China takes the plunge with $223M wind-powered underwater data center off Shanghai

China has launched construction of a wind-powered underwater data center six miles off the coast of Shanghai, marking a significant expansion of its pioneering approach to ocean-based computing infrastructure. The project represents China’s bid to address the massive water consumption challenges facing AI and cloud computing while positioning itself as a global leader in sustainable digital infrastructure.

The big picture: China is pulling ahead of other nations in deploying underwater data centers as an alternative cooling solution for AI computing, moving from pilot projects to commercial-scale deployments in less than 30 months.

Why this matters: Traditional data centers consume hundreds of thousands of gallons of water daily for cooling and compete with agriculture and drinking water supplies, creating sustainability challenges as AI computing demands explode globally.

How it works: The underwater facilities use seawater pumped through radiators on server racks to absorb and carry away heat, eliminating the need for traditional water-intensive cooling systems.

• Hailanyun’s Shanghai center uses at least 30 percent less electricity than land-based data centers thanks to natural ocean cooling, according to assessments with the China Academy of Information and Communications Technology.
• The facility will be connected to a nearby offshore wind farm supplying 97 percent of its energy needs.
• The first phase contains 198 server racks capable of holding 396 to 792 AI-capable servers, with operations beginning in September.

Key details: The $223 million Shanghai project builds on technology Microsoft pioneered over a decade ago through Project Natick, which successfully tested underwater data centers off Scotland’s coast.

• Microsoft found that underwater facilities “are reliable, practical and use energy sustainably” with fewer broken servers due to sealed, nitrogen-filled environments.
• However, Microsoft has reportedly shelved Project Natick, stating they “don’t currently have data centers in the water” but will continue using it as a research platform.
• The Shanghai center is expected to provide enough computing power to complete the equivalent of training GPT-3.5 in a single day.

Environmental concerns: While underwater data centers offer sustainability benefits, researchers have identified potential risks to marine ecosystems.

• Microsoft’s tests showed localized ocean warming of “a few thousandths of a degree” in water downstream from their facility.
• A 2022 study warned that during marine heat waves, the outlet water could be even warmer and hold less oxygen needed by aquatic creatures.
• Security vulnerabilities include potential destruction by underwater speaker systems generating specific sound frequencies.

What they’re saying: Industry experts see China’s approach as potentially influential for global computing infrastructure standards.

• “China’s ambitious approach signals a bold shift toward low-carbon digital infrastructure, and it could influence global norms in sustainable computing,” says Shabrina Nadhila, an analyst at energy-focused think tank Ember.
• Hailanyun spokesperson Li Langping says their assessment found “the heat dissipated by the undersea data center caused less than one degree of temperature rise in the surrounding water” and “virtually did not cause any substantial impact.”

Global expansion: The underwater data center concept is gaining traction beyond China, with South Korea announcing similar plans while Japan and Singapore consider floating surface-based facilities.

Competitive landscape: Zhang Ning, a UC Davis researcher specializing in low-carbon infrastructure, notes that Hailanyun has moved from pilot to commercial deployment “something Microsoft’s Project Natick never attempted,” highlighting China’s aggressive timeline compared to U.S. tech companies.