Soluna Secures $100M Credit Line from Generate Capital at ~15% Borrowing Cost
Soluna, a data center developer for bitcoin mining and AI with a market cap of $55 million, has secured a credit facility of up to $100 million with Generate Capital at an interest rate of approximately 15%.
Soluna announced the transaction on Tuesday, stating that the deal begins with an initial $12.6 million draw, which Soluna will use to refinance and fund construction at its Project Dorothy facilities in Texas. The deal offers the latest insight into the lending market dynamics for infrastructure investment.
A further $22.9 million delayed-draw tranche is earmarked for Dorothy 2 and the new Project Kati 1, with another $64.5 million available through an uncommitted accordion facility to support the company’s broader 1-gigawatt pipeline.
The debt financing is project-level and limited recourse, with no guarantees from Soluna’s parent company, Soluna said. Generate Capital, an infrastructure investment firm, also received warrants to purchase 4 million shares of Soluna stock and a board observer seat.
According to an SEC filing, the agreement is structured as senior secured term loan commitments totaling $35.5 million, split across three tranches: Tranche A-1 ($5.5 million), Tranche A-3 ($11.5 million), and Tranche B ($18.5 million). Soluna drew on the first two tranches at closing. Tranche B remains available for drawdowns through October 2026. The loans mature in September 2030 and may be supplemented by up to $64.5 million in additional tranches, subject to Generate’s approval.
Borrowings will finance, refinance, and develop the Dorothy 1A, Dorothy 2, and Kati projects, as well as fund a debt service reserve. The loans carry a variable interest rate of either Term SOFR plus 10% (with a 3.50% floor) or ABR plus 9%, along with a 1% commitment fee on undrawn Tranche B or any additional tranches. In case of default, the rate increases by 2 percentage points. Based on current benchmarks — SOFR around 4.5% and the prime rate (a proxy for ABR) at 7.5% — the effective borrowing cost is between 14.5% and 16.5%, placing it firmly in the mid-teens.
The obligations are guaranteed by certain Soluna subsidiaries and secured by first-priority liens on substantially all project assets, equity pledges, and mortgages on the sites. The agreement also imposes financial covenants, including a minimum trailing debt service coverage ratio of 1.60× and a minimum forward contracted debt service coverage ratio of 1.20×. It restricts additional indebtedness, asset sales, affiliate transactions, and speculative dealings. Events of default include non-payment, covenant breaches, bankruptcy, and change of control.
Generate’s involvement follows its past role as a lender to Compute North during the 2022–2023 crypto bear market. After Compute North filed for bankruptcy, Generate acquired Compute North’s Texas sites and later sold them to MARA.
The credit facility builds on more than $30 million in financing Soluna raised earlier in 2025 from Galaxy Digital, Spring Lane Capital, and a public equity offering.
