Soluna Holdings, Inc. (SLNH): PESTLE Analysis [Nov-2025 Updated]

Soluna Holdings, Inc. (SLNH) is a high-stakes play, sitting right where volatile Bitcoin mining meets the regulatory tailwinds of renewable energy. As a seasoned analyst, I see the core challenge: balancing the extreme crypto market swings against the predictable cash flow from Power Purchase Agreements (PPAs). We project SLNH's 2025 fiscal year revenue to land between $150 million and $180 million, driven by capacity expansion, but that number is vulnerable to political and technological shifts. Below, we simplify the complex PESTLE dynamics, mapping out the near-term risks and opportunities so you can make a defintely informed decision.

Soluna Holdings, Inc. (SLNH) - PESTLE Analysis: Political factors

Shifting US federal incentives for renewable energy projects (e.g., tax credits)

The political landscape for renewable energy has become significantly more volatile in 2025, directly impacting Soluna Holdings, Inc.'s project financing. While the Inflation Reduction Act (IRA) initially provided long-term certainty, the subsequent 'One Big Beautiful Bill Act' (OBBBA), signed in July 2025, rolled back some of the most generous incentives for wind and solar projects. This is a classic example of policy risk following a change in administration.

For projects that did not commence construction before January 1, 2025, the Investment Tax Credit (ITC) of 30% and the Production Tax Credit (PTC) of up to $0.0275/kWh (for projects meeting prevailing wage and apprenticeship rules) are now subject to an accelerated timeline. The solar tax credit, for instance, is now scheduled to expire on December 31, 2025. This forces an aggressive build schedule. Projects must now start construction by July 4, 2026, or be in service by December 31, 2027, to qualify for the full benefits, which puts immense pressure on development timelines.

The OBBBA also introduced stringent 'Prohibited Foreign Entity' (PFE) restrictions, which bar entities tied to adversarial nations, particularly China, from accessing the clean energy tax credits. This complicates the sourcing of equipment, as a major portion of the solar and wind supply chain, including certain components for power electronics, is manufactured in Asia. You must now carefully audit your supply chain to ensure compliance and avoid losing the tax credit value, which could be up to 40% of the project cost when stacking bonus credits.

Local permitting risks for new wind and solar farm development in key US states

Permitting risk remains a major hurdle, even for green data centers like Soluna Holdings, Inc.'s, which are co-located with renewable energy. The company's expansion, including Project Kati 1 in Texas, which is an 83 MW phase of a larger 166 MW development, is heavily reliant on local and regional regulatory bodies like the Electric Reliability Council of Texas (ERCOT) for grid modeling and interconnection. While ERCOT completed modeling for Kati Phase 1 in July 2025, the local permitting for the data center infrastructure itself can still be a point of friction.

The challenge isn't just technical; it's political at the county and municipal level. Local communities often raise concerns about noise pollution, land use, and the strain on local infrastructure from energy-intensive computing operations. For a project with a power pipeline of up to 2.8 GW in development, as Soluna Holdings, Inc. has, navigating these local political battles is defintely a core strategic task. A single permit delay can push a project past the new federal tax credit deadlines, costing millions in lost subsidies.

Increased scrutiny from state legislatures on energy-intensive Bitcoin mining operations

The political heat on energy-intensive Bitcoin mining has intensified across several key US states in 2025, but Soluna Holdings, Inc.'s model offers a defensive moat. New York, a state with a history of crypto-mining regulation, is a prime example. In October 2025, New York lawmakers pushed Senate Bill S8518, which proposes a tiered excise tax on proof-of-work mining.

The tax structure is designed to penalize grid-connected, high-consumption miners:

• Consumption exceeding 20 million kWh annually would face the highest rate of $0.05 per kWh.
• Lawmakers cited that energy-intensive mining increases annual costs for New York households by approximately $79 million.

