Power Analysis

Soluna Holdings - CEO, John Belizaire Q&A - Kati 2 LOI & Hyperscale Hire!

• Anthony Power & Bryce McNallie • Season 1 • Episode 626

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We sit down with Soluna Holdings CEO John Belazare to unpack the signed Kati 2 LOI, what exclusivity really means, and how fast the team is moving to convert early interest into a bankable AI data center lease. We also dig into execution hiring, why owning generation changes everything in ERCOT, and how Soluna thinks about the long game where power and compute converge. 

• Kati 2 LOI details and what “exclusivity” unlocks 
• Targeting a 100MW Phase 1 lease footprint and design alignment with tenant GPU roadmaps 
• Running site development, permitting, grid studies, and high voltage design in parallel 
• Battery energy storage system role for smoothing and ride through 
• Keeping Kati 1 flexible with shorter contracts and exit rights 
• Metroblocks as a true JV partner with aligned economics 
• Ryan Carver hire and what world class execution adds to diligence 
• Rising demand signals and how regional constraints shift buyer behaviour 
• Power pricing as a competitive edge even with pass through structures 
• Briscoe wind farm repairs, bring your own power expectations, and future acquisitions 
• First earnings call plans and maturing IR infrastructure 

Let us know in the comment section below if you're currently holding shares of Soluna Holdings!


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Welcome And What’s New

SPEAKER_00

Hey guys, welcome or welcome back to the channel McNally Money, the official home of power analysis. A big episode coming your way today with John Belazare, the CEO of Soluna Holdings, joining us on the channel to discuss the recent LOI announcement at CODI 2 and some recent updates. We've got a lot to talk about before we get into it. Take a second, smash a like button, guys. Big help to myself and the channel. If you're not already subscribed, McNally Money, feel free to join. And let us know in the comment section below if you're currently holding shares of Soluna Holdings. With that being said, let's get into today's interview. Okay, guys, a big interview coming your way. We've got John Belazare, CEO of Saluna Holdings, back on the channel. This will be an interesting discussion, John. We were making our way through the monthly production report or results as we normally do. We noticed an interesting paragraph there about an LOI for CODI2. So we thought we'd bring you up, try and get you on the phone. We also wanted to talk about the Briscoe wind farm improvements. And lo and behold, a big hire you made uh just over the last few days as well. So congratulations on the recent developments and news. Welcome back to the show. And if you could maybe walk us through uh this LOI and what it means to Saluna.

SPEAKER_02

Well, Bryce

CODI2 LOI Signed And Explained

SPEAKER_02

and uh Anthony, thanks for having me back on the show. And thanks for uh pulling me in to kind of give a more fulsome update on some of the things we've been putting out. As you might imagine, we've been quite busy over here at Saluna. Uh I think you know the the the number of hours is per day is closely approaching double digits that we're spending on uh on the business. And it's all you know resulting in some very positive uh results and wins for us. Uh so I so it sounds like the first question is hey, we looked at your business update and we saw an LOI in there. Is there in fact an LOI signed on CADI2? Uh I'm I I'm happy to report that yes, that is true. We had uh several uh companies and potential tenants looking at CADY 2 uh just before I took I managed to take some time off. This is the first vacation I've had in about, I think, four years or something like that. And um just before that, we signed, uh worked through the weekend to sign uh an NLOI that includes includes uh some exclusivity for us to enter a formal commercial negotiations with a tenant uh for uh for the site. Uh the goal is to exit that with 100 megawatts of uh uh of lease in a phase one uh footprint with an RFS date that will meet the requirements of the customer. We are digging into deep deeper due diligence now that they've entered into this exclusivity with their power teams and uh operations teams, etc. And uh we're also engaging uh with them in the design process. So they're getting much uh more involved in the design process because we're right in the mix of that. In fact, we just completed uh 50% design. So we got the 50% design package uh uh two weeks ago, and we've been going through what's called the page turn through that, and they're involved, it's just gonna work for us. Um, they're thinking about some of the latest uh GPU uh GPUs coming into the facility, so making sure that that's gonna work and also uh making sure that down the road the next generation of the VR models um are supported by our design. So there's some very interesting aspects there. Uh they're looking at the uh battery and its relationship to the data center for power smoothing, ride-through, etc. And of course, reviewing all of our regulatory regulatory and then uh the lawyers are getting to know each other, you know. Uh probably to have a big battle on the on the lease. So um that's gonna keep us very busy here over the next uh uh uh you know several weeks as we negotiate that. So um so the answer to your question is yes, that that is in fact what you think it is, and um you can expect us to work as hard as possible to turn that uh you know interest uh agreement into a formal lease.

SPEAKER_01

Yeah, we we've we've had a number of COs come on the on the podcast and talk about that experience of of signing that sort of first deal. Patrick Flew is one of the first that came on, and you know, the process for them it took it took six months. And we're not going to ask you when you expect to sign any deal, but can you sort of like I'm I'm referring back to our previous podcast, and we did ask you the question about 2026, and you had a glint in your eye, and you said we'll have somebody that signed in 2026. Are we safe to assume that conversations have started even in sort of like preliminary point of view at that point in time? Um, sort of can you give an indication of how long you've been chatting with this potential client up to now?

