Soluna Holdings secured a $100 million credit facility from Generate Capital with an approximate 15% borrowing cost to fund green data center expansion for AI and Bitcoin mining.

Executive Summary

Soluna Holdings, Inc., a developer of green data centers, has secured a scalable credit facility of up to $100 million from Generate Capital, PBC. This financing, carrying an approximate 15% borrowing cost, is designated for refinancing and constructing data center projects focused on AI and Bitcoin mining, highlighting continued investment in sustainable digital infrastructure despite high capital costs.

The Event in Detail

Soluna announced the closure of a scalable credit facility totaling up to $100 million with Generate Capital. The agreement includes senior secured term loan commitments initially totaling $35.5 million, structured across three tranches. Tranche A-1 ($5.5 million) and Tranche A-3 ($11.5 million) were drawn at closing. Tranche B ($18.5 million) remains available for drawdowns through October 2026. A delayed draw facility of $22.9 million is earmarked for the continued funding of Project Dorothy 2 and support for Project Kati 1 data center. An additional uncommitted accordion facility of $64.5 million is available to support Soluna's broader 1-gigawatt pipeline and to fund AI-related long-lead equipment procurement. The loans mature in September 2030.

The borrowing cost for the facility is approximately 15%, based on a variable interest rate of either Term SOFR plus 10% (with a 3.50% floor) or ABR plus 9%. A 1% commitment fee applies to undrawn Tranche B or any additional tranches. In the event of default, the interest rate increases by 2 percentage points. The debt financing is project-level and limited recourse, secured by project assets rather than Soluna's parent company. As part of the deal, Generate Capital received warrants to purchase 4 million shares of Soluna common stock and a board observer seat.

Business Strategy and Market Positioning

Soluna specializes in building modular data centers that transform curtailed or underutilized renewable energy into compute power for energy-intensive applications, including Bitcoin mining and AI. By co-locating with clean energy producers, the company aims to support a cleaner grid while providing cost-effective, sustainable infrastructure. This strategy positions Soluna to address the growing demand for green computing in the context of expanding AI and Web3 technologies. The company's development pipeline now exceeds 2.8 gigawatts of AI and Bitcoin hosting capacity, including projects such as Dorothy, Kati, Rosa, Hedy, Ellen, and Annie.

This financing follows over $30 million in funding raised earlier in 2025 from Galaxy Digital, Spring Lane Capital, and a public offering, further solidifying Soluna's execution roadmap and expansion efforts. Soluna CEO John Belizaire stated:

"We're not just growing our current projects, we're building new ones wherever wasted renewable energy can be converted into valuable high performance computing. This deal reflects a different kind of infrastructure financing, focused on capital efficiency, modular growth, and disciplined execution."

Market Implications

This $100 million credit facility signifies continued institutional investment in the physical infrastructure underpinning the Web3 ecosystem and the burgeoning AI sector. While it enables Soluna's expansion of green data centers, the approximate 15% borrowing cost provides insight into the current lending market dynamics for such ventures. This high interest rate may reflect perceived risks within the digital infrastructure sector, particularly for companies operating in cryptocurrency mining and early-stage AI infrastructure, or broader challenges in capital markets. The project-level, limited recourse nature of the debt suggests lenders are seeking to mitigate parent company exposure, a common characteristic in infrastructure financing. The deal underscores the increasing convergence of renewable energy, Bitcoin mining, and AI infrastructure, as companies seek sustainable and scalable solutions for intensive computing demands. For the broader market, this transaction illustrates that significant capital is still available for infrastructure projects with strong environmental, social, and governance (ESG) alignment, even if at a higher cost of capital commensurate with perceived sector-specific risks. The expansion of Soluna's data center capacity could contribute to the overall growth and resilience of decentralized networks and AI capabilities reliant on such infrastructure. Investors may view this as a validation of Soluna's unique approach to sustainable computing, even as the cost of capital remains a critical factor in evaluating future profitability and expansion for companies in this space.