ALBANY, N.Y. - Soluna Holdings, Inc. (NASDAQ: SLNH), a developer of green data centers, has secured a $12.5 million credit facility to support the launch of its new Soluna Cloud business, which will host NVIDIA (NASDAQ:NVDA) GPUs for Generative AI workloads. The company anticipates this venture could generate up to $80 million in revenue over the next three years.
The announcement, made on June 24, aligns with Soluna's expansion into AI hosting, complementing its existing Bitcoin mining operations. The credit facility is earmarked to fund the GPU contract and startup costs associated with Soluna Cloud.
In a related financial move, Soluna reported a significant reduction in its convertible loan note balance, decreasing from $7.7 million to $4.5 million as of Sunday. This reduction comes as a result of note holders converting debt into common shares, while warrant holders exercised $2.0 million in warrants.
Consequently, the company's common shares issued and outstanding have increased from 3,921,503 to 5,381,104, including stock grants to the board, employees, and management.
On the operational front, Soluna's Project Dorothy, which includes two phases of 25 MW each for hosting and proprietary mining, is undergoing infrastructure upgrades to improve resilience against the summer heat. Project Dorothy 2, a 50 MW endeavor, is on schedule for construction mobilization by late July, with a phased commissioning plan.
Project Sophie, a 25 MW Bitcoin hosting and AI hosting initiative, is also experiencing fleet upgrades to improve efficiency. Meanwhile, Project Kati, a 166 MW project, continues its planning phase with ERCOT and negotiations for site land leases.
In other recent news, Soluna Holdings, Inc. has made significant strides in its operations. The company secured a $12.5 million credit facility for its subsidiary, Soluna Cloud, Inc., marking the initial phase of a larger fundraising campaign led by BitOoda Technologies and Imperial Capital.
The funds are earmarked for the launch of Soluna Cloud, a service set to go live as early as July 2024, projected to yield annual revenues ranging from $16 million to $26 million.
Soluna Holdings also secured a $34M cloud services deal with Hewlett Packard Enterprise Company (NYSE:HPE), expected to generate substantial revenue between $16.0 million to $26.0 million annually.
The company has reported robust first-quarter results for 2024, indicating a significant increase in Quarterly Adjusted EBITDA and a rise in cash reserves.
In addition, Soluna Holdings signed a 166 MW Power Purchase Agreement (PPA) with EDF (EPA:EDF) Renewables and Masdar for Project Kati in Texas, expected to considerably enhance hosting capabilities. The company also announced the appointment of John Tunison, a veteran in the global energy sector, as its new Chief Financial Officer.
InvestingPro Insights
As Soluna Holdings, Inc. (NASDAQ: SLNH) embarks on its ambitious expansion into AI hosting with the launch of Soluna Cloud, its financial landscape presents a mixed bag of data. The market capitalization of the company stands at a modest 25.57 million USD, reflecting its small-cap status in the tech sector. Investors looking at the profitability metrics would note the company's negative P/E ratio, currently at -0.33, which suggests that Soluna is not generating net income at the moment—a common scenario for growth-oriented tech companies in their early stages.
On the brighter side, Soluna's revenue has seen a significant uptick, with a remarkable quarterly growth rate of 307.17% in Q1 2024. This surge could be indicative of the company's potential to capitalize on the burgeoning demand for AI and blockchain technologies. However, the company's current cash burn rate, as highlighted by one of the InvestingPro Tips, is a critical aspect for investors to monitor, considering that short term obligations exceed liquid assets.
The stock's recent performance has been notably strong, with a significant return over the last week of 13.39%. This rally extends over the last month and three months, with returns of 136.23% and 130.39% respectively, potentially signaling investor confidence in the company's strategic direction. Such performance is particularly relevant in light of the company's high price volatility, a characteristic that may attract traders looking for short-term gains.
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