SPEAKER_02

Yeah, so the way to think about it is to get to the LOI, there have been uh several rounds of conversation diligence that have occurred with them and other parties, and that's happened over the course of the first half. So we've been talking to a host of different folks. And, you know, a lot of times what we're trying to do is to assess uh among all the interested parties, which are going to be the best parties for us in this initial deployment that have a, you know, uh, I like to say the best customer is an educated customer, right? That understands the power design and can fit within this uh our environment, is also uh very uh uh design and and tech forward, if you will. And then the second is uh uh bankability. So what's the right type of financial structure to the deal? Uh is there going to be a wrap? Are they you know providing the wrap themselves? Are there is there a downstream partner? We sort of look at each customer in that way and asking those questions depending on who they are. Uh for the hyperscalers that we talk to, you know, obviously they themselves would wrap, right? And so we look at all of those different aspects, um, what their power needs are and the time frame for their power needs. So a lot of folks are saying, yeah, we want to do the initial hundred, but then what's the next phase look like and how soon can we get that? Because they want to map out that that growth pattern. So a lot of the conversations have been sort of aligning our uh rent plan of the site to their requirements as a customer, mapping our design of this of the facility to their requirements as a customer. And then, of course, looking at what's what's market for for a lease and what that looks like, and and then working with our uh our bank, uh our financing partner to to do that. So so you can assume that we've had extensive conversations with this party uh for some time now. So to reach the LOI is really a material shift to those conversations to the trying to get a deal done.

SPEAKER_01

Now, in terms of the processes for you know, ignoring the the the client that the moment, the the the processes around that you need to get carried out.

Permits Grid Studies Gas And Batteries

SPEAKER_01

Not too many CEOs mention this in terms of that there's a lot of work to be done to get to that phase where you're you know you're a vector ready. Um obviously you're you're building out Caty1 at the moment there with um you know clients such as uh as Galaxy they've moved their machines from from Helios sites and you've brought them and design modules from Corinth. Um I'm assuming like, for instance, like um uh power power is not an issue forecast because you're in a key waiting to be given power, I'm assuming that's gonna be you know, as and when you've declared the power is going to be available. And also things like um all of the permitting requirements for delivering HPC on a piece of land, all the environmental permits and zoning permits, is that something that you're doing in parallel with these discussions, or something that you've already literally started and um and and you'll hope to complete at the same time?

SPEAKER_02

That's a good question. The the answer is every everything is happening in parallel. Um, so land land due diligence and uh the environmental studies phase one, phase two, we look at water, uh, we look at um uh the the key boundaries and we look at size. So to lay out a campus, so based on the customer's power ramp plan. So if they want a multi-phase uh uh right to grow at that site, then we've got to make sure we've got enough land based on the ultimate uh basis of design that we choose. We gotta make sure there's enough space for all the buildings we're gonna put there. And what did that what does that look like in terms of um the amount of land that we're looking to acquire? And I can tell you in this in this business, one thing that I've I'm learning uh as compared to Bitcoin, you always need more land. We thought we had enough, now we have to get more, and we just need more uh based on what the customer requirements are and uh and and the the demand signal that we're getting for the site. Uh so that's underway. Uh there are some regulatory uh things on the ERCOT side that we need to do. So we had 166 uh uh power, but it's not uh approved for AI. So ERCOT has two different lanes. If you're AI, if you already have the power approved, so like 166 at that site is base load in the batch program. So we already have our base load number, we have our batch zero number. So that's not the issue. Like the power is available to us, it's more uh redoing some of the the uh the technical studies when there isn't a Bitcoin farm back there, there's gonna be an AI farm back there, there's gonna be a battery best system back there. So what what they what they know to be behind that POI is changing. And so we've we've already started to submit those uh updated models, for example, uh to do the quality checks and the ride-through and and uh uh uh uh related studies for for a more complex project. So that's being done in parallel. And we're also doing the high voltage design. So this is the process of um uh expanding the uh wind farm substation to have more feeders coming into the site to support uh the power envelope that we're we're contemplating for uh uh Cody 2. And uh uh design, as you know, architecture and design uh is underway. Uh we have a team that's just focused on uh bringing uh gas molecules to the site. So you we have to tap a gas line six miles away, build a pipeline across that. It's not something that necessarily needs to be done before we sign the lease, but it has to be underway. So this site has a a view into using that as a resource. And then we'll we'll we'll decide when we build the actual gas facility. But it's in the master plan that there's a gas plant there. Uh we've been negotiating with and completing design of the of the the uh the best system, which will provide essentially a buffer and a um one-hour backup to the entire data center campus, and also shield the grid from the power fluctuations on on the GPU side. So working with uh a number of vendors on potential solutions, and we ultimately have to pick one with the customer that they like, that we like. Um and just I can keep going. There's just like a long list of things that you have to do, but you get the sense that there's a series of activities that are site development related and design related, such that the customer gets clarity around the product that they're they're signing, at least for. Like they they know they they're gonna know, for example, I mean, they need to know how much space there are between the aisles, right? In the in the data center, in the data halls. Uh, how many data halls are there per building? Where is the network exactly? Uh the only thing I can cover is fiber. So uh uh laying out the fiber route routes that are gonna come into the site, who the providers are, et cetera. There's just a lot host of things. I mean, literally my team had a meeting with the with the local fire department. Hey, we're gonna build a big building here. Do you guys know how to like put out a fire and something like this? It's like, well, we've never seen anything like that. You know, so we're gonna have to figure out how we can provide them with some resources to help them to support us in an event of an emergency. So those are all the types of things that we've never had to think about on the Bitcoin side. On the AI side, we we we have to think through. And to be honest with you, it's it's very exciting. Um, it's it's it's fast pace, a lot of volume of activity. The team is, you know, our team has grown as a result to support that activity. And uh now with uh the the ascension of uh Ryan Carver, uh, we'll also be able to bring some of the world's best uh expertise uh to bear in the execution process here, too. And that also gives the customer confidence that we can deliver. So that's one of the things that they were uh focused on in their diligence. Like, how are you guys gonna do this? Have you ever done this? And and and I'm like, hold on, we understand uh we're very self-aware as a company as to what we're good at and what we're not, and where that expertise will come from. And the MetroBlocks team has has certainly helped with that uh confidence, but this further enhances it that we'll be bringing in uh an in-house team and building out a whole organization that's focused on uh execution.

