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I will now hand the conference over to Mike Tu, Vice President of Finance. Mike, please go ahead.

Good afternoon, and thank you for joining Soluna's second quarter 2026 earnings call. Our earnings release and the accompanying presentation are available in the investor relations section of solunacomputing.com. This call is being webcast with the presentation. With me today are John Belizaire, Chief Executive Officer, Ryan Carver, Chief Development Officer, and Michael Picchi, Chief Financial Officer. Before management begins their formal remarks, we would like to remind everyone that some statements we're making today may be considered forward-looking statements under securities laws and involve a number of risks and uncertainties. As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forward-looking statements.

For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the Securities and Exchange Commission. We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics.

We refer you to our filings with the Securities and Exchange Commission for detailed disclosures and descriptions of our business, as well as uncertainties and other variable circumstances, including but not limited to risks and uncertainties identified under the caption Risk Factors in our annual report on Form 10-K for the year ended December 31st, 2025, and our other SEC filings. One note before we begin, effective this quarter, we changed the presentation of passthrough electricity costs from a net basis to a gross basis. That change increases both reported revenue and reported cost of revenue by the same amount, and thus has no effect on gross profit, operating loss, or net loss. Every affected slide is footnoted, and Mike will walk through the mechanics. With that, I'll turn it over to John.

Thanks, Mike Tu. Hello, and welcome to Soluna's second quarter results and business update. This is our first quarterly earnings webcast, and we are glad to have you all here. Let me start with the thesis because everything else today sits underneath it. Power is the primary constraint in the AI era, not chips, not capital, power, and how quickly you can reach it. Soluna has secured long-term, behind-the-meter access to power at scale, and we convert that access into contracted data center flows and data center cash flows by building directly on the site of renewable generation with stranded power by bypassing long grid queues. Four numbers frame where we stand today. Revenue grew 145% year-over-year, our fifth straight quarter of sequential growth. We have 192 MW of capacity under management, a proven cash-generating operating base, and we expect that to increase this summer to 206 MW.

We have over 650 MW across two AI campuses in development at Kati 2 and Dorothy 3, both on track to secure leases and construction. Our renewable power pipeline grew 47% this year to over 6.3 GW. The scarce input for AI sourced all behind-the-meter. Let me spend a moment on the second and third of those because this is the quarter they connected. We like to say power is the asset and compute follows, and that is the Soluna way. In the second quarter, we took it all the way through at Project Dorothy. On April 1st, we closed the acquisition of the 150-MW Briscoe Wind Farm. On April 15th, we acquired Spring Lane Capital's interest in Dorothy 1A. On May 19th, we acquired Navitas' interest in Dorothy 1B. Soluna now owns the generation and the compute across all 50 MW of Project Dorothy 1.

Everyone in this industry is racing to secure power right now, signing PPAs, taking queue positions, negotiating with utilities for capacity that shows up in 2029. We acquired the wind farm. So when a hyperscaler or neocloud customer performing diligence on one of our sites asked two questions that decide everything, "How fast can you get me power?" and "What is my energy cost?" We answer both with an asset we own outright. That model produces five revenue streams, and the mix is shifting deliberately. Hosting for Bitcoin miners is our largest business today. We build and operate the data center. Creditworthy mining companies bring the machines, and that is the driver of our revenue. Proprietary Bitcoin mining is our own fleet. We sell daily and hold no treasury.

Grid ancillary services pay us to be flexible, interruptible load, and we are compensated for acting as behind-the-meter flexible load for the grid operator. Soluna Wind is our new addition this quarter, on-site wind generation at Briscoe with ERCOT substation and grid interconnection. Of course, AI high-performance computing Colocation and hosting for companies that need AI-ready capacity is where this company is going. That is the segment Ryan was hired to build. Everything we are doing this year sits under four priorities. First, develop AI. Advance Kati 2 and Dorothy 3 to shovel-ready and tenant-ready, and build a pipeline of AI-ready campuses designed for rapid deployment. Next is optimizing our projects. We are focused on energizing and ramping Kati 1, and driving profitability across the operating fleet through uptime, operational efficiency, and disciplined cost management. Next is capital formation.

We intend to fund pipeline growth and AI development through project-level financing and strategic capital partnerships while maintaining balance sheet flexibility. Finally, we are focused on growing our pipeline. As I said earlier, we reached 6.3 GW this quarter, with more than 300 MW of the growth coming from expanded term sheets at four sites already in our portfolio. I want to say something about capital formation because it is a question I get most. We raised $159.4 million in the second quarter, and an additional $23.6 million on our ATM program since quarter-end, issuing about 18.8 million shares. Here is what that accomplished: 100% ownership to Project Dorothy 1, a 150-MW wind farm, the Kati 2 joint venture and land for Dorothy 3, and a clean capital structure. We retired the Series B entirely this quarter and paid out the accumulated dividends.

Every dollar of that went into assets that are now on the balance sheet today. Going forward, the large AI builds are designed to be funded predominantly with project-level debt, collateralized by the data center and underwritten against contracted tenant cash flows. Mike Picchi will take you through that structure. Let's get into the quarter. On the business side, four things. We were added to the Russell 3000 and Russell 2000 indices in the latest reconstitution, and new sell-side research coverage has been initiated on the company in recent weeks. Together with more formal quarterly communications you are seeing today, these reflect a deliberate effort to elevate Soluna's visibility and accessibility to institutional investors. We closed a $53 million acquisition of Briscoe Wind Farm on April 1st, as I mentioned, and it is our first direct ownership of a renewable generation asset.

We consolidated 100% of Project Dorothy 1A and 1B, strengthening the path toward Dorothy 3, our new AI campus. On the project side, our teams delivered across all four campuses. Kati 2 reached a definitive joint venture with Metrobloks, completed design development, and signed a tenant letter of intent. Dorothy 3 secured a definitive land purchase agreement and advanced utility coordination. Kati 1 completed substantial construction, and Dorothy 1A and Sophie held capacity through a heavy summer curtailment window. Ryan will take you through the AI project highlights in detail shortly. Now I'd like to talk about the pipeline, which is our core asset. As of August 1st, the total pipeline is approximately 6.3 GW. That is up from 4.3 GW earlier this year, and I want you to see how it is structured. 192 MW is operating, energized, and generating revenue today.

