Soluna Holdings, Inc. — 2022 Form 10-K Summary
Business context and reporting period
Annual report for the fiscal year ended December 31, 2022; it does not provide standalone fourth-quarter results. Soluna focused on cryptocurrency mining and data-center hosting through Soluna Computing, Inc. The company sold its MTI Instruments business in April 2022 and reported it as discontinued operations. Its strategy centers on modular computing facilities using renewable or otherwise underutilized power.
Operations included Project Sophie in Kentucky and Project Edith in Washington; the 20 MW Project Marie facility in Kentucky was later shut down after NYDIG foreclosed on collateral. Project Dorothy in Texas was under development, with its first 25 MW phase targeted for 2023.
Key financial metrics
Amounts below are in U.S. dollars; financial results compare 2022 with 2021.
| Metric | 2022 | 2021 |
|---|---|---|
| Cryptocurrency mining revenue | $24.4 million | $10.9 million |
| Data hosting revenue | $4.1 million | $3.4 million |
| Total revenue | $28.5 million | $14.3 million |
| Operating loss | $84.8 million | $4.5 million |
| Net loss from continuing operations | $107.0 million | $6.4 million |
| Net loss attributable to Soluna | $98.7 million | $5.3 million |
| Adjusted EBITDA (non-GAAP) | $(4.6) million | $1.5 million |
| Net cash used in operating activities, continuing operations | $6.1 million | Net cash provided: $4.6 million |
| Capital expenditures | $63.7 million | $45.8 million |
Mining costs, including depreciation, were $33.0 million against $24.4 million of mining revenue. Total costs of mining and hosting revenue were $36.5 million against $28.5 million of revenue. The filing therefore shows negative gross contribution before general and administrative and other expenses.
The 2022 operating loss included $47.4 million of fixed-asset impairment and $28.2 million of depreciation and amortization. Other significant charges included $11.1 million for debt extinguishment and revaluation, $8.4 million of interest expense, and a $4.1 million loss on equipment disposals. The MTI Instruments sale produced a $7.8 million gain and $7.9 million of discontinued-operations income.
At year-end, cash was $1.1 million and restricted cash was $0.7 million; working capital was negative $24.9 million. Total assets were $85.0 million, total liabilities $38.7 million, and accumulated deficit $221.8 million. Current liabilities included $11.7 million of convertible notes (net carrying value) and $10.5 million of current equipment debt. The filing separately reports approximately $13.0 million principal on the convertible notes and a $10.5 million NYDIG balance at year-end.
Material changes versus the prior year
- Total revenue nearly doubled as mining capacity expanded, but losses rose sharply as depreciation, impairment, operating costs, financing costs, and corporate expenses increased.
- Bitcoin’s decline during 2022 and lower miner market values contributed to impairment charges and weaker economics. Management noted some Bitcoin price improvement in late 2022 and early 2023 but provided no quantified forecast.
- The company’s 2022 mining revenue grew with the ramp-up of Sophie and Marie. Edith’s GPU mining equipment was sold in September 2022 for approximately $0.8 million; the company retained certain facility services obligations.
- The company sold MTI Instruments for adjusted consideration of approximately $9.4 million, net of specified adjustments and transaction costs, and exited the instrumentation business.
- Soluna’s 2022 investment in Harmattan Energy was fully impaired, resulting in a $0.75 million charge.
Outlook, risks, contingencies, and unusual items
- Going concern: The auditor’s report and management’s disclosures state that recurring losses, negative working capital, and financing needs raise substantial doubt about the company’s ability to continue as a going concern within one year after issuance of the financial statements. The statements were prepared on a going-concern basis and include no liquidation adjustments.
- Funding and debt: Management said additional financing would be needed for operations, commitments, and growth, with no assurance it would be available on acceptable terms. Approximately $11.6 million of convertible-note principal was reported due April 25, 2023; defaults had been waived in March 2023 after a payment, but the filing does not establish that the maturity obligation was otherwise resolved. Equity financing may dilute shareholders.
- NYDIG and Marie: NYDIG accelerated its equipment financing after defaults and foreclosed on collateral on February 23, 2023, repossessing mining and other assets. The Marie facility was subsequently shut down. NYDIG may pursue a deficiency claim against the borrower and guarantor and has indicated it may pursue SCI under a veil-piercing theory; SCI denies liability and filed for declaratory relief. The filing describes the obligations as ring-fenced to subsidiaries, but the claim remains a material uncertainty.
- Dorothy and Spring Lane: ERCOT approvals were obtained in December 2022, and construction of the first phase continued. In March 2023, Spring Lane provided $7.5 million through project-level transactions, increasing its DVSL ownership to approximately 85% and reducing SCI’s to approximately 15%. Soluna retains a right to 50% of project profits after Spring Lane achieves an 18% investment return hurdle. Further phases and financing are not assured.
- Market and operating exposure: Results depend heavily on Bitcoin price, network difficulty and halving, power prices, facility uptime, access to capital, and the ability to complete construction. The filing also cites regulatory, environmental, cybersecurity, supply-chain, and banking-access risks.
- Listing and shareholder claims: Nasdaq notified the company that its common stock was below the $1 minimum bid requirement, with a stated compliance deadline of June 21, 2023. Series A preferred dividends were not declared beginning October 2022; approximately $1.7 million was in arrears at year-end. Series B carried an accruing 10% dividend.
- Other contingency: The company disclosed an EPA demand seeking approximately $358,000 plus interest for a Superfund site matter, which management considered unlikely to result in a material adverse outcome.
- Controls and audit: Management concluded disclosure controls and internal control over financial reporting were effective as of year-end. The auditor issued an unqualified opinion on the financial statements, alongside the going-concern emphasis, and identified critical audit matters involving intangible-asset impairment, fixed-asset impairment, and fair valuation of warrants and convertible debt.
Important facts for investors to verify
- Current cash, restricted cash, working capital, and near-term liquidity needs, including subsequent financing and the status of the convertible notes’ April 2023 maturity.
- The final NYDIG debt balance, proceeds from collateral liquidation, any deficiency judgment, and the outcome of NYDIG’s claim against SCI.
- Whether Dorothy Phase 1A reached energization and commercial operation, its actual project economics, and Soluna’s post-transaction ownership, funding obligations, and profit rights.
- Nasdaq compliance status and any subsequent reverse split, financing, share issuance, warrant exercise, or dilution.
- Preferred-dividend arrears and the terms and amount of any later payments or accruals.
- The assumptions supporting the $47.4 million fixed-asset impairment and the carrying value and recoverability of the strategic pipeline intangible asset.