Benzinga | Aug 12, 2021 07:14AM EDT

EcoChain, Inc. Announces Agreement To Acquire Soluna Computing, Inc; $725,000 Cash At Closing, 92% Off Total Consideration Is contingent Upon Projects Coming Online

Combined Company Will Monetize Wasted Renewable Energy Production from Wind & Solar Farm Owners

ALBANY, N.Y., Aug. 12, 2021 (GLOBE NEWSWIRE) -- via NewMediaWire -- Mechanical Technology, Incorporated ("MTI"), (NASDAQ:MKTY), today announced that it and its wholly-owned subsidiary EcoChain, Inc. ("EcoChain"), a cryptocurrency mining business powered by renewable energy, have entered into agreements for EcoChain to acquire Soluna Computing, Inc. ("SCI" or "Soluna"). Upon closing of the transaction, SCI will become a wholly owned subsidiary of EcoChain (together, the "Combined Company.") The combination will allow SCI to more easily access the capital and resources necessary to scale its renewable energy-powered data center solution more quickly and efficiently. Upon closing of the transaction, MTI plans to change its name to "Soluna Holdings."

The transaction will place the Combined Company into the cryptocurrency mining industry's large-cap peer group based on its development pipeline. Upon the closing of the transaction, MTI will gain access to all SCI assets, including its 300MW (megawatt) pipeline that is currently under letters of intent ("LOI"), bringing EcoChain's combined total to 350MW, with over 200MW more under active development. EcoChain will directly employ or retain Soluna's top-tier technical and management team, bringing expertise in project development, energy markets, project finance and computing technology. EcoChain expects to have 50MW operational by the end of 2021 and another 50MW by the end of the second quarter of 2022. By the end of 2022, EcoChain expects to have two-thirds of Soluna's current pipeline operational.

"I am thrilled to increase the size and scope of our company and this transaction puts us in an even stronger position to provide significant value for investors," said Michael Toporek, Chief Executive Officer of MTI. "The Soluna team has hit upon a formula for creating and creatively financing computing facilities by solving power producers' and grid operators' inherent supply and demand problems, that is, the excess energy produced but not used as a result of the mismatch between the time of energy production, or daytime, and the time when energy use is at its highest, or evening/nighttime, which have increased as total renewable energy production continues to grow. We believe that solving the supply and demand problem of the renewable energy industry will serve as a driver for the growth, scalability, and profitability of 'green' computing."

During 2021 EcoChain has been aggressively ramping up its capacity to meet its 50MW goal by the end of 2021. Based on current plans, EcoChain expects in August to increase its hash rate (a measuring unit of processing power) over July by 269% and that by the end of September, its hash rate will have increased by 863% from July.

"We're excited about this transaction and the opportunities it brings for Soluna to continue helping renewable power producers sell every megawatt of energy," said John Belizaire, Chief Executive Officer of SCI. "We believe that what Soluna is offering now will be an industry standard within three years. It's up to the first movers among renewable power producers to seize this revenue advantage."

Transaction Highlights

* Upon closing, MTI acquires 300MW of green powered computing projects under LOI with costs well under $0.03 per KWh (kilowatt hour)

* Active global pipeline of over 200MW of additional projects

* Soluna team is joining EcoChain with John Belizaire as CEO of the combined business unit, which we plan to rename "Soluna Computing"

* MTI CEO Michael Toporek will continue to serve as CEO of the newly renamed Soluna Holdings

Financial Highlights

MTI continues to develop its business in a capital-efficient fashion with the acquisition of SCI. MTI will issue consideration to SCI as value is received to prevent any earnings dilution. Certain terms of the transaction are summarized below:

* 92% of total consideration is contingent upon projects coming online

* $725,000 cash at closing

* $75,000 for transaction fees and expenses at closing

* 150,000 shares of MTI common stock issued at closing

* Up to 2,970,000 shares of MTI common stock may be issued based on building out an additional 150MW: Contingent shares are not issued, escrowed or outstanding at closing For earnings per share calculations, the number of shares outstanding only changes when revenues are about to increase from a project coming online

Michael Toporek added, "Our company will continue to focus on driving return on invested capital, transparency and accountability as we grow our mining business by providing solutions to power producers and grid managers. We believe every renewable energy project will be considering a green computing component; as we like to say, 'green computing is a better battery.'"