14 MW is under construction, the final phase of Kati 1. We expect this will take us to 206 MW operating by the end of the summer. Approximately 1.6 GW is in planning and development, where PPA negotiations, ERCOT planning, AI feasibility work, and land acquisition activities are underway. Approximately 4.5 GW is in assessment with our power partners. One more piece of the model. Our behind-the-meter structure keeps our data centers flexible. We can draw power from the renewable plant and from the grid, and we can provide ancillary services back to the grid. That flexibility is what gives us rapid time to interconnection. We will cluster. We plan to use multiple generation assets in proximity to a single data center site, which is how a footprint that would otherwise support a fraction of the capacity becomes a 300-MW campus.

We are using that approach at Kati 2 and Dorothy 3, and you will see it in our other sites. Before I turn to the roadmap, I want to address the recent announcements coming out of Texas. On August 3rd, Governor Abbott directed the PUCT and ERCOT to audit every data center in ERCOT's interconnection queue before approving new projects. That is a response to roughly 474 GW of pending requests, about 90% of which are data centers. That mandate targets new studied loads in the interconnection queue. I want to share four points on where we, Soluna, sit. First, our direct exposure is limited. The audit targets new studied load. Roughly 146 MW of our capacity in Texas is already energized, and both Dorothy 3 and Kati 2 build off adjacent energized interconnections. Second, our model fits what the state is screening for.

No costly transmission upgrades, flexible interruptible load, new wind and solar, minimal water by design. We fund our own electrical infrastructure. Third, we see this as a tailwind for operators with live capacity. With the queue frozen for the audit and ERCOT's August seventh dispatch delayed, energized capacity gains value. Fourth, we welcome the review. We support a rigorous and consistent review process, and we are cooperating fully with the PUCT and ERCOT. I want to close with what's on tap for the balance of the year. We're focused on completing Kati 1 with the final 14 MW. We plan to move from design development to construction documents at Kati 2. We're advancing the Dorothy 3 development and begin marketing to potential tenants.

New Bitcoin hosting announcements we expect to take place at Kati 1, and we are also looking at new power purchase agreements underway with Rosa, Hedy, Ellen, Annie, and new projects. Those are the milestones, and we will report against them next quarter. All right, before I hand it over, everything you've heard so far, the wind farm, the buyouts, the capital exists for one reason, converting our power position into contracted AI megawatts, which brings me to the newest member of our leadership team. On July 16th, we appointed Ryan Carver as our Chief Development Officer. Ryan joins us from Microsoft, where he was most recently serving as Senior Director of AI Construction and Site Development, leading a construction P&L in the tens of billions of dollars across the company's AI data center development.

There are very few people who have delivered hyperscale AI campuses end to end, and Ryan is certainly one of them. His mandate here is deliberately broad, from site selection and development to engineering and construction and operations, all in one organization reporting to me. Ryan, welcome to Soluna, and take it away.

Thanks, John. I am really happy to be here at Soluna. Good afternoon, everybody. I am four weeks in, so I will keep the biography short and spend the time on the projects. As John mentioned, I spent more than 10 years at Microsoft, most recently as Senior Director of AI Construction and Site Development. Practically, that meant taking AI campuses from a piece of land to world-class operating data centers, power procurement, permitting, design, construction, commissioning, and handover to operations. The most notable program from my portfolio was called Fairwater in Mount Pleasant, Wisconsin. My background is building large, complicated infrastructure on schedule and on budget. Why I came to Soluna? For the last few years, I have watched this industry run into the same wall. Chips you can buy, power you have to wait for, and buildings that can be built.

Most of the answers I saw amounted to getting in line, a queue position, a utility conversation, capacity that shows up many years later than what could be achieved. Soluna's answer is the most compelling one I have seen. Put the data center behind-the-meter, co-locating facilities with sustainable power generation sites that are already built, underutilized, and already spilling energy. It is a shorter, traceably more sustainable path to the exact same megawatt. My remake covers the AI campuses we are preparing to develop. First, I am going to take you through the operating campuses Soluna has today. Kati 1 is our 83-MW campus in Willacy County, and it is nearly complete. K1A, as we call it, the Galaxy Digital portion, is 48 MW and held steady through the summer 4CP constraint window while meeting its ERS program requirements. K1B is the build-out.

Phase 1 is 12 MW of Cormorant containers and Phase 2, 9 MW of Soluna-designed data centers. Both are energized and operating currently. Phase 3, which is the final 14 MW, is in construction and running ahead of schedule. Kati 1 delivered its first positive gross profit this year. Site moves from capital consumption to cash generation exactly once, and this is the quarter Kati 1 did it. Moving into the Briscoe Wind Farm that John had mentioned previously. Briscoe is a 150-MW wind farm in West Texas. We acquired it April 1st for $53 million. It is Soluna's first direct ownership of a generation asset. It is now integrated into our operations. We inherited a maintenance backlog with the acquisition, and we made a very deliberate decision to fix it immediately. This work was completed in Q3.

Beyond the turbines, we completed our Q2 renewable energy credit sale and did substantial community work with county officials and local landowners, which matters for everything we intend to build in that footprint. Moving into Kati 2. Kati 2 sits directly across the street from Kati 1. At full build, it is expected to be over 350 MW. Phase one is 100+ MW of critical IT capacity. Phase 2 will add another 250 MW. A lot moved this quarter. We signed the definitive joint venture with Metrobloks on June 3rd. Soluna holds all Class A interests and serves as manager. On design, John told you on the Q1 presentation that Phase 1 was at 30% schematic. We are now nearly complete in design development. For anyone who does not live in this vocabulary, schematic design is the concept.

Design development is where you commit to the electrical and mechanical topology, and then onto construction documents, which is what you hand a contractor to build from. We also brought our general contractor on board during the quarter, so the people who will build the site are in the room while we finish designing it. On procurement, we have signed the commitments with key electrical equipment suppliers for certain long lead items. On every AI project I have built, those are the long poles. You have to place those orders early or you risk delays. On power and site infrastructure, engineering is underway to expand the Las Majadas substation by an additional 100 MW in support of future phases with those upgrades expected early next year. We executed a gas pipeline access agreement to improve resiliency.

For future phases, an additional 150 ac parcel is under agreement, and the purchase is nearing execution. We have also begun conversations with county officials on a potential tax abatement. On the tenant, we signed a letter of intent and commercial terms, and lease negotiations are currently underway while we finalize the design. We will update the market when we have a definitive agreement to announce. In the meantime, the clearest signal I can give you is what we are doing while we negotiate. Design is complete through development. The contractor is on board. Long lead orders are being placed. Substation engineering is running in parallel. That is the work assembly requires, and we are doing it now. Let us talk about our second AI project, Dorothy 3. Dorothy 3 is slated to deliver 300+ MW of AI capacity on land adjacent to our existing Dorothy campus in West Texas.