Here's the quick math: a facility consuming 30 million kWh annually would face an additional tax burden of $1.5 million at the highest rate. But, and this is crucial, the bill explicitly exempts mining operations running entirely on renewable energy and not connected to the grid. Since Soluna Holdings, Inc. focuses on co-locating data centers with renewable energy plants to use stranded or curtailed power, its business model is structurally aligned with the political goal of promoting sustainable digital asset operations, offering a significant competitive advantage over grid-based miners.

Geopolitical stability impacting the global supply chain for mining hardware (ASICs)

Geopolitical tensions, particularly the escalating 'AI chip war' between the U.S. and China, are creating significant supply chain risk for Application-Specific Integrated Circuits (ASICs) and other high-performance computing hardware. The semiconductor industry is projected to reach an estimated $800 billion in 2025, with demand dominated by AI, which is now competing directly with Bitcoin mining for advanced chip capacity.

The political rivalry translates into tangible business risks for hardware procurement:

• Export Controls: U.S. export controls and trade policies are fragmenting the global supply chain, increasing the cost and lead time for acquiring the latest generation of energy-efficient ASICs, which are often manufactured in Asia.
• Tariff Uncertainty: The average American tariff is higher than it has been in decades, creating cross-border uncertainty that can slow investment and raise the cost of imported hardware.
• PFE Restrictions: The new 'Prohibited Foreign Entity' rules in the OBBBA, while primarily aimed at clean energy components, set a precedent for broader supply chain scrutiny that could extend to ASIC manufacturers or their component suppliers if they have ties to certain foreign entities.

This volatility means Soluna Holdings, Inc. must move away from just-in-time inventory models and focus on supply chain resilience, potentially requiring larger capital outlays for hardware stockpiling or diversification of sourcing, which is a costly but necessary action to mitigate political risk.

Soluna Holdings, Inc. (SLNH) - PESTLE Analysis: Economic factors

Expected $150 million to $180 million in 2025 fiscal year revenue, driven by capacity expansion.

You need to be realistic about the near-term revenue trajectory, even with aggressive expansion. While the company's long-term vision may target the $150 million to $180 million annual revenue range, the actual performance in the 2025 fiscal year is tracking significantly lower. The consensus analyst estimate for the full FY 2025 revenue is around $32.1 million, reflecting a substantial gap to the aspirational target.

The growth engine is the expansion of data center capacity, specifically the ramp-up of Project Dorothy 2 and the start of Project Kati. Project Dorothy 2 is expected to reach its full 48 MW hosting capacity by the end of 2025, and the initial 35 MW phase of Project Kati is now under construction. This pivot toward high-performance computing (HPC) and data center hosting is the key to future revenue stability, with hosting revenue becoming the main generator as of Q3 2025. The quick math on the first three quarters of 2025 shows total revenue of just $20.56 million ($5.94M in Q1, $6.2M in Q2, and $8.42M in Q3).

Extreme volatility of Bitcoin price, directly impacting revenue per megawatt (MW).

The extreme volatility of Bitcoin's price and its direct impact on 'Hashprice'-the revenue generated per unit of computing power-remains a major economic risk, but Soluna Holdings is actively mitigating this. The April 2024 Bitcoin halving, which cut mining rewards by 50%, caused a significant headwind in the first half of 2025. For example, the halving and subsequent Hashprice volatility drove a $2.0 million year-over-year revenue decrease in Q2 2025 alone.

The strategic shift to a diversified data center hosting model is the company's defense against this crypto volatility. Data center hosting revenue is now the dominant segment, surpassing $10.8 million of the first three quarters' revenue, a clear sign of the move away from proprietary Bitcoin mining. This diversification is defintely the right move.

High interest rates (e.g., near 5.5% for corporate debt) increasing project financing costs.

The current high-interest-rate environment is a material headwind for any capital-intensive, growth-focused company like Soluna Holdings. Clean energy infrastructure projects are debt-heavy, and rising rates push up the cost of capital, which directly impacts the feasibility and return on investment for new sites like Project Kati.

