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Segment Information
 9 Months Ended
Sep. 30, 2025
Segment Reporting [Abstract]  
Segment Information

15. Segment Information

 

The Company applies ASC 280, Segment Reporting, in determining its reportable segments. The Company has adopted ASU) 2023-07, Segment Reporting (Topic 280): Improvement to Reportable Segment Disclosures (ASU 2023-07), which requires disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures of significant segment expenses. Operating segments are aggregated into a reportable segment if the operating segments have similar quantitative economic characteristics and if the operating segments are similar in the following qualitative characteristics: (i) nature of products and services; (ii) nature of production processes; (iii) type or class of customer for their products and services; (iv) methods used to distribute the products or provide services; and (v) if applicable, the nature of the regulatory environment. The Company’s reportable segments are identified based on the types of service performed. The Company has three reportable segments: Cryptocurrency Mining, Data Center Hosting, and High-Performance Computing. In the third quarter of 2024, the Company initiated Soluna Cloud Services, a new business line to provide high performance computing services to support generative AI workstreams but decided to exit active provision of these services during the first quarter of 2025 and will focus in the future on provision of colocation services at our datacenters to host customers in the AI generative space.

 

The guidance requires that segment disclosures present the measure(s) used by the Chief Operating Decision Maker (“CODM”) to decide how to allocate resources and for purposes of assessing such segments’ performance. The Company’s CODM is composed of several members of its senior leadership team directed by the CEO and CFO who use revenue and cost of revenues which formulate gross profit (loss), as well as total general and administrative expenses of the reporting segments to assess the performance of the business of our reportable operating segments and allocate resources. Operating profit (loss) is used to evaluate actual results against expectations, which are based on comparable prior results, current budget, and current forecast. Non-cash items of depreciation and amortization are included within both costs of sales and general and administrative expenses, however only depreciation through the Company’s site levels are evaluated for segment performance.

 

In the adoption of ASU 2023-07, the most significant provision was for the Company to disclose significant segment expenses (ie: costs of revenue) that are regularly provided to the CODM. Utility costs, wages and benefit related costs, facility and equipment costs, and depreciation costs at the site level were determined to be significant segment expenses. The CODM only reviews general and administrative expenses by site level as a whole, and not by significant expenses. No operating segments have been aggregated to form the reportable segments. The Company does not allocate all assets to the reporting segments as these are managed on an entity-wide basis. Therefore, the Company does not separately disclose the total assets of its reportable operating segments.

 

The Cryptocurrency Mining segment generates revenue from the cryptocurrency the Company earns through its Bitcoin mining activities, which is currently generated from Project Dorothy, and previously from Project Sophie and Marie. The Data Center Hosting segment generated revenue from hosting services provided to third-party Bitcoin mining customers at the Company’s data centers, which were previously at Project Marie and are currently from Project Sophie and Project Dorothy. The High-Performance Computing Services segment may generate revenue from either the sale or lease of HPC assets (such as Project Ada which leased GPUs), or from HPC/AI data centers to be leased to third-party HPC/AI customers. This segment began generating revenue in December 2024, as Project Ada worked to build its customer base. With the termination of the HPE Agreement, revenue was minimal for the nine months ended September 30, 2025 and a majority of the costs associated with the termination of approximately $28.6 million were included in the December 31, 2024 financial statements.

 

 

The Company includes demand response revenue as a reconciling item of revenue and is not included within the three reportable segments. The Company utilizes its data centers to deliver demand response services to grid operators or utilities. Under these arrangements with a grid operator, the Company agrees to be available to ramp down a registered data center’s power consumption to a specific target level. In exchange, the grid pays the company a fee for this dispatch right, provided the Company can perform within certain parameters. The Company can be providing any type of service at the data centers whether it be Cryptocurrency Mining, Data Center Hosting, or AI to generate demand response service revenue.