On land, we have 397 ac under contract to support the initial build-out. On design, we have begun preliminary master planning and mobilized design teams. We have also initiated long lead equipment procurement activities, launched environmental, water, survey, and fiber studies, as well as advanced ERCOT integration work. We are also looking at onsite gas options. We currently have over 1.6 GW of AI data center capacity and development. Two things about this quarter's expansion are worth your attention. The first is where the growth came from. Four sites in our existing portfolio got larger. Project Rosa went from 187 MW-242 MW. Project Hedy went from 120 MW-198 MW. Project Ellen went from 100 MW-145 MW. Project Fei doubled and went from 120 MW-240 MW. That is an additional 300 MW added at sites where we already have done the work.

The land is identified, the power agreements are signed, and we have exclusivity. Rosa, Fei, Hedy, and Ellen are now designated for AI workloads. We also allocated Project Grace, our 2-MW technical validation effort with the Siemens PTI team, to Dorothy 3 capacity. The question we get from most investors, the wind does not blow all the time, so how does a data center behind a wind farm serve a tenant who needs power 24 hours a day, every day, for 15 years? The answer is augmenting the wind farms with additional power generation resources that act as one integrated system. First, the renewable plant itself. Sustainable energy that would otherwise be curtailed and wasted at power costs around $40 per megawatt hour. Second, the grid. Our behind-the-meter design lets the campus draw from the plant or from the grid, whichever the moment requires.

That flexibility is what gets us to power in months instead of years. Third, firming. At Kati 2, we have executed an access agreement with a natural gas pipeline operator, and engineering on the lateral to the site is underway. Onsite generation that takes the campus to the availability and AI tenant contracts for. It is a genuinely interesting moment to be doing this work at the point where AI demand meets renewable energy that would otherwise be wasted. Very glad to be here. With that, I will hand it over to Mike Picchi for the financials. Mike?

Thanks, Ryan, and welcome aboard. I am going to spend most of my time on the balance sheet and capital. Let me start there. Liquidity strengthened materially over the quarter. We ended Q2 with $113 million in cash available for project development and operations, and our current ratio improved to 2.1x from 1.7x at Q1. Working capital is a positive $69.2 million. On the asset side, current assets grew 48% to $134.6 million, and net property plant and equipment rose $58.3 million-$137.8 million. That is the Briscoe Wind assets and the Kati 1 construction coming onto the balance sheet. Total assets grew 54% to $293.5 million. On the liability side, total liabilities rose modestly to $81.8 million-$76.1 million. Within that, there is a reclassification worth explaining. Current liabilities increased 26% to $65.4 million, while long-term debt fell 81% to $3.0 million. That is not new borrowing.

It is the reclassification of our Generate debt from long-term to current, as we intend to repay that in the near term. In fact, earlier this week, we prepaid just over half of the loan outstanding. Total debt across the business at June 30th was $33.1 million. The short version, we ended the quarter with materially more liquidity, materially more owned infrastructure, and a simpler capital structure than we started with. Turning to the P&L. Revenue was $15.1 million, up 145% year-over-year. A fifth straight quarter of sequential growth as sites and customers ramped. One accounting note that affects this line. Effective this quarter, we present pass-through electricity cost on a gross basis rather than net in both revenue and cost of data hosting.

That is a change in presentation applied prospectively. It adds approximately $4.4 million to each line for the second quarter, with no effect on gross profit, operating loss, or net loss. Prior quarters are not revised. So there are two ways to read the top line, and both are correct. As reported, revenue grew 145%. Excluding the presentation change, revenue grew 73% year-over-year and 13% sequentially. The footnote is on every affected slide. The growth drivers include hosting revenue as Dorothy 2 reached full quarter operation compared to the prior year. Kati 1 contributed, Dorothy 1A ramped Blockware and Canaan, and Dorothy 1B began hosting. Briscoe added $366,000 of wind revenue, net of the intercompany elimination. Offsetting that, proprietary mining declined $1.1 million, or 40%, on a 34% decline in hash price from roughly $51 to $34.

The deliberate conversion of Dorothy 1B capacity from mining to hosting. Gross profit was $766,000, which compressed 35% year-over-year from $1.2 million. Two things drove that, and I want to be specific because the revenue line moved the other way. New site cost came online ahead of full revenue contribution. Kati 1 is energizing in phases, and the cost of running a site arrives before the site is full. Briscoe's repair work ramped up. The wind farm carried roughly $1.5 million of turbine repairs and maintenance in its first quarter under our ownership and posted a gross loss of $787,000. Ryan walked you through why we chose to front-load that work. Underneath the consolidated number, the operating fleet performed. Data hosting delivered $1.9 million of segment gross profit, the largest contributor. Demand response contributed at effectively full margin.

Proprietary mining posted a loss on hash price compression, and Kati 1 turned its first positive gross profit, the point at which a site moves from consuming capital to generating it. I would also note that cost of revenue includes site-level depreciation. When you consider EBITDA at the segment level, Q2 2026 saw 50% growth compared to Q2 2025. Net loss was $22.6 million in the second quarter, compared with $7.8 million in Q2 2025. The increase is driven by non-cash and financing items I will describe shortly, partially offset by site-level operating improvements. Adjusted EBITDA was a loss of $1.6 million, which improved 25% sequentially from a $2.1 million loss in Q1 and roughly flat year-over-year. Stepping back further, that is a 76% improvement from the $6.4 million loss in Q3 of 2025. The trend line is the point.

Below the line, there are three items you will see in the reconciliation of net loss to adjusted EBITDA. First, non-cash stock-based compensation was $9.4 million, reflecting overlapping 2025 and 2026 equity awards, amortizing on schedules set at the grant date. Second, interest expense of $3.2 million was up from $1.2 million a year ago. Third, there was a $4.2 million loss on debt extinguishment. $2 million related to the Generate Tranche B modification that partially funded Briscoe, and $2 million related to the early Yorkville loan payoff. General and administrative expenses increased $9.8 million year-over-year, of which $7.5 million is the non-cash stock compensation increase. Salaries and benefits added $1.1 million, and professional and legal fees added $720,000, driven by the Briscoe transaction, hosting agreement negotiations, project financing, and technical accounting support. Full reconciliations are in the appendix and the earnings release.