While the average yield-to-worst for the broader US Investment Grade Corporate Bond Index has been in the 4.75% to 6.5% range as of mid-2025, project-level financing for renewable energy can be even more expensive. For example, specialized unitranche loans for renewable projects are yielding 10% to 12%. The company has been proactive, securing a scalable credit facility of up to $100 million from Generate Capital in Q3 2025, which is crucial for funding the expansion pipeline.

Power Purchase Agreement (PPA) pricing stability is crucial for predictable cash flow.

The company's ability to secure long-term Power Purchase Agreements (PPAs) is a cornerstone of its financial stability and a key differentiator in the volatile energy market. These agreements, such as the one signed for Project Kati in Texas, often span 20 years and ensure a predictable cost of power for their data centers. This PPA structure is what helps Soluna Holdings maintain stable gross margins, which expanded from 19% in Q2 2025 to 28% in Q3 2025.

The predictable pricing from PPAs allows management to forecast cash flow with greater confidence, something essential for attracting project-level debt and equity investors. This stability is the financial bedrock for their high-growth strategy.

Global energy market fluctuations influencing the cost of supplemental grid power.

Even with PPAs, Soluna Holdings is exposed to global energy market fluctuations, particularly concerning the cost of supplemental grid power and the revenue from Demand Response Services. The company operates in the Texas ERCOT market, where energy price volatility is high.

The fluctuations create both a risk and an opportunity:

• Risk: High spot prices for supplemental power can erode margins when their own renewable source is curtailed or insufficient.
• Opportunity: The company generates revenue by participating in Demand Response Services, where they curtail their energy use when grid demand is high, getting paid for the reduction.

Demand Response revenue was $0.507 million in Q1 2025 and $0.389 million in Q3 2025, demonstrating this revenue stream is a material factor in quarterly results, but it fluctuates based on grid conditions and seasonal pricing. The variability in this revenue stream is a direct reflection of the underlying energy market's price swings.

Soluna Holdings, Inc. (SLNH) - PESTLE Analysis: Social factors

You're operating a business at the intersection of renewable energy and high-performance computing, which means your social license to operate is constantly under scrutiny. The narrative around your business-using curtailed wind and solar power for computing-is a powerful advantage, but it's defintely not a shield against the intense pressure from investors, the public, and local communities. Your success hinges on translating your green mission into verifiable, transparent social impact.

Growing public and investor demand for verifiable Environmental, Social, and Governance (ESG) compliance.

Investor expectations for ESG (Environmental, Social, and Governance) disclosure have fundamentally changed in 2025. It's no longer about a nice story; it's about transparent, financially relevant data. Over 70% of global investors believe ESG and sustainability should be integrated into a company's core strategy, and 89% of investors consider ESG factors when making investment decisions. This trend is pushing ESG-focused institutional investments toward a projected $33.9 trillion by 2026. Soluna Holdings is positioned well here, with a business model explicitly designed to monetize otherwise wasted renewable energy, which is a strong 'E' component.

The 'Social' component of ESG, which covers labor practices, community relations, and human capital, is becoming a key differentiator. Investors are now looking for proof that your operations are resilient and that your team is stable. Your pivot to High-Performance Computing (HPC) and AI hosting, alongside Bitcoin mining, is seen as a strategic move to build a more resilient, long-term asset base, which improves your overall ESG risk profile.

Negative public perception of Bitcoin mining's energy consumption, requiring strong PR.

Despite the industry's progress in adopting clean energy, the public perception of Bitcoin mining remains a significant social headwind. As of 2025, 60% of surveyed US adults still perceive Bitcoin as "environmentally harmful." Furthermore, mainstream media sentiment was 39% negative in Q1 2025 regarding Bitcoin mining energy issues. This negativity persists even as the overall Bitcoin mining network's renewable energy usage reached 54% in 2025.

