Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 304

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1A
Chunk 304
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7: Management’s Discussion and Analysis of Financial Condition and Results of Operations

The
following discussion of our financial condition and results of operations should be read in conjunction with our Consolidated Financial
Statements and the related notes included elsewhere in this Annual Report. This discussion contains
forward-looking statements, which involve risk and uncertainties. Our actual results could differ materially from those anticipated in
the forward-looking statements as a result of certain factors, including those discussed in Item 1A: “Risk Factors” and elsewhere
in this Annual Report.

Recent
Developments

Soluna
Cloud – Termination of HPE Agreement

Soluna
launched Project Ada- its GPU-as-a-Service business via Soluna Cloud, Inc. (“Soluna Cloud”) earlier in 2024 in order to
achieve two primary goals:

1.Gain
                                                                                                                                                                                                                                     commercial experience in the AI/HPC market in support of future data center development focused on large language models (LLMs) and
                                                                                                                                                                                                                                     other AI workloads. 

2.Capitalize
                                                                                                                                                                                                                                     on lower-cost capital to pursue high-growth revenue opportunities in the compute infrastructure market.

As a point of entry into Project Ada, Soluna AL CloudCo,
LLC (“CloudCo”), a subsidiary of Soluna Cloud, entered into the HPC & AI Cloud Services Agreement and HPE Greenlake Services
Custom Statement of Work with Hewlett Packard Enterprise Company (“HPE”) on June 18, 2024 (together with the associated Statement
of Work, the “HPE Agreement”), that provided data center and cloud services for artificial intelligence (“AI”)
and supercomputing applications, utilizing NVIDIA H100 Graphic Processing Units (“GPUs”).

At the time of launch, the market for NVIDIA H100 GPUs was characterized by constrained supply and strong pricing,
which aligned with the economics of the fixed-cost HPE Agreement. However, by the end of 2024, the GPU market shifted significantly.
Lead times for NVIDIA H100 GPUs shortened from over 50 weeks in 2023 to 8–12 weeks by the end of 2024, easing supply constraints
and reducing urgency among buyers. At the same time, market demand shifted toward larger GPU clusters than those available under the
HPE Agreement, making it difficult to secure long-term, reserved contracts at profitable rates. The expected release of NVIDIA’s
H200 Blackwell architecture also caused some customers to delay purchases. Although release timelines were impacted by design issues,
the prospect of next-generation technology