Now to capital, which is the part I focus on and get the most questions. We raised $159 million in the second quarter. $113.5 million of that came from the ATM program, $24.5 million of debt financing, $18.9 million under the Standby Equity Purchase Agreement, which is now fully utilized, and $2.5 million from warrant exercises. The debt was $12.5 million drawn on Generate's Tranche C to complete the Briscoe transaction and $12 million from the Yorkville note we drew and fully repaid within the quarter on June 12th. We deployed $159 million. $51.4 million net went to Briscoe Wind Farm, $25.3 million went to buy out our joint venture partners at Dorothy 1A and 1B. There was $17 million in debt repayment, $13 million of CapEx and equipment deposits, and $7.4 million of working capital and other. Ultimately, $45.3 million of cash went to the balance sheet.

That last number matters, and it is there for a reason I will come to on the next slide. We also simplified the capital structure. All 62,500 shares of Series B preferred stock converted into 6,510,416 common shares at the adjusted $0.96 conversion price. We paid $2.1 million of accumulated dividends, and we filed a certificate of withdrawal on June 23rd. No Series B preferred stock remains outstanding. Subsequent to the quarter end, we issued approximately 18.8 million additional shares under the ATM program for net proceeds of $23.6 million. Let me close on how we intend to fund what Ryan described. Winning an AI contract requires investment before the contract exists. Fiber studies, environmental and geotechnical work, long lead equipment, deposits, site design, joint venture formation, securing power. A customer performing diligence on a site is evaluating work that has already been done.

You cannot wait to be awarded a contract and then begin. Our policy for the large build-outs is project-level debt. For a 100-MW build-out, which we estimate at $1.2 billion-$1.3 billion, we would target 70%-80% project level debt, likely high yield notes sized against the contracted tenant cash flows under the lease, with the remaining 20%-30% from Soluna contributions or third-party project equity. We would expect that debt and equity formation to occur in the eight to 12-week period following announcement of a signed lease. Having capital already available to begin construction in that window is another use of cash balances we have built through the first seven months of 2026. Bitcoin and AI are capitalized separately at the project level, which gives each access to capital appropriate to its risk profile. This is how we underwrite an AI lease.

At the lease rates currently being struck in the market for critical IT capacity on long duration triple net terms, a 100-MW, 15-year contract would generate sufficient revenue and net operating income to service and retire the project level debt and deliver a strong multiple on the equity invested. The illustrative case on this slide shows roughly $180 million of stabilized annual net operating income against an estimated $1.2 billion-$1.3 billion build-out based on the assumptions disclosed here. When we do reach an agreement, the results may differ materially. I offer it to explain why we are investing ahead of a contract. It is not a forecast, and consider that this is just the first 100 MW of our AI pipeline, with expansion possibilities at each campus and additional projects to layer on top. In summary, Q2 was a quarter of asset consolidation. We took full ownership of Dorothy 1.

We acquired the generation next to it. We formed the Kati 2 joint venture. We retired the Series B preferred stock and ended with the strongest liquidity position in the company's history. The operating fleet improved, adjusted EBITDA improved sequentially, and the capital we deployed went into assets on the balance sheet. With that, I will hand it back to John.

Thanks, Ryan and Mike. Let me close on the shape of the quarter. We grew the pipeline where we already hold power, expanding term sheets at Rosa,Hedy, Ellen, and Fei by more than 300 MW. We completed vertical integration at Dorothy 1. We acquired Briscoe Wind Farm on April 1st, then bought out our partners at Dorothy 1A and 1B, allowing us to achieve vertical integration at the D1 site. We advanced both AI campuses, Kati 2 through design development and into construction documentation with a signed letter of intent for a prospective tenant, and Dorothy 3 through land, fiber and utility studies. Pipeline, power, projects, and now customers. That's the sequence this business runs on, and in the second quarter, we moved on every one of them. All of it sits on clean energy that would otherwise be curtailed or wasted. That's what we mean by renewable computing.

It's our mission to make renewable energy a global superpower using computing as a catalyst. Thank you for your time today. Operator, we'll take questions now.

Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Mike Colonnese with H.C. Wainwright & Co. Your line is open. Please go ahead.

Hi, good afternoon, guys. Congrats on all the great progress across the platform from an execution and financing standpoint. First one for me, you announced last month that you signed an LOI with a potential tenant for Kati 2. Just curious if you could share more information on how those negotiations are progressing, and what needs to take place before a lease can be executed at the campus, and what investors could expect from a timing standpoint.

I'll start. Thanks, Michael, for joining the call. We get that question a lot. Timing of the lease. As you know, these leases are very complex activities. Really detailed negotiations need to take place, and that's all underway. While we can't speak to timing, what we can say is that we're now executing like an infrastructure, AI infrastructure company. We're building the execution teams, developing our sites, designing the data centers, ordering long lead equipment, as you've heard, starting pre-construction activities, doing community development, and gearing up capital formation as we negotiate the commercial terms with at least one potential customer. I'd say the answer to timing is stay tuned, and I'd say that we're making good progress in the process over here.

Got it. Thanks for that, John. A number of questions we've received from investors is around power availability to energize Soluna's near-term AI data center developments, particularly Kati 2 and Dorothy 3. I appreciate the comments you shared there, John, around the location adjacent to existing energized facilities that are powering Bitcoin mining data centers. But how should investors think about current energized capacity that could theoretically power Kati 2, Dorothy 3, and then really the incremental megawatts needed to say, let's power the first initial phase for each of those developments, especially as you navigate some of the audit requirements that are going on in ERCOT. I know it's a mouthful, but it's come up quite a bit in our investor conversations.

Yeah. I can imagine that question would come our way. First of all, as I said on the call, we are very supportive of the audit process. Governor Abbott is looking at things the right way. Data centers should be positive additions to the community, to the grid, and should be thinking about how they're going to affect those two elements. What we can say is that for the past eight years, Soluna's design has been focused on that very thing, making a positive difference in the community, developing data centers that integrate and service the grid. The fact that they're behind-the-meter gives us an advantage because we already integrate with generation assets. That is exciting to us because the governor's sort of implying that that should be the way, and it's already the Soluna way.

To your question, Dorothy 3 will source its power from the grid and the Briscoe Wind Farm. As I said, we now own that asset, and so we can deliver that energy quite easily to the Dorothy 3 project. The Kati platform, the Kati campus that we're building out, is drawing power from the Las Majadas Wind Farm. Also already energized, as we had commented across the street at the Bitcoin side, allowing us to stay within this concept of energized loads being less of the focus and more of the focus on studied loads. We'll be able to source energy from Las Majadas. We have worked with them to increase the amount of energy that we can draw from that power plant, and that's why we're doing additional upgrades to support that new power envelope, if you will, to support the campus expansion.

