Here is My SLNH Investment Thesis
1/ $Soluna Holdings, Inc.(SLNH)$ is the cheapest data center stock in the market.
It has nearly 1GW capacity under development with 2GW of pipeline.
If they can execute, the stock can easily make 6x from here.
Here is my SLNH investment thesis: 🧵
Mountainous landscape with layered ridges under a hazy sky features several white wind turbines on green hills in the foreground and a winding road leading into the distance. Prominent overlaid text reads SOLUNA in large blue and orange letters with a triangular symbol.
2/ SLNH builds data centers near renewable power plants to benefit from excess generation.
One-third of the power generated from renewables is wasted due to grid congestion and a lack of storage.
Soluna uses excess generation to power data centers.
3/ Its data centers are connected to plants through private wiring.
When plants have excess capacity, SLNH uses it, often for cheaper prices than the grid.
They also remain connected to the grid to keep uptime high.
This results in:
- Top-tier uptime
- Cheaper energy costs.
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4/ We can easily see this strategy play out.
SLNH has substantially lower power cost than the industry peers.
Cost difference is striking for AI/HPC tenants as they offer 50% lower energy costs than peers.
This gives them an edge in attracting tenants.
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5/ They have 123 MW active capacity.
They conduct Bitcoin mining in 25 MW of this, while the remaining 97 MW is for hosting Bitcoin miners.
They charge customers in two ways:
- Fixed price per kWh used + services
- Profit sharing
They are actively expanding this capacity.
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6/ They have +900 MW capacity under development.
The majority of this capacity will go to hosting AI/HPC clients like $CoreWeave, Inc.(CRWV)$ and $NEBIUS(NBIS)$ .
First major project, Kati 1, already broke ground, and it'll have 166 MW capacity, divided equally between Bitcoin miners and AI/HPC tenants.
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7/ They have been unprofitable despite growing revenues.
Though GAAP numbers show -$60M loss, most of this wasn't a cash expense, and their operating cash flow was a total of -$1.3M in the last two quarters.
Adding this investing cash flow and financing outflows, we get -$16.5M net cash burn for the first half of 2021.
This was -$31 million for the full year 2024.
This means that the business needs at least around $30 million in financing every year to stay afloat until its projects scale and start generating net cash.
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8/ Good news is that it recently raised this financing.
It recently raised $100 million from Generate Capital to fund expansion.
It also filed a prospectus supplement to sell up to $87.65 million under the At the Market Offering Agreement dated Apr 29, 2025, with H.C. Wainwright & Co.
Together, these deals have secured around 2 years of runway.
If they can execute, the business can become self-sustainable in that period.
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9/ They have been rapidly finding tenants for their capacity.
In the last two months, they locked in tenants for roughly 25MW capacity.
Galaxy Digital will also deploy 48MW of compute power at Soluna's Project Kati 1 as soon as the first phase finishes next year.
They are finding tenants faster than they build capacity.
10/ Risk-reward is attractive.
If they can't execute, the business won't likely become self-sufficient and go bust.
But if they can, the upside is massive.
Even if they can deliver 2/3 of the 900MW capacity under development in the next 5 years, it'll add 600 MW capacity.
Let's assume 60% of this capacity will go to AI/HPC clients.
Given the market rates, it can generate $1.5 million annual revenue per 1MW capacity from AI/HPC clients.
Meaning, they can generate a total of $540 million in revenue from AI/HPC clients in 2030.
The company disclosed that it's generating between $1.65-$1.27 million per 25MW capacity from Bitcoin miners.
In 2030, the business will have a total of 322MW hosting capacity (240 upcoming + 82 active).
Taking the lower end ($1.27 million), it can generate $65 million from Bitcoin miners in 2030.
Assuming that $11.2 million annual revenue from proprietary mining will remain the same, it can generate a total of $716.2 million in revenue in 2030.
Assuming a conservative 15% profit margin and 15x exit multiple, we’ll get a $93.9 million net income and $1.4 billion company, nearly 6x of today’s valuation.
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