Billions in Deals to Cool AI Data Centers: Heat Becomes a Commodity
The world is witnessing a boom in data centers, with companies increasingly outsourcing information storage and expanding their use of energy-intensive artificial intelligence. This creates a fundamental challenge for the industry: how to keep these centers cool.
The disruption of trading systems at the world's largest exchange operator, CME Group, last Thursday highlighted the issue of data center overheating. Trading on its popular currency platform, as well as in currency, commodity, bond, and stock contracts, was halted due to a cooling problem at data centers operated by Dallas-based CyrusOne. CyrusOne operates more than 55 centers in the US, Europe, and Japan. On Friday, the company stated that engineering teams were on-site near Chicago to restore the cooling system.
High-performance servers for AI and cloud computing require enormous amounts of energy, generating intense heat that often exceeds the capacity of traditional cooling systems to handle. Data centers contain racks packed with servers that operate continuously and consume vast amounts of power, and as they heat up, they require constant cooling. “The chips in these centers need to be kept within certain temperatures, otherwise they could malfunction or stop working,” said Daniel Miotton, a partner at the law firm Slaughter and May.
More data centers are moving toward using water or specialized chillers instead of air cooling. Liquid cooling can be up to 3,000 times more efficient at removing heat than air. However, liquid cooling presents its own challenges, including potential leaks, corrosion, the need for specialized maintenance, and water consumption.
Companies are exploring ways to reduce their reliance on external chillers. Last year, Microsoft launched a new data center design that uses zero water for cooling. The new technology recycles water in a closed loop between servers and cooling units to dissipate heat without requiring a new water source. Systems are also available to recover and reuse waste heat from data centers.
Mewton explained that data center outages are generally "rare" due to contractual obligations that require operators to maintain near-99.99% uptime. While outages are generally rare, problems directly related to cooling systems are even rarer. "What I hear about most often are clearly power issues," Mewton added.
The growing global demand for data centers has led to a wave of deals and investments in the sector, in a race to expand capacity to meet escalating energy and cooling needs.
The law firm White and Case estimates that approximately 40% of total energy consumption in data centers is allocated to cooling, making it a massive market in its own right.
In November, energy management company Eaton announced its acquisition of Boyd Corporation's thermal cooling business from Goldman Sachs Asset Management for $9.5 billion, a move aimed at meeting the growing demand for artificial intelligence. Vertiv also entered into a $1 billion deal to acquire PurgeRite Intermediate to expand its liquid cooling services.