The other thing that I mentioned in my portion of the conversation, Ryan made mention to it in the Kati 2 update. We are also investing in bringing firming energy to the site by drawing from local gas lines that are close to Kati 2. That will allow us to look at the development of additional generation back there to provide additional prime power to the site. Both campuses have access to energy. Both campuses are already energized as part of the previous investments we've made in grid integration. We feel we're positioned very well as part of the audit. Everyone's going to get an audit. We welcome it. We already know how we will answer those questions, and I think they will be well received by ERCOT and Governor's office.

Great. Appreciate all the color there, and thank you for taking my question.

Your next question-

You're welcome. Thank you, Michael.

comes from the line of Michael Donovan with Compass Point. Your line is open. Please go ahead.

Hi, thanks for taking my question, and also congrats on the progress. You've previously discussed hyperscaler and neo-cloud interest at Kati 2. Can you help us characterize the prospective tenant now under LOI? At Dorothy 3, how would you characterize the quality and stage of inbound interest you're seeing?

Mike, do you want to take that just to share the love?

Thank you, John. With regard to qualifying the Kati 2 interest, we have not specified whether it's a hyperscaler or neo-cloud. They were under letter of intent. We'll leave it at that for today. With regard to Dorothy 3, I would say the inbound level of interest is very keen. In fact, I would say it pulled forward our development efforts there as we worked through this year. We have been very focused on Kati 2, and we've talked a lot about Dorothy 3 here in the last quarter. Those two projects in aggregate, 650 MW. Now you see already us lining up the projects behind that, Project Fei, and Rosa, and the like. The Dorothy 3 customer interest has accelerated our development of the site, and so we're very excited about that. Having the Briscoe Wind Farm there is a significant asset.

It's going to make that a really wonderful campus for us.

Yeah, I would add that the types of customers we're seeing and the types of interest fills a gamut in terms of hyperscale and neo cloud.

Appreciate that. Mike, you mentioned pulling forward develop at Dorothy 3. So just for clarification, are you formally marketing Dorothy 3, or are you still on track for beginning in fall? If it's beginning of fall, what remaining milestones need to be completed before you launch the formal tenant process?

I'll start there. What we've been doing is following a very specific process we've laid out that says we have to put a master plan together, have begun any kind of interconnection updates and amendments that we need to do to the interconnection process for AI, and land long lead, all the things that Ryan mentioned before we market. But given the level of demand that's happening in the marketplace right now, that doesn't keep people from calling us. We have been receiving inbound interest, and we're generally saying, "Here's sort of some high-level things about the site," and we'll begin formal marketing in the fall. So I'd continue thinking about that timeline, but I also want to share that our phone is ringing.

It is dead. Ryan, congrats on joining Soluna. You touched upon long lead items. Generally, how are you thinking about equipment availability and broader supply chain risk as you move toward construction?

With respect to equipment availability, we already have a lot of key long lead electrical equipment on order right now, and that's always something that's a risk in the industry. Every building I've ever built, especially recently, equipment's always in question. Being prepared, pre-ordering equipment as much in advance as possible as we can as an organization, and looking at our campus master plans and looking to quantify how much equipment we need and when we're going to need it so we can be prepared for it. When it comes to water, right now we're looking at leveraging closed loop systems. For the most part, we're not using direct evaporative right now. Water on site will not be an issue, and we do have some wells that are drilled, and we've identified aquifers that can serve the admin or other common areas right now.

Great. Then one more, if I may. Obviously this will be really driven by customer interest and needs. I was hoping we could get a bit more granular design and build-out of data centers. Once a lease is executed, how should we think about the phasing, sizing of individual data center halls, and timeline from lease signing to initial RFS?

The sizing of data halls, that may differ depending on the client ask, right? I don't want to get into any proprietary details at the moment. We're not prepared to speak to that naturally. What was the second part of your question? I'm sorry.

Yeah.

How do you think about that?

Thinking about timelines, getting to initial RFS.

Right now we're looking at, for Kati 2, it's going to be 15 months, roughly 15 months after contract signing.

Great. Thanks, guys. Again, congrats on progress.

Thank you.

Your next question comes from the line of Chris Brendler with Rosenblatt Securities. Your line is open. Please go ahead.

Hey, thanks for taking my questions, and congrats on all this progress. I am a bit newer to the story, so forgive me if this is somewhat of a bigger quick picture question that may not be appropriate for a conference call. I am sort of struck by all the opportunities and all the execution you have had this quarter, and all the opportunities you have ahead. How do you think about allocating capital towards the growth opportunities that you are faced with? Is there any sort of idea of potentially partnering or growing the footprint through some sort of combination, given your relative size to the amount of your pipeline? I would love to hear how you are thinking about that dynamic. Thanks.

Thanks for the question. I think we do get that question a lot. We are punching above our weight, if you will, and our key asset, our pipeline continues to grow. How will we convert all of that asset base into spinning revenue, given our size and access to capital? The way we think about it is the way we have always thought about it. We look at essentially stairstepping the growth of the business, proving one project at a time that we can execute. We will get access to capital for that initial project, and then as we execute and start driving revenue, it opens more doors to capital as we are able to execute. We are always looking at both financial partners and execution partners that can help us to scale.

That's why in our AI structures, we do explore joint ventures that can help accelerate us, give us access to expertise, capital, and other assets that we may not have. When we look at the almost 1.6 GW of AI projects that we have underway right now, we are very focused on the first two because that's going to be the proof point that we are, in fact, an AI infrastructure platform. We are building out a team to allow us to execute around those projects. Once we've done that, we will have access to more assets that can help us grow and attack the rest of the pipeline. I guess we think of it as being incremental, and through that approach, we believe that will help us to grow and be successful in our strategy.

That's fantastic. Thank you for that color. My follow-up question was on Texas, and I thought your answer on the reasons why you're well-positioned given the current situation with ERCOT is pretty strong and reasons for optimism that you're kind of sit at the top of the queue there. In your experience, does the renewable generation that you bring sort of help escalate your requests? Is that something that you sort of like, before this all happened, were you expecting to be in batch zero? Do you get any color on that front? I would just think that given your power profile and bringing renewables when there's a lot of concern about making sure we don't impact consumers here and bringing power, especially renewable power, is a great way to do that.

I just wanted to get any big thoughts on the intricacies of that process at ERCOT since you have some experience there, Ryan. Thanks.

Yeah. That's a great question, Chris. I'll certainly take that. The way to think about it is we have built an incredible amount of process expertise and understanding of the ERCOT market. It's one of the things we do very well as a company. Early in the life of this entire large load process, we were one of the few companies that sat with the grid operator and provided information and data about these new types of data centers and technology. In this case, it was Bitcoin. That's the insight that they needed to understand the modeling and what would make things successful by integrating these assets, and also how to approach the large load process. We were one of many, but we were one of the first to sort of open the kimono, if you will.

