Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 732

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1C
Chunk 732
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 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 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