Soluna Holdings (SLNH) risk factors, 2025 10-K

Risks Relating to the Company and its Growth Strategy

1. 01Our recurring losses from operations have raised substantial doubt regarding our ability to continue as a going concern, and we will require additional capital to support our business and objectives and grow our business
2. 02We have incurred recurring losses since inception and, as of December 31, 2024, had an accumulated deficit of approximately $314.3 million. We anticipate operating losses to continue for the foreseeable future as we grow our business, and it is possible we will never achieve profitability
3. 03We have a limited operating history and we may not recognize operating income in the future
4. 04If we cannot achieve or maintain profitability, stockholders could lose all or part of their investment
5. 05On June 20, 2024, we issued a $12.5 million secured promissory note, with approximately $11.8 million of principal outstanding as of December 31, 2024. This note, along with accrued interest, is due on June 20, 2027
6. 06On March 12, 2025, Soluna SW, LLC, a subsidiary of Soluna Digital, Inc. (“SSW”), entered into a $5 million term loan with Galaxy Digital LLC under a loan agreement that matures on March 12, 2030
7. 07We also provide guarantees for certain subsidiary debts. If called upon, we may need to cover those obligations, which could impact our cash position and require us to seek additional funding—potentially on unfavorable terms
8. 08We may be unable to meet our remaining obligations under the terminated HPE Agreement which could lead to a default under that agreement
9. 09We may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness
10. 10Joint ventures, joint ownership and strategic partner arrangements and other projects pose unique challenges, and we may not be able to fully implement or realize synergies, expected returns or other anticipated benefits associated with such projects
11. 11We may not be able to timely complete our future strategic growth initiatives or within our anticipated costs estimates, if at all
12. 12We may have difficulty in obtaining banking services for our cryptocurrency activities
13. 13Our business plan is heavily dependent upon acquisitions and strategic alliances and our ability to identify, acquire or ally on appropriate terms, and successfully integrate and manage any acquired companies or alliances will impact our financial condition and operating results
14. 14We may finance future deals by issuing equity or convertible debt, which could dilute existing stockholders or increase leverage
15. 15We are subject to risks associated with our need for significant electrical power
16. 16Global economic and geopolitical events, policies and conflicts may adversely affect our business, financial condition, and results of operations
17. 17We may not be able to continue to develop our technology and keep pace with technological developments, or otherwise compete with other companies, many of which have greater resources and experience
18. 18Implementing new technology may also lead to system disruptions or fail to deliver expected benefits. If we cannot adapt effectively, our competitiveness and growth prospects could suffer
19. 19If we fail to effectively manage our growth, our business, financial condition, and results of operations could be harmed
20. 20Our new services and changes to existing services could fail to attract or retain users or generate revenue and profits, or otherwise adversely affect our business
21. 21We currently operate data centers in Texas, which generated the majority of our revenue in both 2023 and 2024. Our growth plans also focus on new projects in Texas, making our business highly dependent on the state’s regulatory environment, market conditions, and exposure to weather events or natural disasters

Risks Related to our Bitcoin Mining and Hosting Business

1. 22Our success depends on external factors affecting the Bitcoin industry
2. 23Our profitability depends on Bitcoin prices and the stability of Digital Asset markets, which are highly volatile and largely unregulated
3. 24A lack of trust in digital asset exchanges or their closure—whether due to fraud, government action, or business failure—can further undermine public confidence in Bitcoin, increase market volatility, and negatively impact our business. These risks may continue to evolve in ways we cannot fully anticipate
4. 25Regulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects, or operations
5. 26Our interactions with a blockchain may expose us to specially designated nationals (“SDNs”) or blocked persons and new legislation or regulation could adversely impact our business or the market for cryptocurrencies
6. 27Security breaches and irreversible transactions could result in the loss of our cryptocurrencies
7. 28Our business depends on the continued demand for, and value of, cryptocurrencies—particularly Bitcoin—which is influenced by a variety of factors, including adoption, usability, and global economic and geopolitical events. However, the future of cryptocurrency as a widely used payment method remains uncertain
8. 29Because most of our and our hosted customers’ miners are designed specifically to mine Bitcoin and may not be readily adaptable to mining other cryptocurrencies, a sustained decline in Bitcoin’s value could adversely affect our business and results of operations
9. 30Our data center business could be harmed by prolonged power outages, power and fuel shortages, capacity constraints and increases in power costs
10. 31While we may use backup generators and other measures to reduce downtime, they may not always be sufficient. Additionally, as customer equipment becomes more power-intensive, total energy consumption at our facilities may exceed original design expectations, potentially limiting available capacity and future growth
11. 32The Dorothy Facility is subject to a five-year ground lease, and if we are unable to renew its term, we may be unable to fully realize the anticipated benefits of the ongoing development of the site
12. 33Our properties may experience damages, including damages that are not covered by insurance
13. 34Our reliance on a third-party mining pool service provider for our mining revenue payouts may have a negative impact on our operations. The same may be true in the case of our hosted customers
14. 35Declining block rewards, reliance on transaction fees, and network forks could adversely affect our mining operations
15. 36If the aggregate computing power or has rate on the Bitcoin network increases significantly, for proprietary Bitcoin mining, we may incur elevated capital expenses to maintain and upgrade our mining fleet in order to maintain market share
16. 37Climate change and evolving regulations could adversely impact our business
17. 38We may be affected by price fluctuations in the wholesale and retail power markets
18. 39The development and acceptance of competing blockchain platforms or technologies may cause consumers to use alternative distributed ledgers or other alternatives
19. 40We have an evolving business model which is subject to various uncertainties

