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Variable Interest Entities and Voting Interest Entities | 12 Months Ended
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Dec. 31, 2025
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Variable Interest Entities and Voting Interest Entities | Variable Interest Entities and Voting Interest Entities On January 26, 2022, DVSL was created in order to construct, own, operate and maintain variable data centers in order to support the mining of cryptocurrency assets, batch processing and other non-crypto related activities (collectively, the “Project”). On May 3, 2022, SCI entered into a Bilateral Master Contribution Agreement (the “Bilateral Contribution Agreement”) with Spring Lane Capital, pursuant to which Spring Lane agreed, pursuant to the terms and conditions of such agreement, to make one or more capital contributions to, and in exchange for equity in, SCI or one of its subsidiaries up to an aggregate amount of $35 million, amended to $45 million in the third quarter of fiscal year 2024 to fund certain projects to develop green data centers co-located with renewable energy assets (the “Spring Lane Commitment”). On August 5, 2022, the Company entered into a Contribution Agreement (the “Dorothy Contribution Agreement”) with Spring Lane, Soluna DV Devco, LLC (“Devco”), an indirect wholly owned subsidiary of SCI, and DVSL an entity formed in order to further the Company’s development for Project Dorothy, (each, a “Party” and, together, the “Parties”). Pursuant to the Dorothy Contribution Agreement, the Company committed to a capital contribution of up to approximately $26.3 million to DVSL (the “Company Commitment”), and on August 5, 2022, the Company was deemed to have contributed approximately $8.1 million, through payment of capital expenditures and development costs made on behalf of DVSL by the Company prior to August 5, 2022. Further under the Agreement, Spring Lane committed to a capital contribution of up to $12.5 million to DVSL (the “Spring Lane Dorothy Commitment”), and as of December 31, 2023, Spring Lane had actually contributed approximately $4.8 million. Under the Dorothy Contribution Agreement, the Company and Spring Lane have committed to make subsequent contributions, up to their respective Company Commitment and Spring Lane Dorothy Commitment amounts, on a pro rata basis, upon receipt of a contribution request from DVSL, as set forth in the Dorothy Contribution Agreement and subject to the satisfaction of certain conditions described therein. The proceeds of any subsequent commitments will be applied to pay project costs in accordance with the project budget. In exchange for their contributions, the Company and Spring Lane were issued 67.8% and 32.2% of the Class B Membership Interests in DVSL, respectively, and were admitted as Class B members of DVSL. Further pursuant to the Dorothy Contribution Agreement, DVSL issued 100% of its Class A Membership Interests to Devco. The Company evaluated this legal entity under ASC 810, Consolidations and determined that DVSL is a variable interest entity (“VIE”) that should be consolidated into the Company, with a non-controlling interest recorded to account for Spring Lane’s equity ownership of the Company. The Company has a variable interest in DVSL. The entity was designed by the Company to create an entity for outside investors to invest in specific projects. The creation of this entity resulted in the Company, through its equity interest in DVSL, absorbing operational risk that the entity was created to create and distribute, resulting in the Company having a variable interest in DVSL. On March 10, 2023, the Company along with Devco, and DVSL, a Delaware limited liability company (the “Project Company”) entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Soluna SLC Fund I Projects Holdco, LLC, a Delaware limited liability company (“Spring Lane”) that is wholly owned indirectly by Spring Lane Management LLC. The Project Company was constructing a modular data center with a peak demand of 25 MW (the “Dorothy Phase 1A Facility”). Under a series of transactions in February 2023 and March 2023, culminating in the March 10, 2023 Purchase and Sale Agreement, the Company sold to Spring Lane certain Class B Membership Interests for a purchase price of $7.5 million (the “Sale”). After giving effect to the Sale, the Company owned 6,790,537 Class B Membership Interests (constituting 14.6% of the Class B Membership Interests) and Spring Lane owns 39,791,988 Class B Membership Interests (constituting 85.4% of the Class B Membership Interests). The cash portion of the purchase price paid by Spring Lane to the Company was approximately $5.8 million, which represented the purchase price of $7.5 million less the Company’s pro rata share of certain contributions funded entirely by Spring Lane in the earlier portion of this series of transactions occurring during February 2023 and March 2023. As a further part of these transactions, the parties agreed that from January 1, 2023 onwards, the Company would bear only 14.6% of the costs relating to the construction and operation of the Dorothy Phase 1A Facility, compared to its 67.8% share until that time, including during the calendar year 2023. After Spring Lane Capital realizes an 16% Internal Rate of Return hurdle on its investments, the Company retains the right to 50% of the profits on DVSL. Concurrently with the Sale, the Company, Spring Lane, Devco and the Project Company entered into (a) the Fourth Amended and Restated Limited Liability Company Agreement of the Project Company, dated as of March 10, 2023 (the “Fourth A&R LLCA”), an amendment and restatement of the Third Amended and Restated Limited Liability Company Agreement of the Project Company dated as of March 3, 2023, and (b) the Amended and Restated Contribution Agreement, dated as of March 10, 2023 (the “A&R Contribution Agreement”), an amendment and restatement of the Contribution Agreement dated as of August 5, 2022. The Fourth A&R LLCA provides for certain updates in respect of Spring Lane’s majority ownership. The A&R Contribution Agreement reflects updated pro rata member funding percentages as a result of the Sale as well as updated contribution caps for each of the Company and Spring Lane. As of January 1, 2023, there were no changes in the Limited Liability Agreement of DVSL other than those related to incorporating the new investment and the purpose and design of DVSL has not changed. The Company evaluated this legal entity under ASC 810, Consolidations and determined that this entity is a VIE, as the equity holders as a group do not have the characteristics of a controlling financial interest. Even though SLC has a significant portion of the Class B membership, the Company holds all the Class A membership, which gives them the ability to control the significant decisions made in the ordinary course of business. The Company has the right to receive benefits that could potentially be significant to the VIE through its Class A membership interest, as it is eligible to receive 50% of distributions upon SLC obtaining a specified internal rate of return. The non-controlling shareholders do not hold substantive participating rights, voting rights or liquidation rights. Effective January 1, 2023, the Company’s ownership in DVSL was reduced from 67.8% to 14.6%; see above for details. In September 2025, the Company agreed to terms of a debt facility with Generate under a Credit and Guarantee Agreement, as discussed in Note 8. Several events occurred in connection with the debt facility, [1] the Company completed a restructuring of the subsidiaries that comprise “Project Dorothy 1A” and “Project Dorothy 2” (herein referred to as the “Dorothy Restructuring”), [2] Soluna DVSL ComputeCo LLC, Soluna DVSL II ComputeCo LLC, and Soluna KK I ComputeCo LLC entered into a First Priority Leasehold Deed of Trust (the “Deed of Trust”) with Generate which provides Generate with the power of sale and right of entry and possession of the Trust Property. Following the Dorothy Restructuring, Project Dorothy 1A consists of Soluna DVSL JVCo, LLC (“DVSL JVCo”), which has Class A units owned by SDI and Class B units owned by SLC (Soluna SLC Fund I). DVSL JVCo is then the sole parent of Soluna DVSL HoldCo, LLC (“DVSL HoldCo”), which holds 100% of the Class A units in DVSL. The Class B units of DVSL ComputeCo are held by the Company. The total ownership of Project Dorothy 1A remains such that the SDI holds all Class A units and that SLC holds 85.4% of Class B units with the Company holding the remaining 14.6% of Class B units. The Company noted that 1) there is no substantive change to the ascending view of the organizational chart since the Company (through SDI and newly created DVSL JVCo and DVSL ComputeCo) beneficially own the Class A units (i.e., managing units) of DVSL and 2) there are no substantive kick-out rights that exist within Project Dorothy 1A that would cause SDI to not have the ability to direct the activities that most significantly impact the economic performance of DVSL. In addition, the entity’s obligation to absorb losses and right to receive benefits has not changed. As such, Soluna would continue to consolidate the entity since a change in control has not occurred following the execution of Generate Credit Agreement and Deed of Trust. The carrying amount of the assets and liabilities was as follows for DVSL JVCo:
(Dollars in thousands) | December 31, 2025 |  | December 31, 2024
Current assets: |  |  |
Cash and restricted cash | $ | 3,305 |  |  | $ | 2,598 |
Accounts receivable, net | 805 |  |  | 481 |
Other receivable, related party | 1,661 |  |  | 1,090 |
Prepaids and other current assets | 85 |  |  | 34 |
Total current assets | 5,856 |  |  | 4,203 |
Other assets- long term, related party | 2,091 |  |  | 2,452 |
Operating lease right-of-use assets | 39 |  |  | 42 |
Property, plant, and equipment | 12,035 |  |  | 12,744 |
Total assets | $ | 20,021 |  |  | $ | 19,441 |
Current liabilities: |  |  |
Due to intercompany | $ | 152 |  |  | $ | 51 |
Accrued expense | 909 |  |  | 1,608 |
Customer deposits-current | 789 |  |  | 296 |
Income tax payable | 26 |  |  | — |
Current portion of debt | 1,139 |  |  | — |
Operating lease liability | 4 |  |  | 4 |
Total current liabilities | 3,019 |  |  | 1,959 |
Operating lease liability | 34 |  |  | 39 |
Customer deposits- long term | 320 |  |  | — |
Long-term debt | 2,920 |  |  | — |
Other liabilities, related party | 699 |  |  | 275 |
Total liabilities | $ | 6,992 |  |  | $ | 2,273 |
On May 9, 2023, the Company’s indirect subsidiary DVCC completed a strategic partnership and financing with a special purpose vehicle, Navitas West Texas Investments SPV, LLC, (“Navitas”) organized by Navitas Global, to complete the second phase of the Dorothy Project (“Dorothy 1B”). Under a Contribution Agreement among the parties, the Company owned a substantially complete 25MW data center under construction, in which the Company had contributed capital expenditures for the data center. Soluna and Navitas amended and restated the Initial LLCA (the “Existing LLCA”) to reflect Navitas’ contribution of $4.5 million and its receipt of 4,500 Membership Interests, constituting 26.5% of the outstanding Membership Interests of DVCC. On June 2, 2023, Soluna and Navitas amended and restated the Existing LLCA to (a) reflect (i) Navitas’s additional capital contribution of approximately $7.6 million and receipt of an additional 7,597 Membership Interests, for a total of 12,097 Membership Interests and 49% ownership of DVCC, and (ii) Soluna’s additional capital contribution of $1.34 million and receipt of an additional 1,340 Membership Interests, for a total of 12,590 Membership Interests and 51% ownership of DVCC, and (b) describe the respective rights and obligations of the Members and the management of DVCC. As of December 31, 2025, Navitas owns 49% and Soluna owns 51% of DVCC. The Company evaluated this legal entity under ASC 810, Consolidations and determined that DVCC is a VIE that should be consolidated into the Company, with a non-controlling interest recorded to account for Navitas’ equity ownership of DVCC. The Company has a variable interest in DVCC. The entity was designed by the Company to create an entity for outside investors to invest in specific projects. The creation of this entity resulted in the Company, through its equity interest in DVCC, absorbing operational risk that the entity was created to create and distribute, resulting in the Company having a variable interest in DVCC. DVCC is a VIE of the Company due to DVCC being structured with non-substantive voting rights. This is due to the following two factors being met as outlined in ASC 810-10-15-14 that require the VIE model to be followed. a.The voting rights of the Company are not proportional to their obligation to absorb the expected losses of the legal entity. The Company gave Navitas veto rights over significant decisions, which resulted in Soluna having fewer voting rights relative to their obligation to absorb the expected losses of the legal entity. b.Substantially all of DVCC’s activities are conducted on behalf of the Company, which has disproportionally fewer voting rights. Also, the Company is the primary beneficiary due to having the power to direct the activities of DVCC that most significantly impact the performance of DVCC due to its role as the manager handling the day-to-day activities of DVCC as well as majority ownership and the obligation to absorb losses or gains of DVCC that could be significant to the Company. Accordingly, the accounts of DVCC are consolidated in the accompanying financial statements. The carrying amount of the VIE’s assets and liabilities was as follows for DVCC:
(Dollars in thousands) | December 31, 2025 |  | December 31, 2024
Current assets: |  |  |
Cash and restricted cash | $ | 1,122 |  |  | $ | 2,057 |
Accounts receivable | 27 |  |  | 37 |
Prepaids and other current assets | 91 |  |  | 49 |
Other receivable, related party | 584 |  |  | 1,692 |
Total current assets | 1,824 |  |  | 3,835 |
Other assets- long term, related party | 2,091 |  |  | 2,452 |
Operating lease right-of-use assets | 39 |  |  | 42 |
Property, plant, and equipment, net | 14,795 |  |  | 17,774 |
Total assets | $ | 18,749 |  |  | $ | 24,103 |
Current liabilities: |  |  |
Due to intercompany | $ | 1,583 |  |  | $ | 1,475 |
Accrued expense | 833 |  |  | 1,392 |
Income tax payable | 6 |  |  | — |
Operating lease liability | 4 |  |  | 4 |
Current portion of debt | — |  |  | 137 |
Total current liabilities | 2,426 |  |  | 3,008 |
Operating lease liability | 34 |  |  | 39 |
Total liabilities | $ | 2,460 |  |  | $ | 3,047 |
On July 22, 2024 (the “Effective Date”), Soluna Holdings, Inc. (the “Company”) closed financing for the Dorothy 2 project. This project involves Soluna Digital, Inc. (the “Developer”) and Soluna DVSL II ComputeCo, LLC (“DVSL II”), a special purpose vehicle initially owned solely by the Developer. They are collaborating on the development, design, procurement, and construction of a 48 MW modular data center (the “Project Dorothy 2”) in Silverton, Texas. This facility is owned by DVSL II and operated by Soluna US Services, LLC, and may engage in cryptocurrency, batch processing, and other non-crypto related activities. It is adjacent to two other company modular data center projects at the same site. Project Dorothy 2 is financed by Soluna2 SLC Fund II Project Holdco LLC, an investment vehicle of SLC with a capital contribution of up to $29.98 million, and the Developer, as the parent company of DVSL II, with an initial capital contribution of up to $4.6 million. As of the Effective Date, the Company and the Developer became co-owners of DVSL II. In exchange for contributions to DVSL II, the Company and SLC were initially issued 42% and 58% of the Class B Membership Interests in DVSL II respectively, and were admitted as Class B members of DVSL II. Further, DVSL II issued 100% of its Class A Membership Interests to SDI. In relation to distributions, once ERCOT Achievement Date has been met ( date on which SLC and the Company have mutually agreed upon the parameters for power trading or demand response program in the ERCOT market) until the Target Return Date (last day of quarter in which the Class B members achieve an 18% internal rate of return), the Class A members will obtain 7.5% of the distributable cash with the remaining 92.5% being distributed to the Class B members on a pro-rata basis. After the Target Return Date is met, 50% of distributable cash will be allocated to the Class A members and 50% allocated to the Class B members in accordance with their membership interests. Project Dorothy 2 allows the Developer to invest in DVSL II, with the total ownership of the Developer and its affiliates capped at 49% of the Class B Membership Interests. This investment can occur within 30 days after the Effective Date (treated equally to the initial Investor), from day 31 to 180 days after the Effective Date (subject to a purchase price formula with a 20% discount rate), or after 180 days with the initial Investor’s approval. On May 16, 2024, the Company secured $1.0 million in financing from SLC for equipment and machinery for Project Dorothy 2 through an Equipment Loan Agreement (the “ELA”) between SDI SL Borrowing - 1, LLC (the “Borrower”) and SLC. On that date, SLC lent the Borrower $720 thousand to purchase medium voltage cables and low voltage switchboards. This debt was later assigned to DVSL II on the Effective Date. Subsequently, the Borrowing amount in full by issuing the Investor Class B Membership Interests in the Dorothy 2 project valued at three times the borrowing amount (i.e., $2.16 