Company: SLNH
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023503
Chunk: 313

Company: Soluna Holdings, Inc
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 2
Chunk 313
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. These negative impacts were partially mitigated by the successful ramped-up energization and increasing revenue
recognition from the D2 facility, which commenced operations and contribution during the third quarter of 2025.

57

Demand
Response Service: Demand response service revenue declined for the nine months ended September 30, 2025, compared to the prior-year
period. This decrease was driven by a combination of market conditions and operational limitations. Market factors included a decline
in the average ERCOT Clearing Price per MW. Operationally, the capacity bid into the program was reduced due to known outages at the
Dorothy site associated with the D2 substation interconnection, in addition to the expected degradation of the D1B miner fleet’s
performance.

Cost
of Cryptocurrency Mining Revenue, exclusive of depreciation: Cost of cryptocurrency mining revenue includes direct utility
costs, site overhead expenses, and overhead costs attributable to the operations of our cryptocurrency mining facilities in Texas.

The
cost of cryptocurrency mining revenue experienced a minimal decrease for the nine months ended September 30, 2025, compared to the same
period in 2024. This slight decline was primarily attributed to a corresponding reduction in operating and electricity costs, which directly
resulted from a marginal decrease in overall electricity usage during the period.

Cost
of Data Hosting Revenue, exclusive of depreciation: Cost of data hosting revenue includes direct utility costs, site overhead
expenses, and overhead costs attributable to the operations of data hosting facilities in Kentucky and Texas.

Cost of data hosting decreased for the nine months
ended September 30, 2025 compared to the nine months ended September 30, 2024 mainly due to a change in hosting contracts mix, in which
contracts were entered that included electricity passthrough contracts replacing fixed rate volume contracts. This decrease was partially
offset by the initial energization of the Dorothy 2 facility during the second quarter of 2025 and the subsequent increase in MWs capacity
and associated operating costs in the third quarter of 2025.

Cost
of High-Performance Computing Services: Cost of High-Performance Computing Services represents the direct production expenses
associated with providing AI and HPC processing capabilities. For the nine months ended September 30, 2024, this cost totaled approximately
$2.9 million, which was related to the agreement executed with HPE effective July 1, 2024, to acquire access to essential datacenter
and cloud services necessary for supporting our AI and HPC processes.

Revenue