China has opened an underwater data center powered by wind off Shanghai's coast, following Microsoft's earlier research into submerged server farms. The $226 million facility, built by HiCloud Technology in partnership with the Chinese government, represents a bold experiment in addressing one of artificial intelligence's most pressing challenges: the enormous energy and water demands of powering AI systems. As global AI markets expand rapidly, projected to grow from $189 billion to nearly $5 trillion between 2023 and 2033, the infrastructure to support these systems is straining traditional power grids and freshwater supplies.

Why Are Data Centers Running Out of Water and Power?

The scale of the problem is staggering. Global data centers consumed an estimated 448 terawatt-hours of electricity last year, making them the world's 11th largest electricity consumer if they were a nation, ranking behind France and ahead of Saudi Arabia. The water demands are equally alarming. Researchers from the United Nations University Institute for Water, Environment and Health found that the water needed to keep powering artificial intelligence data centers will equal the water needs of 1.3 billion people by 2030. These pressures have forced technology companies and governments to explore unconventional solutions, including placing data centers beneath the ocean's surface.

How Can Underwater Data Centers Reduce Energy Consumption?

• Natural Cooling Systems: Underwater data centers use "once-through" cooling, where cool water is continuously pumped through a heat exchanger that absorbs heat from servers before returning the warmed water to the surrounding body of water, removing large amounts of heat efficiently without mechanical cooling systems.
• Renewable Energy Integration: China's facility leverages wind power generation located directly at the data center site, reducing transmission and distribution system losses since electricity travels shorter distances to reach the servers.
• Reduced Maintenance Disruption: Underwater data centers are designed to be maintenance-free for long periods, minimizing disturbance to marine life and reducing operational costs associated with frequent upkeep.

China's 24-megawatt underwater data center claims to reduce power consumption by close to 23%, while also reducing water and land use by 100% and over 90%, respectively. These figures represent a significant improvement over traditional land-based facilities, which require constant cooling and consume vast quantities of freshwater.

The concept isn't entirely new. Microsoft tested the reliability of a shipping-container-size data center 117 feet deep off the coast of Scotland from 2018 to 2020 through its Project Natick initiative. Microsoft determined the underwater data center was a feasible concept, though a Microsoft spokesperson stated that the company doesn't currently have any data centers in the water and will "continue to use Project Natick as a research platform to explore, test, and validate new concepts around datacenter reliability and sustainability".

What Environmental Risks Do Underwater Data Centers Pose?

Despite the promise, experts caution that underwater data centers are not a silver bullet. Eric Masanet, a professor in the Bren School of Environmental Science and Management at UC Santa Barbara and an expert in data centers and climate change mitigation, emphasized the lack of real-world data on these deployments.

"There haven't been many underwater deployments globally to date, so we don't have much empirical data," said Masanet.

Eric Masanet, Professor, Bren School of Environmental Science and Management, UC Santa Barbara

Masanet identified several environmental concerns that require serious investigation. Thermal pollution from heated water discharge could alter marine ecosystems if not carefully managed. Noise and vibration from underwater equipment pose particular risks to marine life, especially given what scientists already know about the harmful effects of ship vibrations on whales and other ocean creatures. The potential for negative impacts on underwater environments remains largely unstudied at scale.

However, Masanet noted that responsible site selection and design could minimize these risks. "As long as the water body is large enough, with enough natural mixing and cooling, underwater data centers should technically work in both saltwater and freshwater bodies," he explained. With proper planning, "the heat gain and hot spots within the surrounding water could be minimized".

Masanet

Will Underwater Data Centers Replace Land-Based Facilities?

Experts don't expect underwater data centers to become the dominant model. Masanet noted that land-based data centers offer significant advantages that underwater facilities cannot match, including easier access for tenants and reduced latency by being physically close to population centers where users live and work. Instead, underwater data centers are likely to serve as a specialized solution for specific geographic and operational contexts, complementing rather than replacing traditional infrastructure.

The real question facing the industry is whether underwater deployments can scale responsibly. As the AI market continues its explosive growth and power demands intensify, companies and governments will need to weigh the potential energy and cooling benefits against the environmental unknowns. For now, China's $226 million experiment and Microsoft's ongoing research represent important steps toward understanding whether the ocean can help shoulder the burden of powering the artificial intelligence revolution.