China is making significant investments in digital technology, including artificial intelligence and cloud computing, to boost its economy. As part of this strategy, the country is rapidly constructing data centers to increase computing power. However, these data centers consume large amounts of energy and water, posing environmental challenges.
The massive data centers in China and other countries are competing with water resources necessary for human survival, such as agriculture and drinking water. Many companies have located their data centers in dry regions to reduce humidity-related risks to equipment. To address water concerns, China is taking a unique approach by building an underwater data center six miles off the coast of Shanghai.
This innovative project, led by Hailanyun, utilizes seawater to absorb heat generated by the servers and carry it away. The company claims that this underwater data center will consume at least 30% less electricity than traditional land-based data centers, thanks to natural cooling. Additionally, the data center will be powered by an offshore wind farm, further reducing its environmental impact.
The first phase of the Shanghai underwater data center is set to begin operation in September, with plans to provide computing power equivalent to training advanced AI models in a day. Despite its smaller scale compared to land-based data centers, this project represents a bold shift towards sustainable computing infrastructure in China.
Hailanyun’s initiative in Shanghai follows in the footsteps of Microsoft’s Project Natick, which involved submerging a data center capsule off the coast of Scotland. This experiment demonstrated the reliability and energy efficiency of underwater data centers, leading to potential benefits such as reduced equipment damage and energy consumption.
While Microsoft has reportedly discontinued Project Natick, China’s underwater data center project signals a leapfrogging of traditional data center technologies towards more sustainable and efficient solutions. By embracing innovative approaches like underwater data centers, China is paving the way for a greener and more sustainable digital future.
While Microsoft did not provide specific details about their plans to deploy underwater data centers, they did release a statement indicating their commitment to using Project Natick as a research platform for exploring new concepts in data center reliability and sustainability. This comes as Shanghai-based company Hailanyun aims to surpass American companies in the race to develop offshore, wind-powered undersea data centers with the backing of the Chinese government.
Zhang Ning, a postdoctoral researcher at the University of California, Davis, highlighted the rapid progress of Hailanyun, noting that they have moved from a pilot project to commercial rollouts in less than 30 months, a feat that Microsoft’s Project Natick has not attempted.
Environmental Concerns
Despite the potential benefits of underwater data centers, concerns remain regarding their environmental impact. Microsoft researchers found that their underwater pod caused localized warming in the sea, although the impact was minimal. The water downstream of a Natick vessel only experienced a slight increase in temperature.
However, other researchers have raised alarms about the potential harm to aquatic biodiversity during marine heatwaves. A 2022 study highlighted that the outlet water from underwater data centers could be warmer and contain less oxygen, posing a risk to marine life.

Security is another concern raised by a 2024 study, which found that underwater data centers could be vulnerable to destruction by specific noises emitted by underwater speaker systems. This raises potential issues of security breaches through sound-based attacks.
In response to these concerns, Hailanyun has emphasized the environmental friendliness of their undersea data centers. They conducted an assessment on a test pod in China’s Pearl River in 2020, which showed minimal impact on the surrounding water temperature. Hailanyun’s CEO, Li, stated that the heat dissipated by their data centers had negligible effects on the environment.
Interest in undersea data centers is not limited to China, with countries like South Korea announcing plans to pursue them. Japan and Singapore are also considering floating data centers on the ocean’s surface. Zhang believes that the expansion of this trend will depend on how quickly operators can address regulatory, ecological, and supply-chain challenges.
The world is a vast and diverse place, with countless cultures, landscapes, and people. From the bustling streets of New York City to the serene beaches of Bali, there is no shortage of beauty and wonder to be found. But for many, the idea of traveling to far-off lands can be daunting, especially when faced with the challenges of language barriers, unfamiliar customs, and navigating unfamiliar terrain.
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