What we like about this audit process, it's a continuation of that approach to transparency. We have, as a company, a core focus on our technology and our projects really being of service to the grid, as I mentioned. We deploy our data centers with renewable energy to consume wasted and otherwise unused power, which allows the grid to absorb more of that type of power. If you go to every one of our sites, we are a positive addition to the community. We do not use water. We create jobs. We bring our own power, which is this behind-the-meter integration. With the AI approach that we're doing, we're going to do more of that.

If you zoom in on what happens to power prices and whatnot in the regions where we're located, because of the structures and the way power flows and the revenues that flow to those communities, power costs actually go down. When I take a step back and look at the Soluna model versus my peers and other loads joining the queue, we're probably a blueprint for how this should be built going forward. We feel pretty positive about the fact that because our sites are already energized, we'll be included in the batch process going forward. We were already submitted as batch load, so it's kind of hard for a grid operator to say, "You have power. You're using the power. Tomorrow, you no longer have that power." That's not the goal of this audit.

It's really just to make sure that these projects are genuine and will be additive to the grid. Now, we cannot make any promises. This process has just launched. I think tomorrow is the day that they're going to sort of announce more detail on how it's going to work. But what we expect is we'll receive RFIs that essentially ask us about what are you guys doing back there? How does this affect the community? What's your background? How are you going to build these projects, timelines, budget, all that kind of stuff? We're prepared to provide that information because we think it's the right thing to do.

That's fantastic color. Thanks so much.

Your next question comes from the line of John Roy with Water Tower Research. Your line is open. Please go ahead.

Excellent. Thank you so much for taking the question and a great quarter. I wanted to maybe take a step back a little bit and look at it a little bit differently. If we look over the next 18 months, John, what do you see as the single biggest risk to achieving what you guys have laid out.

I'll start the answer, and I want to turn it over to the rest of my colleagues to provide their perspective. I always love the risk question because we ask ourselves the same question inside the company, what are our biggest risks and how are we going to mitigate it? We are transforming the company into an AI infrastructure company. We weren't one before. In that transformation, we look at what are the biggest risks and challenges. I think the number one risk and challenges is execution capability. Do we have all of the tools, the architecture, the expertise, the talent, the partnerships, the capital to be successful over the next 18 months?

When I zoom in on that, I think the biggest risk earlier this year was, do we have the people, the expertise that can de-risk our execution and allow us to perform at the highest possible levels? You know how you solve that? You go hire a Ryan Carver. You hire the best of the best and ask him to go build a team. That's what we've been focusing on over the last quarter, is expanding our team with expertise that we now need to go execute on this incredible asset that we have. I'll pass the baton to Ryan Carver, get his perspective, and I'm sure Mike Picchi has some thoughts.

Yeah. Thanks, John. I would tend to agree with you that that would be the biggest risk, which you appropriately articulated. That is something that we are building right now. We are building the team. I do have a very strong background and a lot of experience with hyperscale development at the highest level at Microsoft, and I am very humbled to have that experience and be able to bring it over here to Soluna. As John mentioned, we are building a team as far as risk is concerned. Someone already touched on long-lead equipment risk. That is something that we can mitigate, though, by getting in front of it, as I previously noted. I would say continuing to build the team, that is our biggest risk, and we are mitigating it now.

Thanks, Ryan. I think in terms of the challenge in the data center industry, two big challenges, access to power and access to capital. I was so attracted to Soluna because of the unique power position, and I just love that tie-in that we are bringing a load to power. We are bringing load to the generation assets that already exist. We do not have to get in a line for the utility queue or the grid operator down the road. We are tied into these wind farms and solar farms that already exist. The second part of that is the risk item. I think about raising the capital, and I think the project level plan of attack and raising project level debt at that roughly 80% loan-to-cost ratio is viable and has been proven multiple times in multiple transactions over the last five years as a viable path.

In terms of on the Soluna side, for the other 20%, coming up with the equity or equity partners or joint venture partners that could help fund the equity piece of it. That is what we work on, and trying to have a portfolio approach to how we fund these projects that will allow us to execute on all 1,600 MW that are in line of sight right now and active. Thanks, John.

Great. Can I get a follow-up real-

[inaudible]

quick to Ryan? I really wanted to understand, Ryan, what really pulled you to Soluna and what really excites you about things going forward?

Soluna has a really interesting value proposition to me. When it comes to co-locating the data center directly adjacent to sustainable power assets, something that was very, very interesting to me. As Mike alluded to and John alluded to previously, we already have the power generation assets in some conditions. In some conditions, we own the entire life cycle from power generation to the data centers that we're going to be developing here very shortly. There is a unique value prop for, again, co-locating data centers with renewable power generation that would significantly reduce the time. I love to build very, very fast. Safety is always the number one priority. I think that goes without saying when you're in the construction industry. But we can go even faster because the fact that we own our own assets and we can bring the data center right there.

There are a number of different wind farms where we already have preexisting exclusivity agreements, PPAs that are already negotiated. There are a lot of different advantages that we have where we have a lot of assets that we could take advantage of very, very quickly that we're not going to be blocked from when it comes to getting into an interconnection queue. Rapid deployment, sustainably traceable power consumption. Out there in the data center industry, there's a lot of different companies that are offsetting their. Let's see here. How do I put this correctly? The environmental impacts. There's a lot of people that are going to sustainable carbon zero, net zero by 2030 and things of that nature. We have traceable, sustainable power that we can prove how much we're consuming, faster time to market, and we own the assets.

Those are all very appealing things to me.

Excellent. Thanks so much.

We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.

Hello there, and welcome to Soluna Holdings Q3 Results and Business Update. I'm John Belizaire, CEO of Soluna, and I'm going to take you through our Q3 results and give you some updates on our key operations for the last quarter. Before I begin, I'd have to read our legal preamble. The following content is completely qualified by the legal disclosures on the slide following this one. Our goal is to share with you some of our strategic thinking and financial analysis we are using to guide the growth of our business. The content is in line with our principles of being accountable and transparent with our shareholders. We operate in a hyper-dynamic economic environment, and that's a fancy way of saying things change quickly.

What we are telling you here is based on our estimates and assumptions, which are our best guess, and we reserve the right to revise our point of view based on new information and changes in the business environment. Despite an uncertain dynamic environment, we must plan and make operating and investment decisions, and this presentation lays some of that out for your review. Legal disclosure and disclaimer. Let's take you through a quick company overview. I know some of you know Soluna very well, but we're often getting new shareholders, added to our shareholder roster here, new fans of the company and investors. So I'd like to take everyone through a quick overview of the business. What do we do?