Risks Related to our Company Generally

1. 41Our business has and is expected to continue to have significant customer concentration
2. 42Failure to attract, grow and retain a diverse and balanced customer base, including key magnet customers, could harm our business and operating results
3. 43We are heavily dependent on our senior management, and a loss of a member of our senior management team could cause the market prices of our securities to suffer
4. 44We depend upon third-party suppliers for power, and we are vulnerable to service failures and price increases by such suppliers and to volatility in the supply and price of power in the open market
5. 45Our confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information, which could limit our ability to compete
6. 46We may not be able to compete with other companies, some of which have greater resources and experience
7. 47Our business model depends upon the demand for data centers
8. 48Insiders continue to have substantial control over the Company
9. 49We are subject to complex environmental, health and safety laws and regulations that may expose us to significant liabilities for penalties, damages or costs of remediation or compliance
10. 50We could incur significant costs related to environmental matters, including from government regulation, private litigation, and existing conditions at some of our properties
11. 51Provisions in our Articles (as defined below), our Bylaws (as defined below), and Nevada law may discourage a takeover attempt even if a takeover might be beneficial to our stockholders
12. 52We rely heavily on complex information systems—both internal and from third-party providers—to run our operations, manage data, and support our customers and employees. These systems store sensitive information, including personal and financial data, and are critical to our day-to-day activities
13. 53Our risk management process may not identify all risks that we are subject to and will not eliminate all risk
14. 54Our officers and directors are indemnified against certain conduct that may prove costly to defend
15. 55We incur significant costs as a result of operating as a public company
16. 56Certain natural disasters or other external events, including climate change or mechanical failures, could harm our business, financial condition, results of operations, cash flows, and prospects
17. 57We may become involved in litigation arising in the ordinary course of our business that may materially adversely affect us
18. 58If we fail to maintain effective internal controls, we may not be able to report financial results accurately or on a timely basis, or to detect fraud, which could have a material adverse effect on our business or share price
19. 59If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below the expectations of investors, resulting in a decline in the market price of our common stock
20. 60Public health crises, such as pandemics, epidemics, or widespread outbreaks of infectious disease, have had, and could in the future have, an adverse effect on our business, financial condition, and results of operations
21. 61Changes in accounting rules and regulations, or interpretations thereof, could result in unfavorable accounting charges or require us to change our compensation policies

Risks Related to Our Securities

1. 62The market price of our securities are likely to be volatile, which may cause investment losses for our shareholders
2. 63Because there has been limited precedent set for financial accounting of Bitcoin and other cryptocurrency assets, the determination that we have made for how to account for cryptocurrency assets transactions may be subject to change
3. 64If we are not able to comply with the applicable continued listing requirements or standards of Nasdaq, Nasdaq could delist our common stock or Series A Preferred Stock or broker-dealers may be discouraged from effecting transactions in shares of our securities
4. 65If we are unable to maintain our Nasdaq listings, our securities may be delisted and quoted on over-the-counter (OTC) markets instead. This would likely reduce the liquidity, market price, and visibility of our stock, and could make it more difficult for investors to sell their shares
5. 66The rights of holders of our Series A Preferred Stock and Series B Preferred Stock (as defined below) rank senior to the rights of the holders of our common stock
6. 67We do not anticipate paying dividends on our common stock, and investors may lose the entire amount of their investment
7. 68If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline

Risks Related to the SEPA

1. 69Substantial blocks of our common stock may be sold into the market as a result of our being party to the SEPA and you may experience immediate and substantial dilution in the net tangible book value per share of our common stock
2. 70The price of our common stock could decline if there are substantial sales of shares of our common stock, if there is a large number of shares of our common stock available for sale, or if there is the perception that these sales could occur
3. 71It is not possible to predict the actual number of shares we will sell under the SEPA, or the actual gross proceeds resulting from those sales