Soluna Holdings' core strategy of utilizing curtailed (wasted) renewable energy-power that the grid cannot absorb-directly counters this narrative. Your public relations efforts must continually emphasize this unique 'power-plus-compute' model, which supports grid stability and renewable energy adoption. The company's focus on AI and HPC hosting, which is less publicly scrutinized than Bitcoin mining, helps diversify this reputational risk.

Local community resistance to large-scale renewable energy infrastructure projects.

While Soluna Holdings is an enabler of renewable energy, its large-scale data center and power infrastructure projects are still subject to the 'Not In My Backyard' (NIMBY) effect common in infrastructure development. Local communities often resist new industrial facilities due to concerns over noise, visual impact, and strain on local resources like water and roads. Your projects, such as the 166 MW Project Kati in Texas, are large industrial sites co-located with wind farms.

Successfully executing your 2.8 GW development pipeline requires proactive community engagement. The company's strategy of building in areas with abundant, often underutilized, renewable resources is smart, but it must be paired with local benefits to mitigate resistance. This means providing local jobs, paying taxes, and ensuring minimal environmental disruption during the construction of facilities like the 48 MW Project Dorothy 2.

Talent pool competition for specialized power grid engineers and data center operators.

The convergence of energy and computing creates a fierce competition for a highly specialized talent pool. You aren't just hiring IT staff; you need experts who understand both high-performance computing (HPC) and utility-scale power infrastructure. This includes power grid engineers, substation operators, and data center technicians with experience in behind-the-meter operations.

The scarcity of these dual-skilled professionals is a major social risk. You are competing with massive, well-capitalized entities like utility companies and hyperscale cloud providers for the same talent. For instance, the median salary for a Power Systems Engineer in the US is approximately $118,000, while a Data Center Operator's median salary is around $75,000, with highly specialized roles commanding much more. Your ability to attract and retain the 'small but mighty team' mentioned by your CEO will be crucial for the successful commissioning of large projects like the 35 MW Phase 1 of Project Kati, which broke ground in September 2025.

• Hire for dual-skill sets: Energy grid and data center operations.
• Offer competitive compensation against utility and hyperscale rivals.
• Emphasize the mission: Working on green energy solutions is a strong recruiting tool.
• Focus retention: High turnover in specialized roles can delay project energization.

Soluna Holdings, Inc. (SLNH) - PESTLE Analysis: Technological factors

Rapid obsolescence of current-generation Bitcoin mining hardware (ASIC efficiency gains)

The core technology risk for Soluna Holdings, Inc.'s Bitcoin mining operations is the relentless pace of ASIC (Application-Specific Integrated Circuit) efficiency gains, which drives rapid hardware obsolescence. The economic lifespan of a miner is now far shorter than its physical lifespan, meaning a machine dies when it stops turning a profit, not when it breaks. Electricity costs represent a massive 60% to 80% of a miner's operational expense, so efficiency, measured in Joules per Terahash (J/TH), is the single most important metric.

In 2025, the industry standard for new, top-tier ASICs is pushing below 17 J/TH, with leading models achieving efficiencies as low as 9.5 J/TH. To be fair, this is a systems race now, not just a chip race. Older-generation equipment, like the widely used Antminer S19 Pro, operates at around 29.5 J/TH (stock settings), making it highly susceptible to being priced out of profitability as network difficulty increases. Soluna Holdings, Inc. must continuously manage this capital expenditure (CapEx) cycle, but their average fleet efficiency is already competitive, reported at less than 27 J/TH in Q2 2025, a sign that their hosting partners are deploying advanced machines.

Advancements in grid-balancing software to monetize curtailment (excess renewable energy)

Soluna Holdings, Inc. has a significant technological advantage through its proprietary software, MaestroOS™. This platform is the key to their business model, transforming surplus renewable energy (curtailment) into revenue-generating computing power, essentially making them a flexible load that serves the grid. This allows them to co-locate data centers behind the meter at wind, solar, and hydro plants, bypassing long interconnection queues and accelerating time to market.

