China has put 2,000 servers in sea near Shanghai, taking off from a Microsoft project that shutdown in 2020, where the company sank 855 servers in North Sea
China has switched on a commercial underwater data centre off the coast of Shanghai, dropping roughly 2,000 servers onto the seabed in the Lingang Special Area and wiring them directly into an offshore wind farm. The facility runs at 24MW, sits 10 metres below the surface and more than 10km out, and uses the surrounding seawater in place of chillers and cooling towers. It took 1.6 billion yuan of investment, roughly Rs 2,100 crore, and is a joint effort between HiCloud Technology and state-owned China Communications Construction. Commercial operations began in May, after trials in February and construction wrapping up last October.The design it borrows from belongs to Microsoft. In 2018 the company lowered a white steel cylinder the size of a shipping container 117 feet under the North Sea off the Orkney Islands, with 855 servers inside and 27.6 petabytes of storage. The air was pumped out first and replaced with dry nitrogen, so nothing inside could oxidise or take on moisture. Two years later Microsoft pulled it back up, published results better than anyone expected, and then walked away from the idea entirely.
Microsoft’s underwater servers failed at one-eighth the rate of its land servers
The number that made the experiment famous was the failure rate. Microsoft lost six of the 855 servers on the seabed. A control group running identical jobs in an ordinary building on land lost eight out of 135. That works out to 0.7% underwater against 5.9% on land. Two things explain it. Cold seawater carried heat away at no cost, and a sealed tube filled with nitrogen and off limits to humans removed slow corrosion and the accidental knocks that wear down land hardware over years. Power usage effectiveness came in at 1.07, with no mechanical cooling at all, at a time when most of the industry was still sitting above 1.5.
China’s underwater data centre runs GPU clusters for AI training
The Shanghai pod is not a proof of concept. It carries GPU clusters doing AI training, big data annotation and work on domestic large language models, with computing capacity deployed by China Telecom and local service providers. Its developers put its PUE at around 1.15, claim a 22.8% cut in electricity consumption, no water use at all, and more than 90% less land than an equivalent site onshore. The Chinese government says the project is designed to run on more than 95% green electricity. HiCloud first sank servers off Hainan in 2021 and set up the first commercial modules there in 2023. It has talked about taking the offshore wind model up to 500MW.
Seawater cooling cuts the power bill and removes the freshwater bill entirely
The timing is what makes an old experiment relevant. In a land-based facility, somewhere between a quarter and half of total electricity demand goes to moving chilled water around the servers. Training clusters are pushing density past what ordinary buildings can handle, and grid operators in Virginia and Texas have started resisting new data centre connections. A sealed module offshore avoids both halves of the problem. The sea absorbs the heat, the turbines overhead supply the electricity, and no aquifer gets touched. A United Nations university institute warned this week that the water footprint of data centres could hit 9.3 trillion litres by 2030, roughly what the entire population of sub-Saharan Africa uses domestically in a year.
Marine biologists say the warming around the pods stays local
The obvious objection is that a heat source on the seabed is still a heat source. Researchers who study coastal ecosystems say the risks, including disturbed sediment and warmer water immediately around the modules, look manageable but need monitoring over time. Rick Stafford, a marine biologist at Bournemouth University, said cooling with seawater does raise local temperatures but that the effect will “not be far reaching”. Microsoft’s own cylinder came back up wearing algae, barnacles and anemones grown to the size of melons, which answered a question nobody had asked about whether sea life would mind the hardware.
Microsoft shut Project Natick down even though the numbers worked
Microsoft confirmed in 2024 that its subsea programme was over. Noelle Walsh, who runs the company’s cloud operations and innovation group, said flatly that she was not building subsea data centres anywhere in the world. The reasoning was practical rather than technical. Sending a technician down in a strong current to fix a failed board is expensive, saltwater still eats steel, and Microsoft has been building on land at a pace it has no reason to slow. A researcher at Hong Kong Polytechnic University put the gap simply: Microsoft got to the concept first, while China had the market demand, marine engineering and policy backing to turn it into a working commercial site. Around 90% of the world’s AI data centre capacity now sits in those two countries.
