Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 180

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1
Chunk 180
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 is called upon to deliver on its stand-ready obligation
to curtail capacity.

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.

High
performance computing services

The
Company provided high performance computing (“HPC”) services to support customers’ generative AI workstreams. We have
determined that HPC services were a single continuous service consisting of a series of distinct services that are substantially the same
and have the same pattern of transfer (i.e., distinct days of service).

These
services were consumed as they are received, and the Company recognized revenue over time using the variable allocation exception as it
satisfies performance obligations. We applied this exception because we concluded that the nature of our obligations and the variability
of the payment terms based on the number of GPUs providing HPC services were aligned and uncertainty related to the consideration was resolved
on a daily basis as we satisfied our obligations. The Company recognized revenue net of consideration payable to customers, such as service
credits, and accounted for as a reduction of the transaction price in accordance with guidance in ASC 606-10-32-25.

The
Company, as it seeks to develop AI/HPC data center projects, may enter into customer hosting contracts whereby the Company, or its JV
partners or affiliates, may provide hosting services which include electrical power, other utilities, network connectivity, and management
of hosting facility to AI/HPC customers, and the customers pay a stated amount per megawatt-hour MWh, a fixed rate, as well as a percentage of the profit share of net income from the customer’s mining operations,
or a combination thereof. Some contracts may also include pass-through expenses which are not recognized in revenue. The actual monthly
amounts will be calculated after the close of each month and billed to the customer. If any shortfalls due to outages were to be experienced,
service level credits may be made to customers to offset outages which prevent them from utilizing the AI/HPC facility. Customer contract
security deposits, if applicable, would be reflected as other liabilities created at the time the contract is signed and held until the
conclusion of the contract relationship.

Cost
of Cryptocurrency Mining and Data Center Hosting Revenue

The
Company’s cost of revenue consists primarily of (i) direct production costs related to mining