Hosting revenue of $4.1 million, BTC Equivalent Mined 883

Soluna Holdings, Inc. (“SHI” or the “Company”), (NASDAQ: SLNH), the parent company of Soluna Computing, Inc. (“SCI”), a developer of green data centers for Bitcoin mining and other intensive computing, announced financial results for the full year ended December 31, 2022.

Michael Toporek, CEO of Soluna Holdings, stated, “The last 18 months have proven to be challenging for the entire sector. Our team has risen to the occasion and repositioned the Company for future success and to not only have innovative low-cost facilities, but to drive to achieve the scale necessary to have meaningful corporate level Adjusted EBITDA once Project Dorothy is scaled.”

Toporek further added, “These accomplishments have come as we have reduced headcount and operating costs while focusing our resources to achieve maximum return on investment.”

Fiscal Year 2022 Financial and Recent Operational Highlights

• Project Dorothy regulatory approval for 100MW, Energization expected in April.
• Effectuated significant cost reductions through headcount reductions, efficiencies, and focusing resources.
• Developed project pipeline to help more renewable energy power plants benefit from monetizing curtailed energy.
• Fully ramped project Sophie by March of last year with an operational capacity of 25 MW.
• Proprietary-mining produced 883 equivalent in Bitcoin for 2022.
• Cryptocurrency mining revenue of $24.4 million for 2022.
• Data hosting revenue of $4.1 million for 2022.

Fiscal Year 2022 Financial Results

Total revenue in 2022 increased by 99% to $28.5 million compared to $14.3 million in 2021. The increase is attributable to the significant increase in mining operations at the Project Sophie facility following the March 2022 full energization. Adjusted EBITDA was -$4.6 million for 2022 compared to $1.5 million in 2021.

The total cost of revenue excluding depreciation as a percentage of revenue increased to 62% in 2022 compared to 41% in 2021 primarily driven by a decline in Bitcoin pricing and increases in energy costs.

General and administrative expenses, exclusive of depreciation and amortization and stock-based compensation, for the year ending on December 31, 2022, increased by $8.2 million, or 115%, to $15.3 million from $7.1 million for the year ending on December 31, 2021. This increase was driven by an increase in personnel costs of $4.6 million during the year ending on December 31, 2022, compared to the year ending on December 31, 2021, driven by the acquisition and ramp of the Soluna Computing Inc. business unit. Stock-based compensation costs were $3.9 million for 2022 and $2.0 million for 2021 an increase of $1.9 million.

Legal fees increased by approximately $1.5 million during the year ending on December 31, 2022, compared to the year ending on December 31, 2021, due to legal expenses of approximately $1.2 million in relation to Project Dorothy. In addition, there was an increase of approximately $500 thousand in relation to general corporate matters associated with the growth of the business.

Consulting and professional services increased by $959 thousand during the year ending on December 31, 2022, compared to the year ending on December 31, 2021, due to required valuations of complex transactions, advisory fees for complex accounting research matters, and pipeline development project costs, in which the Company involves multiple consultants to help build out future plans.

The audited financial statements are available online.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Soluna Holdings, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials, and in oral statements made by its officers, directors, or employees to third parties. Statements that are not historical facts, including but not limited to statements about Soluna’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, further information regarding which is included in the Company's filings with the Securities and Exchange Commission. All information provided in this press release is as of the date of the press release, and Soluna Holdings, Inc. undertakes no duty to update such information, except as required under applicable law.

Non-GAAP Measures

In addition to financial measures calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), we also use “Adjusted EBITDA.” Adjusted EBITDA is a non-GAAP financial measure defined as net income (loss) from continuing operations before interest, taxes, depreciation, and amortization (“EBITDA”) adjusted to eliminate the effects of certain non-cash, non-recurring items, that we believe do not reflect our ongoing strategic business operations. Management believes that Adjusted EBITDA results in a performance measurement that represents a key indicator of the Company’s business operations of cryptocurrency mining and hosting customers engaged in cryptocurrency mining.

We believe Adjusted EBITDA can be an important financial measure because it allows management, investors, and the Board to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period to period by making such adjustments. Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with U.S. GAAP. For example, we expect that stock-based compensation costs, which is excluded from the non-GAAP financial measures, will continue to be a significant recurring expense over the coming years and is an important part of the compensation provided to certain employees, officers, and directors. Similarly, we expect that depreciation and amortization of fixed assets will continue to be a recurring expense over the term of the useful life of the assets.

Adjusted EBITDA is provided in addition to and should not be considered to be a substitute for, or superior to net income, the comparable measure calculated in accordance with U.S. GAAP. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted earnings per share or any other performance measure calculated in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under U.S. GAAP.

Reconciliations of Adjusted EBITDA to net income from continuing operations, the most comparable U.S. GAAP financial metric, are presented in the table following the financial statements prepared according to U.S. GAAP.

About Soluna Holdings, Inc (SLNH)

Soluna Holdings, Inc. is the leading developer of green data centers that convert excess renewable energy into global computing resources. Soluna builds modular, scalable data centers for computing intensive, batchable applications such as Bitcoin mining, AI, and machine learning. Soluna provides a cost-effective alternative to battery storage or transmission lines. Soluna uses technology and intentional design to solve complex, real-world challenges. Up to 30% of the power of renewable energy projects can go to waste. Soluna’s data centers enable clean electricity asset owners to ‘Sell. Every. Megawatt.’

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