 

The following table details revenue, cost of revenues, and other operating costs for the Company’s reportable segments for three months ended September 30, 2025 and 2024, and reconciles to net income (loss) on the consolidated statements of operations:

 

For the three months ended September 30, 2025

 

  

Cryptocurrency

Mining

  

Data Center

Hosting

  

High- Performance

Computing Services

   Total 
Segment Revenue: Revenue from external customers  $2,769   $5,257   $       -   $8,026 
Reconciliation of revenue                    
Demand response service revenue (a)                  389 
Total consolidated revenue                  8,415 
Less: Segment cost of revenue                    
Utility costs   1,237    1,308    -    2,545 
Wages, benefits, and employee related costs   167    665    -    832 
Facilities and Equipment costs   243    556    -    799 
Cost of revenue- depreciation   1,053    665    -    1,718 
Other cost of revenue*   123    330    -    453 
Total segment cost of revenue   2,823    3,524    -    6,347 
General and administrative expenses   3    874    -    877 
Impairment on fixed assets   -    -    -    - 
Segment operating income (loss)  $(57)  $859   $-   $802 

 

For the three months ended September 30, 2024

 

  

Cryptocurrency

Mining

  

Data Center

Hosting

  

High- Performance

Computing Services

   Total 
Segment Revenue: Revenue from external customers  $2,811    4,271   $-   $7,082 
Reconciliation of revenue                    
Demand response service revenue (a)   -    -    -    443 
                   7,525 
Less: Segment cost of revenue                    
Utility costs   1,395    1,523    -    2,918 
Wages, benefits, and employee related costs   212    516    -    728 
Facilities and Equipment costs   268    389    2,859    3,516 
Cost of revenue- depreciation   1,068    444    -    1,512 
Other cost of revenue*   183    221    -    404 
Total segment cost of revenue   3,126    3,093    2,859    9,078 
General and administrative expenses   57    804    83    944 
Impairment on fixed assets   -    -    -    - 
Segment operating income (loss)  $(372)  $374   $(2,942)  $(2,940)

 

(a)   Demand response service revenue is included as a reconciling item of total revenue and not included as part of segment gross profit or loss.
     
*   Other cost of revenue includes insurance, outside service costs and margins, and general costs.

 

 

The following table presents the reconciliation of segment operating income (loss) to net income (loss) before taxes:

 

   2025   2024 
   For the three months ended September 30, 
   2025   2024 
Segment operating income (loss)  $802   $(2,940)
           
Reconciling Items:          
Elimination of intercompany costs   261    189 
Other revenue (a)   389    443 
General and administrative, exclusive of depreciation and amortization (b)   (6,831)   (4,304)
General and administrative, depreciation and amortization   (2,401)   (2,404)
Interest expense   (1,212)   (821)
(Loss) gain on debt extinguishment and revaluation, net   10,107    875 
Other financing expense   (4,746)   - 
Loss on sale of fixed assets and credit on equipment deposit   (780)   - 
Fair value adjustment (loss) gain   (22,047)   328 
Other income (expense), net   5    (6)
Net loss before taxes  $(26,453)  $(8,640)

 

(a)   Demand response service revenue is included as a reconciling item of total revenue and not included as part of segment gross profit or loss.
     
(b)   The reconciling general and administrative expense, exclusive of depreciation and amortization represent corporate and unallocated general and administrative expenses for the three months ended September 30, 2025 and 2024.

 

The following table details revenue, cost of revenues, and other operating costs for the Company’s reportable segments for nine months ended September 30, 2025 and 2024, and reconciles to net income (loss) on the consolidated statements of operations:

 

For the nine months ended September 30, 2025

 

  

Cryptocurrency

Mining

  

Data Center

Hosting

  

High-

Performance

Computing

Services

   Total 
Segment Revenue: Revenue from external customers  $8,630   $10,795   $28   $19,453 
Reconciliation of revenue                    
Demand response service revenue (a)                  1,057 
Total consolidated revenue                  20,510 
Less: Segment cost of revenue                    
Utility costs   3,927    2,160    -    6,087 
Wages, benefits, and employee related costs   588    1,668    7    2,263 
Facilities and Equipment costs   701    1,448    -    2,149 
Cost of revenue- depreciation   3,200    1,578    -    4,778 
Other cost of revenue*   410    839    -    1,249 
Total segment cost of revenue   8,826    7,693    7    16,526 
General and administrative expenses   62    1,337    270    1,669 
Impairment on fixed assets   -    12    -    12 
Segment operating income (loss)  $(258)  $1,753   $(249)  $1,246 

