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China has fully operationalized a 2,000-server underwater data center off the coast of Shanghai in the Lingang special area, operating at a depth of 35 meters to slash cooling costs. According to the facility, which achieves a Power Usage Effectiveness below 1.15, bypassing the 1.5 industry average while utilizing offshore wind power.
The rollout revives a high-risk engineering concept that Microsoft quietly abandoned in mid-2024 after years of experimentation, leaving markets to question whether deep-sea cooling represents a structural efficiency breakthrough or an operational dead-end.
The Bottom Line
- Efficiency Gains: The Lingang facility cuts power consumption by at least 30 percent compared to terrestrial alternatives, driven almost entirely by natural seawater cooling.
- Energy Independence: Local offshore wind farms supply 97 percent of the data center’s 24-megawatt capacity, minimizing grid reliance.
Engineering the Abyssal Grid
Located 9.7 kilometers off the Shanghai coastline, the submerged cluster relies on raw thermodynamics rather than mechanical chillers. Traditional terrestrial facilities spend up to 40 percent of their total electricity load exclusively on climate control and liquid evaporation.
Construction and deployment were handled by HiCloud Technology (also known as Hailanyun) alongside the China Academy of Information and Communications Technology (CAICT). According to Hailanyun, the initial development phase began in June 2025 with 198 server racks, scaling rapidly to the current 2,000-server capacity. Power is funneled directly from nearby offshore wind generation sites, feeding dense clusters of graphics processing units managed by China Telecom and LinkWise.
Weighing the Project Natick Precedent
The deployment validates data points first gathered by Microsoft during Project Natick. In 2018, the Redmond-based tech giant dropped an 855-server capsule 36 meters deep off the coast of Scotland. Over a 25-month test window, only 6 of the 855 servers failed, compared to a significantly higher failure rate in control groups on land. Stable subsea temperatures and a nitrogen-purged interior environment successfully mitigated hardware oxidation.
Yet, despite superior hardware longevity, Microsoft pulled the plug. In June 2024, Noelle Walsh, Head of Cloud Operations and Innovation at Microsoft, stated, “I am not building underwater data centers anywhere in the world.” While Walsh confirmed the technical experiment succeeded and provided vital data regarding vibration impacts, the company elected not to scale the infrastructure commercially.
Operational Friction Versus Thermodynamic Yield
“This is clearly interesting from a cooling perspective, but less interesting from an operational perspective,” noted Mark Seymour, an engineer at Cadence Design Systems, highlighting that sealed subsea units hinder rapid hardware adjustments.
| Metric | Subsea Facility (Lingang) | Traditional Terrestrial Facility |
|---|---|---|
| Power Usage Effectiveness (PUE) | Below 1.15 | ~1.50 Industry Average |
| Cooling Energy Share | Negligible (Seawater Heat Sink) | ~40% of Total Load |
| Power Supply Source | 97% Offshore Wind | Regional Grid Mix |
Environmental concerns have also drawn scrutiny from academic observers. Research from 2022 flagged potential local water temperature spikes around thermal discharge points. However, Hailanyun spokesperson Li Langping rejected claims of widespread ecological disruption, stating that displaced heat raises surrounding water temperatures by less than one degree.
Global Capital Allocation and Regional Horizons
Telecommunications and cloud providers across South Korea, Singapore, and Japan are quietly evaluating marine hosting frameworks to combat escalating power grid constraints.
