Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 333

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1A
Chunk 333
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 for the
year ended December 31, 2024. In addition, the Borrower deferred financing costs associated with the Loan of approximately $163 thousand.

Critical
Accounting Policies and Use of Estimates

The
prior discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements,
which have been prepared in accordance with GAAP. Note 2 of the Consolidated Financial Statements included in this Annual Report includes a summary of our most significant accounting policies. The preparation of these consolidated financial statements requires
management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure
of assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition,
income taxes and share-based compensation. We base our estimates on historical experience and on various other factors that we believe
are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions
or conditions. Periodically, our management reviews our critical accounting estimates with the Audit Committee of our Board of Directors.

The
significant accounting policies that we believe are most critical to aid in fully understanding and evaluating our consolidated financial
statements include the following:

Revenue
Recognition

We
have entered into customer hosting contracts whereby we provide hosting services which include, electrical
power to cryptocurrency mining customers, other utilities, and management of hosting facilities. Customer contracts can be a combination
of a stated fixed amount per megawatt-hour (“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