SPEAKER_01

I'll

Balancing Caty1 Mining With AI Upside

SPEAKER_01

let Bryce come on and talk about Brian in a short while, but I just wanted to I heard somebody mentioned in that response um about obviously the the different types of uh of power associated with HPC and mining. Now, obviously phase one, uh CATI 1 is 83 megawatts um, you know, in terms of mining, hosted mining, and CATY two um was originally 83, but you you basically want to increase that to 300 plus megawatts to make it a sizeable HPC space. I mean in the current climate, um you know it's is it safe to say that you're still thinking of Caty 1 as the as the sort of like uh the mine space there and you're and you're not going to remove any of the power from that one in the short term to sort of utilize to develop Cat E2 so that you have uh clients, or do you think it's feasible that you'll be able to increase the power in Cat T2 from 83 to meet your demands? And I think you mentioned 100 megawatts. I know that's not putting out any updates, but in terms of uh the initial client sort of LOI for an amount of power, um, how how does that how do you see that working? Are we literally looking at two separate things?

SPEAKER_02

So yeah, that's a good, very good question. Um, you know, when you have power, everybody wants that power. So that what about that? What's that thing across the street? And and uh say, oh, that's our Bitcoin farm and everything, but what what why don't you just bring that what why are you doing that? Just give it to us, you know, and uh it's a very good question. So the approach that we're taking is we are uh continuing to develop Cali One and we've reached uh construction complete uh for uh you know second phase of the three phases, and we'll probably be done with the full site here this summer. And we do have uh customers interested in coming into that facility. Uh, but one of the things we're doing that's very different than what we've done before is we're not signing long-term contracts um with those uh and or to the extent that they they they really need something longer term than we're willing to do, we include a uh an exit right in that contract where we can come in with some notice and say, hey, we're gonna need your power, and you're gonna have to, you know, we'll we'll move you to another one of our sites, or um uh, or we can help you transition out uh such that in the event that we we do need that power for the AI project, we have the flexibility to do that.

Metroblox JV And Execution Hiring

SPEAKER_00

Yeah, I've got a couple for you here as well, John. Metro Blocks, I wanted to get an update there. You guys signed this partnership to support the development, the design quite some time ago. You mentioned now the company has grown a lot, you've got a lot of the in-house talent. Can you explain how involved Metroblox is versus your in-house staff and also their position in the project? Is there an equity component? Do they own any portion of this project, or are they simply there just as a consultation or uh contractor?

SPEAKER_02

I'll start with the people. The uh Metroblox is very involved. Um, I'd say, you know, in terms of the team makeup, we have engineering, mechanical, um, commercial teams, underwriting, which is another way of saying finance teams uh involved in the kind of two project. They are a true joint venture partner with us, uh, with the exception that we bring the bulk of the capital or partners who bring the bulk of the capital. And then we've designed and disclosed the uh the Metro Blocks uh deal where they will receive certain fees for the work that they've been doing uh with us, the actual sweat equity, if you will, and they'll actually get some uh some payment uh for that. They'll be uh able to uh be involved in uh post-uh lease activities. And then uh once we are fully stacked, like the full capital stack is in the program, there'll be a uh uh sharing of the profits, uh, majority us, minority them, and then some sharing of the of the splits after some return of the uh invested capital in the project, uh, which affords them the ability to make some money off the the potential of this this asset. Which we uh we we deeply appreciate the partnership that we have with them. And we thought that was really important, that this wasn't sort of like a, hey, you're just gonna be, you know, we'll just pay you some consulting dollars. I want them to have a piece of the of the project because it aligns our interests and uh uh makes sure we make this the best possible data center uh ever. The team has grown uh primarily on the development side and the grid integration side, and we're just getting started building the HPC operations, development, um, and construction side. So Ryan uh has come on board, and as you might imagine, with uh when an incredible person like that comes on board, they have networks of folks that they know are really strong. And uh, you know, we've started to uh put job offerings, you know, job availabilities for certain roles that he knows we're gonna need. And people are applying from a host of different incredible companies that uh have worked directly with uh Ryan or have partnered with him in the past, and they're like, whatever you're doing, we're you know, we want to do that. And uh we have uh vendors that have worked with him in the past that are already talking to us about how they can help in the project. So I mean, overnight we've gone from you know where we're gonna find some of these resources to now we have access to some of the best, uh, the best in the world. And so we're gonna start to ramp the team up from that in line, also in parallel with uh sort of all of those activities that that are going on. Having said all of that to you guys, I realize yeah, we got a lot we have a lot going on. And uh just it's just the nature of what we're doing, it's a major transformation of our business. Probably, you know, I like to tell the team that this is this is the biggest push we will we we have done to date. Uh it will have immeasurable uh benefits to the value of the company and uh growth of the team uh in general. And so uh uh so that's how I would sort of describe what's going on. You know, our core team has grown in sort of our core area, which is you know power development and uh grid integration uh development activities with IPPs. That's also uh grown considerably. You know, we haven't published the update to our pipeline and activities there. We'll do that probably during during the upcoming quarterly uh uh review. But when we do that, what you'll see is that uh there's been material improvement, uh maturing of the assets. We're getting better clarity around the projects that are clearly going to be AI versus now in the table it says, you know, AI versus Bitcoin. Now we're we're getting clarity around projects uh that are clearly going to be AI versus Bitcoin. So we'll get more clarity there. And you know, the team is just Just doing an incredible, incredible job.

