China’s $226M Underwater Data Center Is Running. The Ocean Still Has to Prove It Can Scale

The ocean offers data-center builders a simple proposition: use seawater instead of scarce freshwater and let offshore conditions help cool AI hardware. The evidence so far is more complicated. A $226 million Chinese underwater facility is now operating commercially, but Microsoft stopped its own subsea program, while maintenance and marine heat remain unresolved constraints.

Ocean-based computing is taking several forms rather than converging on one design. China’s project, described as possibly the world’s first wind-powered underwater data center, began full commercial operations in May after launching in June 2025. It uses seawater for cooling and offshore wind turbines; the project is reported to use at least 30% less electricity than traditional data centers.

The water is a heat sink, not a complete solution

The mechanism is straightforward: seawater can take heat away from servers, reducing the energy required for cooling and the need to refrigerate freshwater. Floating platforms can also preserve land and provide room for solar panels or wind equipment. Those gains affect cooling infrastructure; they do not eliminate the computers’ underlying electricity demand or carbon footprint.

Reliability does not solve serviceability

Microsoft’s trial delivered a promising reliability signal. After two years, the company said its servers failed at roughly one-eighth the rate of comparable land-based servers. Microsoft hypothesized that a sealed environment reduced exposure to oxygen, humidity and temperature swings, as well as disturbance from on-site component replacement.

But the same sealed design makes failures harder to handle. A failed computer cannot be repaired in place underwater; servicing even one machine may require bringing the entire module to the surface. Microsoft did not state why it ended the project, though analyses cited in the article point to environmental permits and the need for faster equipment upgrades and replacement as possible factors.

Heat has somewhere to go

Seawater cooling moves heat rather than erasing it. Portugal’s SIN01 data center returns Atlantic water to the ocean about 1 degree Celsius warmer. HiCloud has reported a rise of less than 1 degree Celsius in water near China’s Hainan underwater facility. Warmer discharge can affect local oxygen levels, pH and marine life, and multiple installations could create localized thermal pollution.

A portfolio of designs is still taking shape

• Near Yokohama, Japan is testing a containerized data center on a floating platform powered by onboard solar panels and batteries through March 2027.
• Keppel began building a four-story floating data center in Singapore in 2026, with an opening scheduled for 2028 and seawater cooling planned.
• South Korea is planning an Ulsan underwater facility that could hold more than 100,000 servers and is projected to use 30% less power than land-based centers through seawater cooling.

That spread is the important reality. Offshore computing is no longer only a research bet, but it has not yet established a proven template for large-scale AI infrastructure. Its appeal rests on cooling, land and freshwater savings; its viability depends on whether operators can manage repairs, permits and heat discharge at scale.