Company: SLNH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001756
Chunk: 703

Company: Soluna Holdings, Inc
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1C
Chunk 703
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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 contributed to hesitancy in NVIDIA H100 GPU acquisition. Competitive pressure from alternative
GPU vendors further softened demand and market pricing. As a result, Soluna Cloud’s business progressed more slowly than anticipated.
Revenues were first recognized in December 2024, with modest growth in early 2025. During the last six months, our engagement with potential
financing and operating partners for AI/HPC confirmed that rather than continuing the effort to lease and resell GPU/HPC chips, refocusing
on our core strength - creating, developing, financing and operating our extensive pipeline of potential bitcoin and AI hosting facilities
- will create far more value for us and our shareholders.

In