SPEAKER_00

And then just the second one for me there, John.

Demand Spike And First Lease Strategy

SPEAKER_00

I wanted to ask, we saw that moratorium news come out in New York on data centers. Uh, Anthony and I immediately thought, hey, this probably adds value to existing data centers or data centers in other uh states. You guys also have the Briscoe Wind Farm, so quite a differentiated approach. It have you seen or heard anything related to that uh moratorium that would indicate the value is of changing for these existing sites?

SPEAKER_02

So um what we have seen is suddenly a significant increase in demand signal. So imagine you are a hyperscaler or neo cloud, and you have certain regions in the country that you're assuming are part of your resource to meet your demand, right? There, there's supply to meet that demand, if you will. And suddenly one of one one major one, you can imagine the Northeast Corridor is a pretty major one, suddenly gets taken off of the map or pause for a second. You're scrambling to redirect that demand to other supply that might be out there. Uh, and so I can't tell you how many times we've gotten calls on Dorothy 3. Is that what when is that gonna be available? And what time frame? And and how big is it? How big can it be? You know, have you done everything? And and we're like, I'm sorry, I'm sorry, who are you? That's awesome. And it's it's like something like that is coming in. Um, you know, what you know, Kyle 2, is that available now? Can we take that? It says, Well, we're kind of talking to somebody right now, we can't really talk to you. Uh but what about the rest of the power? Do they have a rofo? I mean, it's it's it's it's it's gotten to the point where you know you've got a lot of we've got a lot of inbound. So I don't know that that's because of that moratorium, but it just so happens to happen to be happening around the same time. You're seeing sort of a pretty significant increase in demand signal. So either that's a a more macro demand signal increase around AI growth, um, or it's a uh repositioning of you know uh demand signal to to match it with supply.

SPEAKER_01

Yeah, the the the interesting thing at the moment was seeing an again in 2026 quite an influx of uh contracts being signed. Uh we saw Clean Spot come out with their uh initial contract uh last last um last sorry early this week, sorry. Um, yeah, very happy for those guys. They covered the rates that they were getting. And actually, I looked at first glance. I thought I thought that they were they were fairly good in terms of the type of lease they had, uh, you know, uh, and and the facts. It was, you know, just under 1.9 million per megawatt, you know. Now there's a lot of factors people don't realise that you know that the the cost of capital, the weight average cost of capital when you're going out there, you know, raising all your funds to deliver a project. You want to make sure that the revenues that you're getting are not just going to pay for that, but also give you a decent sort of like return as well, on top of that. There, um that's obviously something that you're conscious of. I I mean we're seeing rates over two million dollars per per uh megawatt, but you know, and and this is for companies that haven't even delivered HPC yet. You know, in in in we look at like uh HUD 8, they signed a great deal recently, and um and TerraWolf have been signing some great deals. None of them have delivered any HPC in any size at the moment, haven't delivered any HPC at all at the moment. Great been sort of put back because of all the uh you know the expectations of delivering going straight to that. Where do you see yourself in that sort of like negotiation with the with with all that we're seeing from a fairly transparent view outside of there? Are you sort of a you know be able to sort of like negotiate great great rates from where you are, or do you think you'll have to get one of these projects going to show the market that you're able to deliver, and then the next project that comes along it gives you the opportunity to go out there and seek the right rate for what you're delivering?

SPEAKER_02

Yeah, well, I can't speak to what rate we're gonna get and in any in any uh any color on the uh the quality or or non-quality of it. But what I can say is that um uh we saw a lot of demand for this site, and so to have us, remember, I have a criteria, right? It's like the economic the commercial criteria, their their characteristics as a customer, bankability, all of those factors play into what's the best first deal for us as a company, our platform, our cost of capital, our valuation. And every company is doing the same exercise, right? And you we you work closely with your bank, and the banks, you might go to the bank and you say, I have this deal, this deal, this deal, and the bank works with you and says, you know, this one's better than that one, even though the price might not be, you know what I mean? So I I think I think the um uh you know, I think it's unfair for let's say those folks in CMBC to comment on whether C is I think it was unfair. I'd be like, whether whether the Clean Spark, you know, uh, you know, my my my peers, my my my colleagues out there in the industry did a good deal or not. Um, everybody has to assess the deal quality based on the characteristics, characteristics of their company, phase in the AI transformation, et cetera. But what I what I do know is that after you've done the first one, the second one's easier, the third one's easier, the fourth one's easier, and you find that in aggregate, you know, your average cost per megawatt will start to increase over time, depending on what the demand signal is at that given time. But let's just be clear, you know, we're talking about, you know, speaking for for ourselves, you know, a company that's in a value in a in a value uh realm that we think doesn't match the potential of the company yet. But once you do one deal, the asset value, the NAV value that gets added to the business relative to where we are today is laughably significant, you know. You know what I mean? It just doesn't make sense. Like you go from hundreds of millions of dollars of of assets in in our in our balance sheet to potentially billions of dollars. And um I don't think that the focus is gonna be on, you know, whether the lease was the best lease relative to peers in the space. That's not the main focus. Our focus is building long-term value and predictable significant cash flows, and that's why we're doing the transition and doing the trade. So we're gonna do the the best uh most profitable deal that we could do with the right partner, and then we're just gonna do another one after that and another another one after that. And just keep building, guys.

