Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 1323

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 4
Chunk 1323
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MWh”) (“Contract Capacity”), a percentage of the profit share of
the daily net income from the customer’s mining operations, or a combination thereof. Some contracts also include pass-through
expenses which are not recognized in revenue. The actual monthly amounts are calculated after the close of each month and billed to the
customers.

Cryptocurrency
revenue consists of revenue recognized from our cryptocurrency mining facilities. Revenue is recognized at the cryptocurrency’s
realized cash value based upon the rates at cryptocurrency exchanges where we are registered. Cryptocurrencies are earned through participation
with mining pool operators where the company provides hash rate services to the mining pool. The consideration received is payable in
BitCoin based on a published formula Cryptocurrency is converted to U.S. dollars on a daily basis.

Starting
in December 2023, we began providing emergency demand
response solutions to ERCOT pursuant to a contractual commitment over defined service delivery periods. This contract includes a single
promise to stand ready, on a monthly basis, to deliver a set amount of curtailment (committed capacity) per month when and if called
upon by ERCOT. The Company believes that an output measure based on the monthly contractual MW stand-ready obligation is the best representation
of the “transfer of value” to the customer. Accordingly, the Company recognizes monthly revenue based on the proportion of
committed stand-ready capacity obligation that has been fulfilled to date.

58

Fair
Value Measurement

The
estimated fair value of certain financial instruments, including cash, accounts receivable and short-term debt approximates their carrying
value due to their short maturities and varying interest rates. “Fair value” is the price that would be received to sell
an asset or transfer a liability in an orderly transaction between market participants at the measurement date. We utilize valuation
techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the
inputs used in the valuation methods, we are required to provide the following information according to the fair value accounting standards.
These standards established a fair value hierarchy as specified that ranks the quality and reliability of the information used to determine
fair values. Financial assets and liabilities are classified and disclosed in one of the following three categories:

    Level
    1:
    Quoted
    market prices in active markets for identical assets or liabilities, which includes listed equities.

    Level
    2:
    Observable
    market-based inputs or unobservable inputs that are corroborated by market data. These items