15. Segment Information

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

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

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

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

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

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

Schedule of Segment Reporting Information 

For the three months ended June 30, 2025

For the three months ended June 30, 2024

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

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

For the six months ended June 30, 2025

For the six months ended June 30, 2024

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

Concentrations

During the three months ended June 30, 2025 and June 30, 2024, aside from the Bitcoin Mining revenue generated as a result of the Company’s participation in a mining pool and the Company’s participation in the demand response program, three customers each contributed more than 10% of the Company’s total consolidated revenue constituting approximately 40% for the three months ended June 30, 2025 and two customers contributed more than 10% of the Company’s total consolidated revenue constituting approximately 41% of the Company’s total consolidated revenue for the three months ended June 30, 2024.

During the six months ended June 30, 2025 and June 30, 2024, aside from the Bitcoin Mining revenue generated as a result of the Company’s participation in a mining pool and the Company’s participation in the demand response program, three customers each contributed more than 10% of the Company’s total consolidated revenue constituting approximately 37% for the six months ended June 30, 2025 and two customers contributed more than 10% of the Company’s total consolidated revenue constituting approximately 36% of the Company’s total consolidated revenue for the six months ended June 30, 2024.

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

For the three months ended June 30, 2025 and June 30, 2024, approximately 53% and 73% of the Company’s data center hosting revenue was generated from Project Dorothy 1A, 40% and 27% from Project Sophie, and 7% and 0% from Project Dorothy 2, respectively. For the six months ended June 30, 2025 and June 30, 2024, approximately 55% and 70% of the Company’s data center hosting revenue was generated from Project Dorothy 1A, 41% and 30% from Project Sophie, and 4% and 0% from Project Dorothy 2, respectively.