SPEAKER_01

That's that's that's that's what we do, and that's our focus as it's going back to what you said um on the previous uh podcast about the type of client. And uh, and without you know, I think it was sort of like lean towards the you know the the neo the neoclouds or the the enterprise value, not necessarily the hyperscalers. What we're seeing from the hyperscaler contracts is it's the power of the buyer, then, because they're able to flex their muscles and they'll say, look, we can open doors for you to get low low cost of capital, um but we either want a chunk of the company or we want the the the rates around our level, and we are seeing that from some of the biggest uh providers out there when you look at that that you know they're and they're happy to sign these contracts uh single gas, but when we see some of the sort of like you know, the anthropic deals which are pay they're paying really really well at the moment, so maybe these have to go in there and sort of like pay a premium to beat the hyperscalers to the to the power. Um

The Power And Compute Convergence

SPEAKER_01

and and I think with tokenization, I think you know what rates are showing at the moment don't probably reflect what rates will be in a few years' time because you know I think if we went a year ago and said how many people are using AI regularly, the question the answer to that question now from a year ago is a whole different space. I think everyone's probably using AI of some form, you've everyone's got it on their phones now in in some way or form, you have to buy a package to use it. Um so that people get used to that, it's gonna be second nature, and then when the tap goes on and people have to start paying for usage, like they do for an like electricity bill, and that's where we'll end up, John. I think you know, this is where we'll see those sort of like everything the money follows, then everything else goes back to the to the contracts, then and and everyone benefits from it. That's my assumption, anyway, John. I don't know if you're thinking along those lines yourself, but um that's certainly what I'm seeing from the industry.

SPEAKER_02

Yeah, so um uh I've said this before, and I'll say it again. Our our our view of the market that we're going into is that there is a uh convergence underway, and uh power and computer becoming one and the same thing. But ultimately what that translates to is a new form of infrastructure to deliver tokens at the lowest cost possible, right? So that's going to favor uh power sources and energy sources that are also at the lowest cost, and that favors uh a Solina platform. And um so but today where what's driving that is not the endpoint of the of the thesis I've just laid out, right? The end point of the thesis is when the when the the demand signal reaches a scale such that um it it becomes uh it has escape velocity, if you will. That escape velocity will uh allow the industry to get the benefits of scale, because you have high competition across all of these different providers, to deliver uh intelligence in a ubiquitous way at the lowest cost possible. And so when you start to break everything down, uh it's gonna mean that all of this stuff has to kind of sort of come into a cost level that can deliver this at a reasonable price for an individual at home or their phone or whatever that has happens to be. And it just so happens that every other major innovation uh has gone through that process. And when they exit the other side, it basically reduces to whatever the cost of the core infrastructure costs to deliver that that value. So uh an example I like to use is uh content. So the internet essentially created a way for us to deliver information and content in a ubiquitous fashion. Um, so the cost of that is essentially reduced to almost zero, right? Like I have like a almost you know uh a gigabit network that's driving my network here. I pay almost nothing for that, and I can watch any channel, any, any, any show, basically for free, you know? And so uh intelligence is a good thing. If you have the time too. Yes, if you have the time, which I never do. Uh but intelligence is going to go through the same process, right? You're gonna, you know, the goal is to get tokens delivered to everyone on earth for almost for free, and that boils down to it reducing to the core infrastructure, which is power and uh and and silicon. So um so whatever's happening right now is just the characteristics of the early stage of this market, right? Where uh if you look at cloud, when cloud was um young, you know, some companies wanted to do cloud, some people were like some companies were like, we're never doing cloud. And then so the demand signal will go like this and it would go down, it was kind of like this this very choppy thing. Uh now cloud just goes like this. You gotta be no one talks about doing anything on-prem anymore, except maybe for AI, which is a new thing. But cloud just goes like that at 15%. And then you've got this new thing, which is AI that's like is like where cloud was in the early days, where it's like demand signal's up, demand signal's down. Yes, we're gonna have the efficiencies we want for AI. No, maybe we're not, you know, like it's it's going like that. And uh at some point it's gonna become like this, where people were like, this is the the way you do things now. You just use AI as just part of your life. The demand signal will be like that, and that scale will allow us to do a lot more infrastructure build-out um at a much lower cost.

SPEAKER_00

Yeah, that's awesome.

Ryan Carver And Investor Attention

SPEAKER_00

We think we're early in this as well. Hey, I want to move over to Ryan Carver, and then we wanted to ask you about Mike Alfred as well, making some waves for Saluna on social media. Uh, Ryan Carver, so he comes from Microsoft. I'm gonna quote here, director of AI construction and site development. So obviously a huge asset to your company or probably many others in your position. What was it about Saluna Holdings that attracted Ryan to the team? And what does he now enable you to do in-house?

