Company: SLNH
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010886
Chunk: 73

Company: Soluna Holdings, Inc
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 1
Chunk 73
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 partnerships with major HPC original equipment manufacturers.

    4.
    Capital Formation – Pursuing financing opportunities to support key growth initiatives, including Project Dorothy 2 (“D2”) and Project Kati.

Revenue Sources

Bitcoin Mining Business

We engage in proprietary Bitcoin mining, a process
that verifies transactions and secures the Bitcoin blockchain. This process involves the use of specialized computing equipment to solve
complex cryptographic algorithms. Miners compete to solve these algorithms; the first to do so is awarded a predetermined number of newly
issued Bitcoins (the “Block Reward”) and any transaction fees associated with that block.

We participate in one or more mining pools—collaborative
networks of miners who combine computing power to improve the probability of earning rewards. Block Rewards earned by the pool are distributed
among participants based on each member’s proportional contribution. This model helps reduce revenue volatility compared to solo
mining operations.

Our mining operations are energy-intensive and require
significant computational resources. We operate data centers equipped with both proprietary and third-party hardware and software. Our
proprietary data center operating system, MaestroOS, is used to optimize performance, manage power consumption, and increase operational
efficiency.

Revenue from Bitcoin mining consists of Block Rewards
and transaction fees and is recognized upon receipt in accordance with applicable accounting guidance. Upon receipt, all digital assets
are promptly converted into U.S. dollars through the Coinbase cryptocurrency exchange.

The profitability of this business is affected by
several variables, including the market price of Bitcoin, global network hash rate, mining difficulty, electricity and infrastructure
costs, and mining pool fees. In addition, Bitcoin undergoes a periodic “halving” event approximately every four years, reducing
the Block Reward and potentially impacting future revenue. For the three months ended March 31, 2025, our Bitcoin Mining Business represented
approximately 51% of total revenue.

Bitcoin Hosting Business

We provide colocation and hosting services for third-party
Bitcoin mining customers at our data centers. Customers contract space based on their power requirements. Our current customer base includes
several large-scale (“Hyperscale”) Bitcoin miners. Contracts typically range from 12 to 24 months in duration.

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We offer two primary commercial structures:

    1.
    Fixed-Fee Model – Customers pay a fixed fee based on the volume of energy consumed.

    2.
    Profit-Share Model – Customers pay a share of the profits from their mining activity, with power costs passed through.

For the three months ended