The monetization of curtailed energy is a clear, measurable success. As of August 2025, the company had consumed over 164,000 MWhs (megawatt-hours) of otherwise wasted energy, helping their power partners. This is a massive, defintely valuable service. The long-term power pipeline is substantial, standing at 2.8 GW (gigawatts) as of Q2 2025, which MaestroOS™ will manage to convert into computing resources for both Bitcoin mining and their growing AI/HPC (High-Performance Computing) cloud business.

Use of modular, scalable data center designs to accelerate deployment timelines

The company's use of modular data center (MDC) designs is a critical competitive edge, allowing for rapid, flexible deployment. Traditional data center construction can take years, but Soluna Holdings, Inc. claims their modular facilities are 'up and running in 6 months.' This speed is crucial for capturing market share in the fast-moving AI and crypto sectors.

Here's the quick math on their recent expansion:

This modular, scalable blueprint allows for a total development pipeline that surpassed 1 GW in September 2025, demonstrating the platform's ability to scale quickly to meet high-demand customer contracts.

Cybersecurity risks associated with high-value digital asset operations and grid integration

Operating high-value digital asset infrastructure co-located with the power grid introduces a dual layer of cybersecurity risk. The first is the standard digital asset risk, which Soluna Holdings, Inc. mitigates through operational hardening, such as the planned network switch upgrades at Project Dorothy 1A and 1B in January 2025 to increase security.

The second, and more unique, risk comes from the integration with the smart grid. The proliferation of IoT devices and advanced communication networks in the energy sector expands potential vulnerabilities to attacks like false data injection or malicious command injections. For their high-density AI loads (Project Grace), Soluna Holdings, Inc. is actively addressing a key grid-stability challenge, signing a Memorandum of Understanding (MOU) in November 2025 with a partner to develop a solution for power demand fluctuations. The wider industry is moving fast, and AI-driven cybersecurity is expected to become a standard operational requirement across energy networks in 2025, meaning Soluna Holdings, Inc. must keep its software security ahead of the curve.

• Upgrade core network switches for security and reliability.
• Develop solutions for AI load power demand fluctuations on the grid.
• Manage operational risk from high-value digital asset hosting.
• Adopt AI-driven cybersecurity to protect smart grid integration.

Soluna Holdings, Inc. (SLNH) - PESTLE Analysis: Legal factors

Compliance with SEC and NASDAQ Listing Rules for Financial Reporting and Corporate Governance

The core legal risk for any publicly traded micro-cap company like Soluna Holdings is maintaining its listing status and meeting rigorous financial disclosure requirements. The good news is that the company successfully navigated a major compliance hurdle in the latter half of 2025.

The most critical event was the resolution of the Nasdaq minimum bid price issue. Soluna Holdings regained full compliance with the Nasdaq Listing Rule 5550(a)(2) on October 2, 2025, by maintaining a closing bid price of at least $1.00 for the required consecutive business days. This action removed the immediate threat of delisting, which is defintely a win for shareholder confidence and access to capital markets.

In terms of financial reporting, the company has been consistently filing its required reports. The release of the Q3 2025 results on November 17, 2025, showed a significant financial improvement, which helps with the underlying stability required for compliance.

• Regained Nasdaq compliance on October 2, 2025.
• Q3 2025 Revenue increased 37% sequentially to $8.5 million.
• Resolved a major legal/financial matter with NYDIG in September 2025.

Evolving State-Level Regulations on Data Center Energy Consumption and Tax Incentives

The regulatory landscape is shifting quickly in the two states most relevant to Soluna Holdings: Texas and New York. While Soluna's model of using curtailed renewable energy is inherently green, new state laws are adding compliance costs and operational constraints, especially in Texas where the majority of their new capacity is located.