SPEAKER_02

So, what attracted Ryan uh was the unique approach to power, the scalability of the platform, and uh the people themselves that that that he met. He was looking for at some point we'll get him on the show and let him speak for himself, and you'll find that he's a very he's a very modest uh person. But he has done incredible stuff, you know, on a global basis, global basis. Um the way to describe Ryan is he's the guy they would call when you're trying to you're trying to think about this new innovation that you want to use in data centers, but you you know, you you don't have a way to sort of prove that you can deploy it in a in a in a in a scalable way. So his team's the one you bring in to do that. If you have a project that's going sideways and it's not gonna get delivered on time and it seems to be heading the wrong way, his his team is the one that would get brought in to get that project back on back on track. Exactly. And if you're trying to uh launch a super ambitious greenfield project where you're built, you you want to build the largest AI supercomputer ever built. There's only one person you call. You call Ryan Carver and you bring him in and he gets it built on time on schedule faster than anyone else had said they would do it. So uh he was looking for the opportunity to go to it in a company, an enterprise where doing the impossible is like Monday, Tuesday, Wednesday. That's where he lives, you know. So he wants he so what he saw in Saluna is like, we're gonna do stuff like that no one's ever done. Like, you know, we're gonna build these sites that have these different, very complex components that can deliver the best in class uh, you know, AI platform for these customers. He believes that uh speed to power is a fundamental need for his alma mater and uh peers in the industry. And so that certainly attracted him. And there's one thing he said which surprised us, and that was that um we are not ambitious enough. Like we don't realize how much potential the company has is actually far beyond what we think it is based on his assessment. And trust me, his assessment was quite rigorous before he said yes, because he's coming with a very specific lens. Can you do this? Show me you can do that, you know. And he went out to the sites, you know. So you know, it's the it's the it's the huge potential of the company, the team, the vision, the the the pipeline, and what his expertise and execution capability can bring to the growth and scale of the business that attracted him, and that's what he was looking for. He could easily have gone to some other big data center platform or whatever, but it'd probably be boring because it's already built out. Like, is that you know what I mean? This is this is like green field almost that he can um bring a lot of uh value to bear, and he's coming to us right at the right time. I mean, uh just just yesterday I was in a room with him. We were going through some key decision stuff on Cadi 2 and the way he processed information and decisions and the all the experience that he bear. Like, you know, people don't realize, but you know, you you have this thing that that your people always get wrong because you think about the project like this, but it's actually this is what happens, and so the right decision here is is is is why, based on all of that, you know, learned experience. That's huge for us, you know. Um that's huge for us. And so uh we're we're we're very excited, he's very excited, and we're you know, we're already off to the races here, uh, pushing on a lot of things.

SPEAKER_01

Yeah. Back in April, John, we were all at uh the Bitcoin conference, and you had a meeting with uh a sort of a big hit on the on on X, uh Mike Alford. Can you tell us anything about that sort of conversation? He he seems to have been sort of buying a few of your shares since that meeting.

SPEAKER_02

Uh I I don't realize I didn't talk to you guys since then. Yeah, I was in Vegas uh at the Bitcoin conference. We were at an investor conference that was put on by the um OG advisory folks, industry advisory. So we met a lot of the analysts and um investors in the space that didn't know about Saluna. I mean, the number one uh wrap-up sort of summary comment from folks after uh Mike PG and I walked them through what we're up to and you know who we are. How do we not know about you guys? Like the the this is this is this is crazy. Is anybody how how do we not know about you guys? That's the most common uh response. So after the the the main sort of sessions of the day, the work, the work part of the session we went into with sort of a cocktail part wrapped up. I I was I barely had a voice talking all day and whatnot, uh nonstop. And uh the OG guys uh uh pointed out sort of who's in the room and folks that they think I should talk to. And so uh at some point that evening, they put me directly in you know in front of Mike Alfred, you know? And I'm and uh and I'm like, hi, I'm John Bellis here. So who are you? And and and and and and what are you doing here? And he's like, I'm the I'm the number one shareholder of this and that, you know, I've done all these things. And I'm like, oh wow, that's that's amazing. And he's like, So what are you guys up to? And I've heard I I heard about you guys, you know, he says, I heard about you guys, you know, they love you on X, you know, and I'm like, do they? I guess I guess they do. So he's like, and then he just goes into, yeah, exactly. And then he he goes into some very, very probing deep questions about the business, the strategy. How are you gonna do this? How are you gonna account for this? These guys, you know, do you know a little how long it takes? And I think I I explained to him my background. I understand enterprise selling and how long it takes. And and and and we, he's like, but but but how are you gonna show them that you actually know what you're talking about? Where we did this JV with Metro Blocks, so we brought expertise. So, and some of the people we're talking to used to work for these people. Some of the people who are looking at our sites, they used to work for the Metro Blocks guys, you know. So it's like it's a different uh conversation and strategy. And um, what makes us unique, I explained to him, and what we see coming down the pike and the strategy we're approaching. So because he's so knowledgeable in a short period of time, uh, my sense is he was he was able to assess me, the company, and you know, our prospects as an organization. Uh so I think the next day I'm flying back and you know I finally get Wi-Fi because there's always choppy for some reason on the plane, and then I see like all this all this like activity. Uh as Mike is like, I met this guy, pretty impressive, pretty impressive.

SPEAKER_01

So that's great. Just switching it to uh power, John.

Why Cheap Power Still Matters

SPEAKER_01

I just want a couple of questions on power because um one thing you mentioned um you know a few years ago, and actually people probably you know um weren't taking you seriously. I think you would have you're one of the first companies to talk about a pipeline of power. Um, some people were saying, well, if you talk about pipeline, it's not real, it's just like you can put any number there. But the great thing about you guys is is that you've you've basically had your projects table consistently since then early early days, just increasing it by every additional project as that power's coming uh becoming more and more available, and the fact that grown and they were starting doing more than one project at one given time has probably given you a sort of like a lot of credibility. I think the journey through that period has has been great for the for the retail shareholders who've been seeing that movement there. And me and Bryce were just talking before the podcast. Now we can see from uh from social media land um you know how well a company's do in terms of retail because when we put posts out, we know the sort of like the fact how much um you know engagement there are and and also now starting to sort of get traction in in terms of like Keel and Iron, um, you know, who are generally the biggest the biggest. Too not necessarily the biggest company. Close not the biggest company out there, but Ben seems to do a great job as CEO and engaging with the community. And obviously, Iron has got Mike Alford and Dan Roberts to do their engagement, you know, and they've had a massive following over the last few years. And now you're sort of coming into that group as well, ahead of some of those other, probably more well-known players that you know we talk about on a regular basis. Now, talking about that power pipeline and talking about the fact that you're able to get it at such a great price, how much of the how much of the conversation is around the fact that you can get power cheaper? Um is it because we know power's not as sensitive in terms of HPC as it is absolutely for mining, but is it is it is it sort of like high on the list, or is it sort of like it's just another great positive thing to add, probably lower down the list in terms of delivering HPC? How how do you know your clients, potential clients see it, the ones you're having discussions with? Is it a selling point or is it something no, it's a nice to have, and you know, uh it comes with a territory?

