

Operating Activities

 

 

 

 

 

 

 

 

Net loss

 

$

(99,095

)

 

$

(5,261

)

Net income from discontinued operations (including gain on sale of MTI Instruments of $7,751 for the year ended December 31, 2022)

 

 

(7,921

)

 

 

(1,127

)

Net loss from continuing operations

 

 

(107,016

)

 

 

(6,388

)

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation expense

 

 

18,731

 

 

 

2,124

 

Amortization expense

 

 

9,483

 

 

 

1,579

 

Stock-based compensation

 

 

3,673

 

 

 

1,941

 

Consultant stock compensation

 

 

179

 

 

 

104

 

Deferred income taxes

 

 

(1,388

)

 

 

41

 

Impairment on fixed assets

 

 

47,372

 

 

 

-

 

Amortization of operating lease asset

 

 

202

 

 

 

169

 

Impairment on equity investment

 

 

750

 

 

 

-

 

Loss on debt extinguishment and revaluation, net

 

 

11,130

 

 

 

-

 

Amortization on deferred financing costs and discount on notes

 

 

6,538

 

 

 

1,876

 

Loss on sale of fixed assets

 

 

4,089

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

211

 

 

 

(471

)

Prepaid expenses and other current assets

 

 

146

 

 

 

(956

)

Other long-term assets

 

 

(29

)

 

 

(812

)

Accounts payable

 

 

553

 

 

 

2,765

 

Deferred revenue

 

 

137

 

 

 

316

 

Operating lease liabilities

 

 

(197

)

 

 

(156

)

Other liabilities

 

 

(308

)

 

 

306

 

Accrued liabilities

 

 

(374

)

 

 

2,197

 

Net cash (used in) provided by operating activities

 

 

(6,118

)

 

 

4,635

 

Net cash provided by operating activities- discontinued operations

 

 

369

 

 

 

917

 

Investing Activities

 

 

 

 

 

 

 

 

Purchases of property, plant, and equipment

 

 

(63,684

)

 

 

(45,792

)

Purchases of intangible assets

 

 

(76

)

 

 

(1,567

)

Proceeds from disposal on property, plant, and equipment

 

 

2,605

 

 

 

-

 

Deposits of equipment, net

 

 

6,441

 

 

 

(9,909

)

Net cash used in investing activities

 

 

(54,714

)

 

 

(57,268

)

Net cash provided by (used in) investing activities- discontinued operations

 

 

9,084

 

 

 

(37

)

Financing Activities

 

 

 

 

 

 

 

 

Proceeds from preferred offerings

 

 

16,658

 

 

 

27,965

 

Proceeds from common stock offering

 

 

2,858

 

 

 

17,250

 

Proceeds from notes and debt issuance

 

 

30,543

 

 

 

15,000

 

Costs of preferred offering

 

 

(1,910

)

 

 

(2,707

)

Costs of common stock offering

 

 

(504

)

 

 

(1,847

)

Costs of notes and short-term debt issuance

 

 

(2,078

)

 

 

(1,338

)

Cash dividend distribution on preferred stock

 

 

(3,852

)

 

 

(630

)

Borrowings under line of credit

 

 

-

 

 

 

1,000

 

Payments on NYDIG loans and line of credit

 

 

(4,491

)

 

 

-

 

Contributions from non-controlling interest

 

 

4,786

 

 

 

-

 

Proceeds from stock option exercises

 

 

153

 

 

 

102

 

Proceeds from common stock warrant exercises

 

 

779

 

 

 

4,586

 

Net cash provided by financing activities

 

 

42,942

 

 

 

59,381

 

 

 

 

 

 

 

 

 

 

(Decrease) increase in cash & restricted cash-continuing operations

 

 

(17,890

)

 

 

6,748

 

Increase in cash & restricted cash- discontinued operations

 

 

9,453

 

 

 

880

 

Cash & restricted cash – beginning of period

 

 

10,258

 

 

 

2,630

 

Cash & restricted cash – end of period

 

$

1,821

 

 

$

10,258

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information

 

 

 

 

 

 

 

 

Noncash equipment financing

 

 

4,620

 

 

 

-

 

Interest paid on NYDIG loans and line of credit

 

 

1,311

 

 

 

6

 

Proceed receivable from sale of MTI Instruments

 

 

295

 

 

 

-

 

Notes converted to common stock

 

 

3,295

 

 

 

-

 

Warrant consideration in relation to promissory notes and convertible notes

 

 

14,602

 

 

 

-

 

Promissory note conversion to preferred shares

 

 

15,236

 

 

 

-

 

Noncash proceed on sale of equipment

 

 

210

 

 

 

-

 

Purchase of miner equipment using restricted stock

 

 

-

 

 

 

(207

)

Registration fees in prepaids and accounts payable

 

 

-

 

 

 

(200

)

Termination shares issued in conjunction with merger for intangible assets

 

 

-

 

 

 

1,917

 

Warrants exercised prior to year-end not received until subsequent period

 

 

-

 

 

 

206

 

Share consideration in relation to strategic pipeline contract

 

 

-

 

 

 

33,000

 

Deferred tax liability in relation to strategic pipeline contract

 

 

-

 

 

 

10,934

 

Adjusted EBITDA Full Year 2021 and 2022

 

(Dollars in thousands)

 

Years Ended
December 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Net loss from continuing operations

 

$

(107,016

)

 

$

(6,388

)

Interest expense

 

 

8,375

 

 

 

1,879

 

Income tax (benefit) expense

 

 

(1,346

)

 

 

44

 

Depreciation and amortization

 

 

28,214

 

 

 

3,703

 

EBITDA

 

 

(71,773

)

 

 

(762

)

 

 

 

 

 

 

 

 

 

Adjustments: Non-cash items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation costs

 

 

3,852

 

 

 

1,941

 

Loss on sale of fixed assets

 

 

4,089

 

 

 

 

Loss on debt extinguishment and revaluation, net

 

 

11,130

 

 

 

 

Impairment of equity investment

 

 

750

 

 

 

 

Impairment on fixed assets

 

 

47,372

 

 

 

 

Adjustments: Non-recurring items

 

 

 

 

 

 

 

 

Exchange registration expenses

 

 

 

 

 

293

 

Adjusted EBITDA

 

$

(4,580

)

 

$

1,472

 

 

Contacts

Contact Information
Michael Toporek, CEO
Soluna Holdings, Inc.
hello@soluna.io

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Contacts

Contact Information
Michael Toporek, CEO
Soluna Holdings, Inc.
hello@soluna.io