We take excess energy from renewable energy sources, and we buy the curtailed energy from those sources and plants, and we convert it to clean, low-cost global computing. What we mean by that, primarily today, is Bitcoin mining, and we do that from a proprietary mining and hosting perspective, but we also are going to be expanding into the high-performance computing space, and specifically AI. The reason we focus on this is because there's a big unspoken problem in the renewable energy space. About $6.8 billion is lost every year to wasted energy. It's a big unspoken secret in the renewable energy space. Our goal is to build a capability, a solution that's available now to solve that problem and reduce curtailment to zero on a global basis.

We do that essentially by building data centers behind the meter that combine with existing power plants and allow them to monetize that wasted energy. Here's an example of a data center project that, where we consume renewable energy. It's a 150 MW site. As you can see in the far left, the company deployed or energized the facility in 2016, and consistently over the ensuing years, curtailment has increased upwards of 40%. And this is something we see very often, 30%-40% of the power and renewable energy sites never makes it to the grid. By adding our data center, starting with 50 MW, we could reduce that by half, that wasted energy. And as we begin to grow our data center upwards to matching the wind farm, we can virtually eliminate that curtailment.

That's the value proposition for wind farms and solar plants in all parts of the country. Our configuration is we build our data centers behind the meter, integrated with the substation. That allows us to source power from the grid and allows us to then build out a whole infrastructure that connects our facility to the substation and expands our footprint at that location, building an entire farm of data center facilities at that location. That data center becomes a digital battery to some extent, for the wind farm or solar farm, absorbing that wasted energy, and it, as a result, gives us access to very cost-effective power, and a lot of it, to power our data center operations. We source that power from three places: curtailed energy, subtractive energy, and grid energy.

We have advanced technology and software that allows us to source the power from those three different locations. Curtailed energy, we purchase at a fixed price. Subtractive energy, that's the energy that we would use from the wind farm or solar farm before it would go to the grid. When it's not curtailed, we pay that nodal price for that. And then grid energy, we buy it from the grid by having the power come through that substation to our data center, and then we pay the load zone price for that energy. Now, our data centers are not just Bitcoin mining facilities. They're super advanced technology. We have spent a great deal of time thinking about the thermodynamics of the site, quality build. The way we lay it out also manages the thermodynamics.

We have technology that allows us to manage the site, diagnose maintenance and operate the site. It can ramp up and ramp down very fast, and we have a host of different support for enabling and processing a host of different type of compute. This quarter, we also announced a whole host of new improvements to the data center design that will be geared toward AI that we're working on. But the point is that the facilities and the design is purpose-built to efficiently convert wasted energy to high-performance computing applications, and the configuration that we use at a particular site, or mixture of configurations, is really driven by the type of compute we'll be supporting at a given project.

This is powered all by software, so Maestro OS is our industry-leading technology that allows us to manage the control of the site. We can completely automate the fans, PDUs, miners, power infrastructure, and networking. We can enhance the life cycle and reduce failures of the facility by proactively managing activities at the site. We can manage the operations, so we have dashboards that allow us to see real-time tracking of miners and their level and activity. If they're not hashing, we can triage them. This will be true also for the next generation of computing that we're putting in the facilities.

And then more importantly, that slide I showed you earlier where I talk about the different sources of energy, our software allows us to manage that as well, the power, the source of the power, the curtailment levels, etcetera, within the site. We are servicing a broad market. Bitcoin is not the only one we're going after. We're going after AI as well, and in fact, AI is clearly at our doorstep at this point, really showing us the potential that it can have for our platform. Because AI is growing at an exponential rate right now, it needs lots of space, it needs lots of energy, and it really needs to be more sustainable. And so our positioning is to really go after that market, position ourselves as a zero-carbon cloud for these types of solutions.

And so that's really gonna be pivotal for us in the future here. Now, how do we make money? As a reminder, we make money in two ways today, four ways in the future. We started out doing proprietary Bitcoin mining, and we started shifting our business earlier this year to hosting. So we make hosting the primary part of our business, but we do do some joint venture-based Bitcoin mining in facilities where we have the best possible power and highest efficiency levels. And most recently, we've been able to do that by partnering with folks who can get access to highly efficient Bitcoin miners as well. In the future, we're going to be expanding in two new areas: grid ancillary services, we've been talking about that for a while.

Last quarter, we filed our pre-registration for ancillary services at the Dorothy site, and that is moving through the ERCOT process. We also announced, as I said, our Helix program, where we'll be designing facilities and data centers, and we have some strategic partnerships coming up as well that will launch us into this whole new market. So stay tuned, you'll see how that all comes together in the coming quarters as well. Now, how do we, how do we bring all of that together into a powerful flywheel? Why do we see the company as a platform? It's because we've become really good at sourcing low-cost, curtailed power from IPPs. We can build these facilities in a very cost-effective way, and we design that build to return capital in two years, approximately.

We use that new asset that we've built that will be owned by us for a very long time, right? These assets run 20 years or plus. And we can attract hosting customers, and then hosting customers for Bitcoin, and then down the road, we'll be able to attract high-performance computing customers, AI customers. We can turn that large computing facility that's highly flexible, managed by our Maestro OS system, into a grid asset, a grid resource, where the grid needs power or the grid needs us to ramp up our consumption because it has excess energy. We can monetize that behavior through a host of different ancillary services.

Those two or four revenue streams, if you will, allow us to grow our EBITDA, our earnings power, our profit, our cash, which we can then reinvest in the business, that allows us to then grow our project pipeline, which allows us to generate new projects, attracting more capital for development, giving our assets under management growth potential, lots of, lots of headroom for growth. Then we cycle that around to more access to low-cost power, which allows us to build more sites, etcetera, and you see how the flywheel continues to grow and expand. That's really the Soluna way and the key differentiation in the way that we, we build our business. Now, I'd like to shift to operational highlights for the third quarter. Very quickly, looking at our key operating metrics, this is through the end of October.

Our MW under management is 75 MW. That's what we have today, and we have that fully ramped today, so that's what's exciting about Q3. We reached the sort of close to final full ramping, but in this quarter that I'm talking to you now, we're fully ramped. We are able to grow to 291 MW, and we will be able to do that through a host of different project-level partnerships that we're putting together that's focused on expansion of our flagship project and our new project, Kati. We have 2.6 exahash installed across all of our sites. We have an average power cost of $30 per MW or less. Most of our sites are below that. We've been talking about something new and exciting, and that is curtailed energy consumed.

