Microsoft and at least a dozen startups are testing nonconducting liquids to cool servers in data centers, where almost half of the power is used for cooling
Bloomberg : Tweets: @jaycuthrell , @timsteno , and @mathiswilliam Tweets: Jay Cuthrell / @jaycuthrell : Eventually “the hot aisle” will become niche as changing heat exchange uses cases bring two-phase engineered fluid immersion cooling into wider adoption that are compounded by the progression of advanced RISC machines to edge / core / cloud modalities. https://www.techmeme.com/... Tim Stenovec / @timsteno : Between 2 and 4 percent of the world's electricity goes to data centers. https://www.bloomberg.com/... Will Mathis / @mathiswilliam : It takes a ton of air conditioners and a lot of electricity to keep the world's millions of data centers running. A load of liquid cooling startups are betting they have the answer to cut energy and still keep computers cool @BW with @IvanLevingston https://www.bloomberg.com/...
Context & Ripple Effects
This story is the opening move in Microsoft's multi-year campaign to redesign how data centers shed heat. The immediate stakes are energy: data centers draw an estimated 2–4% of world electricity, and within a facility nearly half of that goes to cooling rather than compute — which is why Microsoft and at least a dozen startups are now testing nonconducting liquids to replace air conditioning entirely. Jay Cuthrell's framing in the coverage points where this leads: engineered two-phase fluid immersion making the traditional 'hot aisle' niche.
Liquid cooling also slots into Microsoft's broader resource agenda already visible in related coverage — the 95% water-consumption reduction goal set later in 2021, the zero-water data center design rolled out from August 2024 after a typical center used over 125M liters of water annually, and the siting logic behind Amazon, Microsoft, and Google building in colder countries as climate stress mounts.
First-order effects
- Microsoft gains a direct lever on its largest single power cost inside the data hall: if immersion replaces chillers, the roughly half of facility power spent on cooling converts into usable IT capacity or avoided energy purchases.
Second-order effects
- A dozen startups testing alongside Microsoft get a hyperscale reference customer whose validation de-risks the technology for other operators — while rivals Amazon and Google, already competing on clean-energy procurement across a combined 45 TWh/year footprint, face pressure to match immersion-cooling efficiency claims in their own fleets.
Third-order effects
- Cooling becomes a site-selection variable rather than a fixed constraint: if heat can be managed by fluid instead of air, operators gain freedom to place capacity underwater (the approach Microsoft pioneered in 2014, which Hailanyun's $223M wind-powered Shanghai-area project later commercialized) or in cold climates — decoupling data center geography from cheap air conditioning.
The trend: Data center thermal management is shifting from air-and-chiller plumbing toward engineered fluids and exotic siting, as hyperscalers treat every watt not spent on cooling as reclaimed compute capacity.