SPEAKER_02

Good question. Um, so it is uh definitely part of the conversation. It's not the first thing that's covered, how how cheap is your power? Uh, but power is passed through, so it is part of their cost, right? So if you're a neo cloud, you've got to combine your power cost because you you you you're not generally passing through the power. You you charge on a per GPU basis, so that gets into your margin. So power cost is is is definitely uh a part of the entire package, if you will, an analysis of the profitability of the deal. And so there is some some uh uh some trading to be to be done there. Uh you're right, it's less sensitive to power cost than Bitcoin, but believe you me, it's it's not it's not unbounded, right? Like they that there is a limit as to how much they will pay for for energy because again, it it all it all fits into into their margin. And and this is true even of the hyperscalers, they know what they'll they'll pay the what the industrial, the average industrial rate is on a national basis. Um, and uh if you're showing in our case, you know, half the price or even even less, that is very compelling to them. Uh so you can deliver a lot of power over the next few years for us, and you can give it to me at half the price I would pay in Virginia. Actually, a third of the price. Like Virginia is like, you know, the national average is like 80. Virginia is like 120, you know. So if I'm delivering it at 50 for them, 40 for them, um, it's a it's definitely a competitive edge relative to other deals that they were looking at.

SPEAKER_01

There's a reason I asked the question, John. I had a comment and I won't mention the company, but they are a big company in the space, they have got a sizable deal. Um I'm I asked a sort of similar question about the power. Now they're on a sort of like a market rate there, about five cents a kilowatt hour. And I said, you know, how you know, how, how, how, you know, it's a pass-through cost. How important is the power cost? And the response I got was if the market rate went up to ten cents a kilowatt hour, you think he may get a phone call? Wow. I'm like, wow, that's like double the power cost, and they may start to ring up and say what's going on. Like no.

SPEAKER_02

So that's my point.

SPEAKER_01

That's exactly my point. You really have to have effectively your power rate to make any sort of margin at the moment. You know, we know a lot of people out there, four and a half, five cents. You ain't getting anything from Bitcoin mining at those rates. You've got to be in that probably with a three, maybe, to sort of like, you know, and obviously have great machine efficiency to be the other side of the equation. You're not just having cheap power and um, you know, an S9 minor, you know, you're not going to get anything.

SPEAKER_02

You know, it's a totally different thing.

SPEAKER_00

One more for me, John, on power. I know we're just about at time here. Uh, just an update on Briscoe Wind Farm. We noticed that you guys are doing some repairs, uh, updating there. You mentioned you're more feeds coming in. This is yet again another key competitive advantage. Uh, can you tell us what's going on there and how important is this bring your own generation that we're hearing about?

SPEAKER_02

Oh, uh, so two things. Uh things are going things are going well. The repairs that we're doing were were planned repairs that were already scheduled as part of the acquisition. Uh what those repairs are is uh inside of a turbine, when a turbine spins, uh what happens is you you you you basically turn sort of low speed. So when you see the turbines that you're driving by, they don't they don't look like they're going like this. They're going very slowly, almost you know, at this constant pace. That then gets translated into a very high speed uh oscillation inside the turbine through what's called a gearbox system. So they basically take this very large thing and then they keep shrinking it down, and that gearbox turns a generator, which then starts to generate electricity. And um uh those gearboxes uh fail after a certain number of years of use, uh, or if there's some like big sort of wind event or something like that. And so uh we are we we had about 10 of them that that were uh failing on the site, um, so 10 out of like 80 turbines or something like that. So uh we have two uh crews on site. It was cool to watch actually, uh going to you know the different turbines and going in and pulling those gearboxes out, replacing them with new gearboxes, putting the you know, the the the blades back on and uh and then restarting and retuning uh those turbines. So we started with one crew, we've added a second so that we can um get those turbines back to uh performing and generating revenue for us uh at a much higher rate. We've had some weather delays uh in Texas that kind of slowed us down, but I think we're we'll we'll get back on track with the with the dual piece. Um now that is uh a description of Saluna managing its own wind farm that it now owns. And every time I go to Dorothy, I was there this week uh with Ryan. Uh it's a different feeling to go see Dorothy now, because I I don't just look at the buildings down below. I look at the whole thing as like, that's all mine, you know. Uh and it's it's pretty neat. And uh now uh it's also giving us um the view that uh when we talk to customers, we tell them like you know, the power, that's us delivering the power. And uh that's like a that's like an eyebrow raising thing. They don't see that uh regularly, which give them more confidence that the power's there, right? You don't we don't have to go negotiate with the wind farm owner to give us the power and they're gonna go look at those agreements and so forth. Um we are doing it on a on a bilateral arm's length way, but it's us that we're that we're delivering into the project. Also, it has allowed us to uh do all of the uh submissions for conversion of the power, uh increasing the power envelope at a much faster rate than we've ever been able to do before. You know, before it was sort of like cajoling and talking to these folks about, hey, we want to do this new thing. And it's like, well, I gotta go talk to my equity, tax equity, my debt provider to see if it if if if they think this is, I think it's a good idea, but they may not think it's a good idea, John. So we'll get back to you in like three months, whether they like it. Then we got to do another three months to actually negotiate it, you know. And I'm like, now I just say submit this to their count and it's done. So uh, or or to Encore. So uh uh that goes a long way to accelerating the process with which we can develop uh the Dorothy project. And uh on the uh site when it comes to saying that you're building an AI campus and so forth, um, all of the uh local energy providers, the co-ops in ERCOT have um made it clear that A, what the governor wrote in his letter, like you must bring your own power, you gotta have some way to is we're taking that seriously. You will not use any of our resources here locally. Those that generation is for our our our constituencies, and you're gonna you know have to bring your own power. And we're like, great, we own this wind farm here. And they're like, fantastic. We love that's why we love you guys. You know, that's kind of like the feedback. So it's working very well for us and giving us a lot of um local community support for the projects because of the unique approach we're taking, which will be true for Cody too, as well. Um, there are some uh let's call them strategic opportunities as we grow that site that um will will allow us to uh uh have the same benefit as we have as uh Dorothy.