I've talked about the fact that our core business is about consuming wasted energy. More importantly, it's the amount of energy that we've monetized, actually. So we take curtailed energy and monetize it. So we've consumed over 4,000 MWh, and folks can use ChatGPT to figure out what that, what that relates to in, in perhaps real-life terms. But you know, 4,000 MWh is probably close to, you know, 1 billion iPhone charges. Now, there's a power usage efficiency that is at the heart of what we do, right? We essentially convert almost precisely the amount of energy we consume to computing, and so our cooling cost is very efficient, using only the power of physics. We deployed lots of miners last quarter as well.

Over 23,000 miners were deployed, and we had an average joules per terahash. The efficiency of the miners was well below 30 joules per terahash as well. That's important as we go into the halvening. The most efficient machines will be the machines that stay online. The most optimized power costs and power footprint will be important as well. So, when you look at our business, it's very strong and well-architected for the future. Now, I'll quickly take you through the sites. Here's Project Dorothy 1A, 950 petahash. It's wind-powered, 1.01. LCOE or power cost, if you will, is below $27, and that's our Spring Lane partnership in this site, and we've consumed about 2,500 MWh of curtailed energy.

1B, very similar. She's just coming online here, and 816 petahashes per second. Wind, 1,502 MWh, and LCOE about the same. This is our proprietary mining facility. 1A is hosting, reminder, 1B is prop mining, and we have a partnership with Navitas Global here to do a JV around proprietary mining. Project Sophie is our first flagship site in Kentucky. 25 MW, 844 petahash here, 1.02 on the PUE, and this is hydro grid. This is on-grid site. This was our first site design and implementation of our new thermals, and we tested Maestro here and then scaled that implementation at Dorothy. Now, I've made mention to our pipeline a few times.

I want to quickly walk you through that. So Dorothy 2 is our flagship expansion project. So we're gonna take Dorothy and double the size of that project to 100 MW, and we recently announced that we'll be doing hosting and AI at that site. We're also in the design and planning phases, so we're beginning to prepare for beginning to construct this new project in the first half of next year. Now, Project Kati, we also announced in the fall. This is a great new project, very similar to Dorothy, but bigger. Kati is a 166 MW facility, named after Katalin Karikó, the Nobel Prize winner, who is responsible for a host of new RNA vaccine therapies.

This is co-located with a 300 MW wind farm, one asset of a host of assets, associated with one of the most successful renewable energy players in the industry. Now, in addition to these projects, we have a host of different projects that we're focusing on. We added about 500 MW to our long-term pipeline, so that puts us well over 2 GW of long-term pipeline that we can source from, are developing and maturing, that we will start to build out as we have the capital and partnerships to do so. Now, let's get into the financial results for this quarter.

As I've been hinting at, we had four key focuses this quarter: energizing Dorothy, managing our cash flow and bringing expenses down, expanding our flagship facility, and also growing our pipeline. I'm very happy with the team's execution over the last three quarters. The last six months have been really challenging, you know, grueling. We were doing a lot of things, transitioning the business, dealing with the hot weather in Texas, new site coming online, finishing construction, attracting new investors, reorganizing the company and the business, investing in new technology, et cetera. The results are beginning to show the value of what we did there in that timeframe.

So if you look at this, look here of our financials, it's our, year-to-date to 2023 Q3, look. It shows you essentially the first three quarters of the business to give you a sense of the growth and potential. Essentially illustrates the significant positive impact that the strategic shift from cryptocurrency mining to data hosting has had on our, on our financial results. During the first quarter of 2023, approximately, call it 91% of our revenue came from cryptocurrency mining, generating a negative profit of $67,000, so just shy of profitability. We made a significant decision to diversify our revenue from one source, primarily from the cryptocurrency or proprietary mining, to a mix that's more heavily weighted on data hosting. And judging by our third quarter results, we definitely made the right decision.

If you look at the third quarter results, you know, implementing the change was not a trivial transition, by the way, as we were working through these past few months. But much of that transition work occurred during the second quarter, and the second quarter results reflect the impacts of the shift, right? Our total revenue declined, so we went down by 33%, from $3 million to $2.1 million, and our gross profit declined from a loss of $67,000 to a loss of $390,000. While the third quarter was still a transition quarter, and Project Dorothy 1B was not fully ramped up, and not in other words, not fully construction complete and ramped, but we were very pleased with the results.

You know, total revenue increased by 180% from $2.1 million to $5.8 million, and gross profit improved from a negative $339,000 to a positive $1.4 million, an amount sufficient to lift our year-to-date results at the end of the third quarter to $10.9 million in total revenue and $1.0 million of gross profits. So if you look at it from that perspective, we've come a long way since last year. You know, the business is turning. You know, we're coming around the corner, if you will. The team is executing well. Our model is working. We're expanding into new markets, and that's all very exciting, you know, as a team and a company, and I'm very proud of the organization.

Here's a graphical look. As you can see, you know, the blue is crypto mining, and the red-orange is data hosting and revenue. And you can see the shift quarter-over-quarter as we're beginning to grow the data hosting business and focusing on these higher margin activities. Our cryptocurrency mining, the joint ventures we're doing, are also highly profitable and also structured around the projects that are most efficient from a power perspective and flow into some of our new projects that we're working on. The rest of the slides, as you see in the attachment, are snapshots from our 10-Q. You see our balance sheet. Our cash remains strong north of $5.6 million.

Last quarter was in the sevens of unrestricted cash, and if you combine restricted and unrestricted, it's well over $10 million, and that continues to be the case. From an operating perspective, you're seeing a reduction in net loss year-over-year in this look. If you look at the EBITDA table here, we're very proud to say that year-over-year, we are adjusted EBITDA positive of $405,000. So it's a pretty significant shift in the business. In fact, this is the first time we're EBITDA positive since, I believe, the second quarter of 2022.

So the business has really shifted and turned around, and it's a strong business, as I said, and we have lots of potential for continued growth as our team continues to execute going forward. Thank you for taking the time. I appreciate you listening in on this summary of our Q3 results. If you wanna get in touch with me or the Soluna team, please reach out to us on Twitter. We're at Twitter, we're @SolunaHoldings. We're also on LinkedIn. Just go to the company page, we're Soluna Holdings. And please, if you haven't joined our newsletter, please follow the link below to join our newsletter. We give updates, insights, great articles all the time.

We appreciate the patience of our shareholders as we transition and continue to grow our business and generate a strong shareholder value, and always open to your comments and feedback. We'll be in touch. Thank you.