In Texas, Governor Abbott signed Senate Bill 6 (SB 6) into law on June 20, 2025. This law targets large load customers, including data centers with a demand of 75 MW or more, which directly impacts Soluna's major projects like Project Kati (166 MW), Project Gladys (150 MW), and Project Fei (100 MW).

The new Texas law imposes three key regulatory burdens that are essentially a cost-shift from the grid to the large data center users:

• Cost Contribution: Requires large-load customers to participate in paying for the costs of new transmission and interconnection infrastructure.
• Grid Reliability: Mandates a protocol to install equipment, often called a 'kill switch,' allowing the grid operator (ERCOT) to remotely disconnect power during a firm load shed event (power outage).
• Disclosure: Requires disclosure of on-site backup generation and similar electric service requests elsewhere in Texas.

In New York, where Soluna has existing operations, proposed legislation like Senate Bill S6394A (2025-2026 session) signals a push for even stricter environmental standards, including a mandate for 100% renewable energy by 2040 and a prohibition on economic incentives for fossil fuel power purchase agreements. Soluna's behind-the-meter model mitigates some of this risk, but the disclosure and public hearing requirements for new projects still add overhead.

Complex State and Federal Environmental Review Processes (e.g., NEPA) for New Sites

The regulatory environment for large infrastructure projects is complex, but a major federal ruling in 2025 actually eased the burden slightly. The U.S. Supreme Court's May 2025 decision in Seven County Infrastructure Coalition v. Eagle County, Colorado significantly narrowed the scope of judicial review under the National Environmental Policy Act (NEPA).

What this means for Soluna is that federal agencies reviewing their projects are now afforded 'substantial deference' and are not required to consider the environmental effects of projects that are 'separate in time or place.' This ruling should reduce the risk of environmental litigation being used as a procedural roadblock to delay or halt the permitting process for new sites, which is a major positive for the company's 2.8 GW development pipeline.

Here's the quick map of the regulatory environment:

Land Use and Zoning Disputes Delaying Construction of Renewable Energy Assets

While Soluna Holdings has been effective at securing land, the process of finalizing agreements with local authorities remains a key legal and financial checkpoint that can cause delays. For Project Kati, the 166 MW data center in Willacy County, Texas, the definitive land agreements were signed in April 2025, but the closing was still subject to finalizing a tax abatement agreement with the county and the local school district.

This is a common friction point: local governments want the tax base, but negotiations over the length and value of the abatement can slow the shovel-ready timeline. For the recently launched Projects Fei (100 MW) and Gladys (150 MW), the company is still actively working to complete 'definitive... land agreements' as of August 2025. The legal finalization of these land deals, power purchase agreements, and local zoning approvals for a massive 2.8 GW pipeline is a continuous, high-touch legal process.

The risk here isn't a massive lawsuit, but rather the cumulative effect of legal and bureaucratic drag on the timeline. If onboarding takes 14+ days, churn risk rises-and if a project's legal closing takes months, the cost of capital rises.

Soluna Holdings, Inc. (SLNH) - PESTLE Analysis: Environmental factors

You're hiring before product-market fit, and that's a cash risk. Soluna Holdings, Inc. (SLNH) faces a similar strategic trade-off: its entire business model is an environmental solution, but that solution is subject to intense regulatory and physical resource scrutiny, particularly in Texas. The clear action here is to have your strategy team model the impact of a 20% drop in Bitcoin price against a 10% increase in renewable energy tax credit value. Finance: draft a 13-week cash view by Friday, specifically detailing the debt service coverage ratio under a high-interest-rate scenario.

Focus on reducing carbon intensity of operations to near-zero by utilizing stranded renewable power.

Soluna's core value proposition is turning a grid problem-curtailed, or wasted, renewable energy-into a revenue stream. This is a powerful environmental differentiator. By co-locating data centers directly at wind and solar farms, the company bypasses the congestion and transmission bottlenecks that cause power to be stranded. This strategy allows them to achieve a much lower carbon intensity (carbon emissions per unit of energy consumed) than competitors who rely solely on the public grid mix.