SPEAKER_01

Just before I come into my final question, a very quick yes or no question. Do you do you see Soluna looking to acquire any more power in the future, like like you did with the Briscoe Wind Farm? Is it does wind farms offer you any better opportunity in what you're trying to accomplish with your varying strategies? Just a just a very quick answer, John.

SPEAKER_02

Uh yes, the answer, the the short answer is yes. We we we um we are looking for uh more Briscoe opportunities and actively pursuing those. Um we are looking at that as a way to accelerate clustering. So if we own the wind farm, we can accelerate clustering, um, build bigger campuses, um combine clustering with gas, you can build bigger campuses. So those are the types of um insights we're gaining and uh you know we're we're we're forging conversations in that regard.

Earnings Call Plans And Wrap Up

SPEAKER_01

Uh we're probably two weeks away from this the earnings season for most of the companies that we talk about on a on a daily basis on the podcast. Um, can you give us any any update uh in terms of how Saloon are preparing for for earnings this particular time? Um obviously we we know that the challenge of Bitcoin price, even the companies that have signed contracts are still predominantly getting their revenues from the mining industry, and we'll continue to do that probably for the next maybe 12 to 18 months, maybe a bit longer for other companies there. But you know, how sort of like how are you preparing any any updates you can give us? I mean, we don't need to know numbers at the moment, but any any updates you can give us in terms of how you're preparing for rowing season.

SPEAKER_02

So uh we're gonna do something different this next earnings um release. We're actually going to have our first uh earnings call. Um so we're upgrading everything around here, we're setting up a new IRS IR platform. We are uh we brought on a new uh IR firm to help us with um preparing materials and preparing for uh these these formal calls. Uh in our call, uh we're gonna be focusing on the integration of our power generation business, uh, the Bitcoin business, and uh the future uh plans uh for AI and how we see that uh uh taking hold. We are also um bringing in more uh of a team, if you will, to the conversation, right? Um my hope would be that uh it'll be Mike Peachy and I and probably Ryan talking about the business um for the um uh for for the uh uh for the quarter and for the the second half. So there's lots of uh uh new infrastructure, new processes underway to mature as a company and actually uh do things the right way. One of the things we we we heard on an investment tour that we just did, like a non-deal roadshow, if you do you you will, companies do that to introduce companies to the to them, not necessarily you know raising any money. We're just saying, here's who we are. When we do raise money, we'll give you a call, things like that, you know. And uh the the the the the overarching feedback was similar to Vegas. Why have we ever heard of you guys? And the second was why don't you do earnings calls? Because you know, we're old school, like we don't we don't find out about you on X. I'm not on X. I go, I look for earnings calls, I look for transcripts, that kind of stuff. And so it it's become clear to us that uh it's the right time as we do this transition. There's gonna be a lot more to talk about. Uh, we're bringing on uh uh a fairly professional team now, and uh it's time to enter the big leagues. Makes sense.

SPEAKER_00

Hey, I know we're at time, we've covered a lot of ground here. I wanted to give you an opportunity to close out. Uh I recall Vegas, you and I were texting back and forth, John, saying you come down to the where we are, we come down there. We're both saying it's too hot. It sounds like you made the right choice and you had some great uh conversations and outcomes there. So we look forward to catching up in person. Congrats on all these big announcements, and I'll give you an opportunity to close out.

SPEAKER_02

Well, thanks again, uh, the two of you. Always a pleasure. Uh I like this uh informal conversation, some great questions here. And uh, you know, to our shareholders out there, uh, we've got uh a lot under our belt in the first half. We've been able to transition ownership of our sites. We've expanded our footprint in terms of the types of assets we own. We're building out uh new uh development sites for AI. We're expanding our capital formation capabilities, and we're upgrading our team. We're bringing on you know powerful expertise that can help us to drive execution and become thought partners in the growth of the business. And we're scaling up all of our infrastructure, and there's so much uh to do, so much more to come. So as always, stay tuned.

SPEAKER_00

There you go, guys. You keep pushing. We've been uh following your story for a number of years here. It's incredible to see the growth. Let us know if you have any additional questions, comments for John and the team below. Thanks again for your time, guys. We'll see you back here on Monday.