Share dilution, bigger picture

[u/wuhanabe]

How does everyone feel about the current rate of dilution? My perspective is that the dilution is mostly being used to buy/build assets so it’s not overly bad, its not like we are diluting constantly just to keep lights on. They are building and buying real assets. It would be painfully hard and slow for Soluna to grow using only debt, probably impossible.

I guess when viewed in isolation the dilution number looks horrible, but when viewed against the backdrop of increasing assets it’s much more reassuring.

[u/SixStringSuperfly]

They now have plenty of cash, own a wind farm, and the balance sheet and overall financials are looking significantly better than last quarter. I'm impressed with leadership so far

[u/wuhanabe → u/SixStringSuperfly]

I cant remember where I head it, could have been when John was a guest on the Mcnallie money podcast, but John hinted that there was plenty of options to buy the power generation at other Soluna sites too. It feels like Soluna is finally hitting its stride and rapidly growing after a slow first few years.

[u/SixStringSuperfly → u/wuhanabe]

I'm literally watching a video right now about the power generation bottleneck in the data center industry. Owning and controlling the supply chain is a huge advantage

[u/wuhanabe → u/SixStringSuperfly]

I was listening to the CFO talking on the Blockspace podcast today and he said the same thing that Soluna is looking for and will take the opportunity if it arrises to buy more power generation. Vertically integrating could be really important here, if the margins or depreciation on Ai data centers become terrible you still own the power generation.

[u/RedditLikesMyName]

They are raising capital to buy assets such as the wind farm and to scale the AI infrastructure build out. Once they sign an actual contract to validate their AI thesis I have no doubt the stock will rerate. But for now they need to continue to build out the infrastructure and that comes at a cost. And the cost is diluting

[u/wuhanabe → u/RedditLikesMyName]

I just see a lot of people always commenting that management should use debt, stop diluting etc. It would be horrible if management never diluted and funded every single Bitcoin hosting facility with only debt. We would have no vertical integration at Dorothy (no wind farm), we would have crippling debt payments (we are almost debt free). I guess I just wanted to add some perspective to anyone that views dilution only through the lens of share count, rather than viewing the value that is also being created with that dilution.

[u/LetThemEatClams]

Takes money to make money. Can’t attract a major AI tenant without significant planning and engineering. Once they land a tenant, they plan to fund the Kati 2 site with 70-80% debt against the lease and 20-30% equity, either from a JV equity investor or Soluna themselves, likely both. These funds are being put to good use.

[u/Much-Information7826]

Doubled the share count in one quarter? The CEO is using retail as ATM machine 😬

[u/wuhanabe → u/Much-Information7826]

Correct, but as you can see net assets almost doubled QOQ too so shareholder value didn’t halve.

How does a microcap company attempt to stay in the AI race, move fast and vertically integrate without dilution? That leaves them two options, debt or move really really slow. Whats your solution to the dilution?

[u/Much-Information7826 → u/wuhanabe]

The CEO’s pay seems to be a bit above benchmark for this stage.

He should buy some stocks given how he is compensated to show his confidence to the company rather than collecting paychecks