million). On April 4, 2025, the Company transferred its Class B Membership to SLC, resulting in 0% Class B Membership Interests held by the Company. SDI still retains 100% Class A Membership Interests in DVSL II as of December 31, 2025. Based on evaluation, the Company would be able to consolidate this entity. The Company evaluated this legal entity under ASC 810, Consolidations and determined that this entity is a VIE, as the equity holders as a group do not have the characteristics of a controlling financial interest. Even though SLC has all of the Class B membership, the Company holds all the Class A membership, which gives them the ability to control the significant decisions made in the ordinary course of business. The Company has the right to receive benefits that could potentially be significant to the VIE through its Class A membership interest, as it is eligible to receive 50% of distributions upon SLC obtaining a specified internal rate of return. The non-controlling shareholders do not hold substantive participating rights, voting rights or liquidation rights. In September 2025, the Company agreed to terms of a debt facility with Generate under a Credit and Guarantee Agreement, as discussed in Note 8. Several events occurred in connection with the debt facility, [1] the Company completed a restructuring of the subsidiaries that comprise “Project Dorothy 1A” and “Project Dorothy 2” (herein referred to as the “Dorothy Restructuring”), [2] Soluna DVSL ComputeCo LLC, Soluna DVSL II ComputeCo LLC, and Soluna KK I ComputeCo LLC entered into a First Priority Leasehold Deed of Trust (the “Deed of Trust”) with Generate which provides Generate with the power of sale and right of entry and possession of the Trust Property. Following the Dorothy Restructuring, Project Dorothy 2 consists of Soluna DVSL II JVCo, LLC (“DVSL II JVCo”), which has Class A units owned by the Developer and Class B units owned by SLC. DVSL II JVCo is then the sole parent of Soluna DVSL II HoldCo, LLC (“DVSL II HoldCo”), which is the sole owner of DVSL II ComputeCo. The total ownership of Project Dorothy 2 remains such that the Developer holds all Class A units and that SLC holds all Class B units. The Company noted that [1] there is no substantive change to the ascending view of the organizational chart since the Company (through the Developer and newly created DVSL II JVCo and DVSL II ComputeCo) beneficially own the Class A units (i.e., managing units) of DVSL II and [2] there are no substantive kick-out rights that exist within Project Dorothy 2 that would cause the Developer to not have the ability to direct the activities that most significantly impact the economic performance of DVSL II. In addition, the entity’s obligation to absorb losses and right to receive benefits has not changed. As such, Soluna would continue to consolidate the entity since a change in control has not occurred following the execution of Credit Agreement and Deed of Trust. The carrying amount of the assets and liabilities was as follows for DVSL II JVCo:
(Dollars in thousands) | December 31, 2025 |  | December 31, 2024
Current assets: |  |  |
Cash and restricted cash | $ | 7,969 |  |  | $ | 402 |
Accounts receivable, trade | 3,054 |  |  | — |
Accounts receivable, intercompany | 175 |  |  | 2,868 |
Prepaids and other current assets | 77 |  |  | 41 |
Other receivable, related party | 2,580 |  |  | 3,370 |
Total current assets | 13,855 |  |  | 6,681 |
Other assets- long term, related party | 4,036 |  |  | 13,223 |
Operating lease right-of-use asset | 74 |  |  | 82 |
Property, plant, and equipment, net | 24,296 |  |  | — |
Deposits on equipment | — |  |  | 716 |
Total assets | $ | 42,261 |  |  | $ | 20,702 |
Current liabilities: |  |  |
Accounts payable, trade | $ | 8 |  |  | $ | — |
Accounts payable, related party | 627 |  |  | 3,598 |
Due to intercompany | — |  |  | 9 |
Accrued liabilities | 5,160 |  |  | — |
Income tax payable | 13 |  |  | — |
Current portion of debt | 2,574 |  |  | — |
Other current liabilities | 91 |  |  | — |
Operating lease liability | 8 |  |  | 7 |
Total current liabilities | 8,481 |  |  | 3,614 |
Other liabilities | 2,071 |  |  | — |
Other liabilities- related party | 854 |  |  | — |
Long-term debt | 7,293 |  |  | — |
Operating lease liability | 66 |  |  | 74 |
Total liabilities | $ | 18,765 |  |  | $ | 3,688 |