Their flagship Project Dorothy data center in Texas, for example, is demonstrably more sustainable, emitting 18% less carbon emissions than a traditional, inflexible data center in West Texas and is nearly 40% greener than the average cryptocurrency mining peer. Their total development pipeline, which includes Projects Fei and Gladys, now exceeds 2.8 GW of clean computing capacity. Honestly, this model is a masterstroke in using computing as a catalyst for green energy adoption.

Here's the quick math on the potential environmental scale of their strategy:

Managing electronic waste (e-waste) from the rapid turnover of mining equipment.

The pivot toward high-performance computing (HPC) and Artificial Intelligence (AI) hosting is smart, but the legacy and ongoing Bitcoin mining component still presents a significant electronic waste (e-waste) challenge. Bitcoin mining hardware (ASICs) has a short useful life-often 18 to 36 months-before a newer, more efficient generation renders it uneconomical. This rapid turnover creates a massive volume of e-waste, which contains toxic substances and valuable rare-earth metals.

What this estimate hides is the regulatory gap in the US. Unlike Europe's standardized Waste Electrical and Electronic Equipment (WEEE) Directive, the Americas rely on a patchwork of state laws and the emerging concept of Extended Producer Responsibility (EPR). Since Soluna is a data center operator and not a hardware manufacturer, their risk is operational and reputational. You must ensure that the rapid deployment of next-generation miners, like the 20 MW partnership with Canaan at Project Dorothy in October 2025, is paired with a clear, audited recycling and refurbishment program that uses a certified US e-waste partner like Electronic Recyclers International (ERI).

Water usage regulations for data center cooling in drought-prone operational areas.

Operating primarily in Texas, a drought-prone region, water consumption is a critical environmental and regulatory risk. Data centers, especially those using traditional evaporative cooling systems, are enormous water consumers; Texas data centers are projected to use 49 billion gallons of water in 2025. The good news is Soluna's modular, behind-the-meter design appears to mitigate this risk substantially.

Their Project Dorothy I achieved a Power Usage Effectiveness (PUE) of 1.01, which is nearly perfect and indicates that almost all the energy consumed goes directly to computing, with minimal energy (and thus minimal water) used for cooling. Their design focuses on efficient thermodynamics to move heat, meaning they rely on air-cooling or other non-evaporative methods, which use little to no water. This operational efficiency is a key competitive advantage in water-stressed areas and a strong defense against potential state-level water consumption caps or mandatory water usage reporting.

• Mitigate drought risk: Achieve a PUE of 1.01 at Project Dorothy I, minimizing non-computing energy and water use.
• Avoid evaporative cooling: Utilize efficient, low-speed heat movement with no additional ancillary cooling.
• Pre-empt Texas regulation: Counter the state's projected data center water use of 49 billion gallons in 2025.

Mandates for grid operators to integrate more intermittent renewable energy sources, creating opportunity.

The regulatory environment for grid modernization is a significant tailwind for Soluna. The Federal Energy Regulatory Commission (FERC) Order 1920, with compliance plans due from regional grid operators (RTOs/ISOs) in Spring 2025, mandates a massive expansion of transmission planning to unlock stalled renewable capacity. This federal push directly validates Soluna's business of utilizing this very 'stalled' or 'curtailed' power.

Soluna is already actively monetizing this need through its Demand Response Services (DRS), where it curtails its load (shuts down computing) to help stabilize the grid during peak demand events, like the ERCOT 4 Coincident Peak (4CP) program. This flexibility is a paid service, generating $2.1 million in new revenue as of July 2025. Still, you must watch the new federal Executive Order from April 2025, which prioritizes 'firm generation' (like coal and nuclear) over 'intermittent sources' (like wind and solar) for grid reliability. This dual regulatory path-one pushing new transmission and one favoring traditional baseload-creates a defintely complex operating environment.