 

 

For the nine months ended September 30, 2024

 

  

Cryptocurrency

Mining

  

Data Center

Hosting

  

High-

Performance

Computing

Services

   Total 
Segment Revenue: Revenue from external customers  $13,691   $14,446   $-   $28,137 
Reconciliation of revenue                    
Demand response service revenue (a)   -    -    -    1,612 
Total consolidated revenue                  29,749 
Less: Segment cost of revenue                    
Utility costs   4,093    4,243    -    8,336 
Wages, benefits, and employee related costs   594    1,443    -    2,037 
Facilities and Equipment costs   780    1,011    2,859    4,650 
Cost of revenue- depreciation   3,220    1,320    -    4,540 
Other cost of revenue*   488    530    -    1,018 
Total segment cost of revenue   9,175    8,547    2,859    20,581 
General and administrative expenses   193    994    141    1,328 
Impairment on fixed assets   130    -    -    130 
Segment operating income (loss)  $4,193   $4,905   $(3,000)  $6,098 

 

(a)   Demand response service revenue is included as a reconciling item of total revenue and not included as part of segment gross profit or loss.
     
*   Other cost of revenue includes insurance, outside service costs and margins, and general costs.

 

The following table presents the reconciliation of segment operating income (loss) to net income (loss) before taxes:

 

   2025   2024 
   For the nine months ended September 30, 
   2025   2024 
Segment operating income  $1,246   $6,098 
           
Reconciling Items:          
Elimination of intercompany costs   708    513 
Other revenue (a)   1,057    1,612 
General and administrative, exclusive of depreciation and amortization (b)   (17,384)   (13,297)
General and administrative, depreciation and amortization   (7,207)   (7,209)
Interest expense   (3,246)   (1,694)
Gain (loss) on debt extinguishment and revaluation, net   10,658    (1,888)
Loss on sale of fixed assets and credit on equipment deposit   (802)   (21)
Fair value adjustment loss   (22,165)   (5,607)
Other financing expense   (5,203)   - 
Other expense, net   (280)   (32)
Net loss before taxes  $(42,618)  $(21,525)

 

(a)   Demand response service revenue is included as a reconciling item of total revenue and not included as part of segment gross profit or loss.
     
(b)   The reconciling general and administrative expense, exclusive of depreciation and amortization represent corporate and unallocated general and administrative expenses for the nine months ended September 30, 2025 and 2024.

 

Concentrations

 

During the three months ended September 30, 2025 and September 30, 2024, aside from the Bitcoin Mining revenue generated as a result of the Company’s participation in a mining pool and the Company’s participation in the demand response program, two customers each contributed more than 10% of the Company’s total consolidated revenue constituting approximately 40% for the three months ended September 30, 2025 and two customers contributed more than 10% of the Company’s total consolidated revenue constituting approximately 49% of the Company’s total consolidated revenue for the three months ended September 30, 2024.

 

During the nine months ended September 30, 2025 and September 30, 2024, aside from the Bitcoin Mining revenue generated as a result of the Company’s participation in a mining pool and the Company’s participation in the demand response program, three customers each contributed more than 10% of the Company’s total consolidated revenue constituting approximately 42% for the nine months ended September 30, 2025 and two customers contributed more than 10% of the Company’s total consolidated revenue constituting approximately 39% of the Company’s total consolidated revenue for the nine months ended September 30, 2024.

 

For the three and nine months ended September 30, 2025 and 2024, all of the Company’s cryptocurrency mining revenue was generated from Project Dorothy 1B (data center located in Silverton, Texas).

 

For the three months ended September 30, 2025 and September 30, 2024, approximately 31% and 82% of the Company’s data center hosting revenue was generated from Project Dorothy 1A, 27% and 18% from Project Sophie, and 42% and 0% from Project Dorothy 2, respectively. For the nine months ended September 30, 2025 and September 30, 2024, approximately 43% and 74% of the Company’s data center hosting revenue was generated from Project Dorothy 1A, 34% and 26% from Project Sophie, and 22% and 0% from Project Dorothy 2, respectively.