On July 22, 2025 (the “Effective Date”), Soluna Digital, Inc. (“SDI”), a subsidiary of the Company, finalized a contribution agreement and operating agreement for Project Kati, a 166 MW facility located in Willacy County, Texas, which is expected to be delivered in two phases at 83 MW each. This project involves SDI as the Developer, Soluna KKSL JVCo LLC (the “KKSL JVCo”), a special purpose vehicle initially owned solely by SDI, and Soluna2 Kati Project Holdco LLC (“Spring Lane”). This facility is owned by KKSL JVCo, and operated by Soluna US Services, LLC, and may engage in cryptocurrency, batch processing, and other non-crypto related activities. Currently Project Kati 1 is financed by Soluna2 Kati Project Holdco LLC, an investment vehicle of Spring Lane Capital (“SLC”) with a capital contribution of up to $48.98 million. In exchange for contributions to KKSL JVCo, SDI was issued 100% of Class A Membership Units and SLC was initially issued 100% of the Class B Membership Interests in KKSL JVCo, respectively, and were admitted as Class B members of KKSL JVCo. Further, SDI and Spring Lane entered into a Developer Investment Side Letter in which allows SDI to invest into KKSL JVCo up to 49% of ownership in the Class B Membership Interests for a period of six months after August 1, 2025. SDI has contributed to KKSL JVCo, as such as of December 31, 2025, SDI holds a 100% Class A membership and 20% Class B membership interest in Project Kati 1. In relation to distributions, until the Target Achievement Date (date at which Class B members achieve 16% of IRR), the Distributable Cash received by the Company shall be distributed ninety-two and five tenths percent (92.5%) to the Class B Members on a pro rata basis, and seven and five tenths percent (7.5%) to the Class A Member, until each of the Class B Members has received its Target Return; (ii) second, after the Target Achievement Date, the portion of Distributable Cash received by the Company shall be distributed fifty percent (50%) to the Class A Member (or its respective assigns), and fifty percent (50%) to the Class B Members (or their respective assigns), pro rata in accordance with their Membership Interests. The Company evaluated this legal entity under ASC 810, Consolidations and determined that this entity is a VIE, as the equity holders as a group do not have the characteristics of a controlling financial interest. Even though SLC has all of the Class B membership, SDI holds all the Class A membership, which gives them the ability to control the significant decisions made in the ordinary course of business. The Company has the right to receive benefits that could potentially be significant to the VIE through its Class A membership interest, as it is eligible to receive 50% of distributions upon SLC obtaining a specified internal rate of return. The non-controlling shareholders do not hold substantive participating rights, voting rights or liquidation rights. The carrying amount of assets and liabilities were as follows for KKSL JVCo:
(Dollars in thousands) | December 31, 2025 |  |
Current assets: |  |  |
Cash and restricted cash | $ | 1,621 |  |  |
Due from intercompany | 725 |  |  |
Loan commitment assets | 3,018 |  |  |
Prepaids and other current assets | 393 |  |  |
Total current assets | 5,757 |  |  |
Other assets- long term, related party | 3,300 |  |  |
Finance lease right-of-use assets | 2,246 |  |  |
Property, plant, and equipment, net | 15,918 |  |  |
Deposits on equipment | 1,377 |  |  |
Total assets | $ | 28,598 |  |  |
Current liabilities: |  |  |
Accounts payable, trade | $ | 2,236 |  |  |
Accounts payable, related party | 2,590 |  |  |
Accrued liabilities | 2,152 |  |  |
Finance lease liability | 20 |  |  |
Total current liabilities | 6,998 |  |  |
Other liabilities-related party | 1,373 |  |  |
Finance lease liability | 2,236 |  |  |
Total liabilities | $ | 10,607 |  |  |

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- Definition The entire disclosure for a variable interest entity (VIE), including but not limited to, judgments and assumptions in determining whether to consolidate and in identifying the primary beneficiary, gain (loss) recognized on the initial consolidation of the VIE, terms of arrangements, amounts and classification of the VIE's assets and liabilities, and the entity's maximum exposure to loss. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 810 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/810/tableOfContent + Details
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