China's Underwater Data Center: How It Works and a Fact Check of the Viral Claim

A post circulating on Reddit and X says: China put a data center under the sea, powered by offshore wind and cooled by the ocean, it uses no fresh water, and almost no one is talking about it. It also says other countries' data centers drink 30 million gallons and pay zero fines. This post sticks to the engineering and the checkable facts. We explain how an underwater data center works, check each claim against published reports, and note what we could not verify. We are not taking a side in any country comparison.

TL;DR: the verdict on each claim

What the reports actually say

The facility is described as sitting about 10 km off Shanghai's Lin-gang Special Area. Reports name Hailanyun, also known as HiCloud, as the developer and Shanghai Hicloud as operator, with backers including Shenergy, China Telecom's Shanghai branch, INESA and CCCC Third Harbor Engineering. These details come from news summaries, and we have not checked company filings.

Figures vary by source, which is normal for early reporting:

• Cost: about 1.6 billion yuan, roughly 226 million US dollars.
• Power source: offshore wind supplying more than 95 percent of electricity in some reports and about 97 percent in another.
• Capacity: a first phase of 2.3 megawatts was reported completed, with a planned full capacity of 24 megawatts according to local authorities. One report says the site holds 2,000 servers.
• Efficiency: a stated target of a power usage effectiveness (PUE) of no more than 1.15, and an assessment reported to show 22.8 percent lower electricity use than conventional land-based data centers.
• Status: some reports say complete, others say full operation, and the articles we found were of varying ages, so check a recent source for the current state.
• Expansion: the operator was reported to be exploring a 500-megawatt version for offshore sites.

A rough calculation from those numbers: 226 million dollars over 24 megawatts is about 9.4 million dollars per megawatt of planned capacity. That is our arithmetic on reported figures, not a published cost per megawatt, and it depends on which phase the cost covers.

Separately, another project off Hainan has been described as the first commercial underwater data center. Both projects have been called "the first," so treat that label with caution.

How does an underwater data center work?

Underwater data center concept shown as a small submarine with a lamp beam in the deep sea

The idea rests on a simple fact: water carries heat far better than air, and the deep sea is cold.

1. Servers sit in a sealed vessel or module placed on the seabed or in shallow water, with no people inside.
2. Seawater is circulated through radiators or heat exchangers. In the reported Shanghai design, seawater passes through radiators behind the server racks. The heat moves into the water and is carried away by currents.
3. Power and data arrive by cable. Offshore wind turbines nearby supply most of the electricity, and fiber links the facility to the shore.
4. Cooling energy drops. A land data center runs chillers, fans and often evaporative towers. A seawater loop mostly needs pumps, which is where the reported electricity saving comes from.

Because the loop exchanges heat without evaporating water, it avoids the evaporative cooling that drives most water use at conventional sites. That is the real basis for the "no fresh water" idea, and it is a genuine advantage over evaporative designs. It is not the same as zero water use across the project's whole life.

Is this new? Project Natick and earlier tests

Underwater data centers are not a new concept. Microsoft's Project Natick ran sealed pods in the Pacific starting with a 105-day trial reported in 2015, followed by a longer deployment. Coverage said the tests showed the idea was feasible. As far as we know, Microsoft did not turn it into a commercial product. A US patent for an underwater data center with a heat exchanger releasing heat into surrounding water also exists (US10136562B2), and a consortium in Singapore signed a memorandum to study ocean data centers. So the news value of the Shanghai project is commercial operation at scale, not the concept.

Claim by claim

"Powered by offshore wind"

Underwater data center wind-power claim: a server cabinet beside a wind turbine

Reports say wind supplies the vast majority of the electricity. Offshore wind output varies with weather, so the facility must still have some backup or grid connection, which is consistent with "more than 95 percent" and not 100.

"Cooled by the ocean"

True in principle and in the reported design. One caution is thermal: discharging heat into the sea warms the water near the facility. Reports we found did not describe environmental monitoring of that effect, so we cannot say how significant it is. Marine growth and corrosion on heat exchangers are also known engineering challenges for seawater cooling.

"It uses no fresh water"

Underwater data center fresh water claim: a water droplet above a server block

The design avoids evaporative fresh-water cooling, so its direct cooling water use should be very low. But "no fresh water" as a blanket statement goes beyond what reports say. Manufacturing the servers, building the structure and operating shore facilities all involve water, and we found no independent measurement of the facility's total water use.

"Almost no one is talking about it"

False. Tech and engineering outlets, mainstream business sites and news aggregators have covered it, and some compared it directly with Project Natick. Viral posts often claim a topic is ignored to encourage sharing.

"Others just drink 30 million gallons"

No source is given for the number, and water use varies by a huge range. Some facilities use closed-loop or air cooling and consume little water, while others using evaporative cooling consume a lot. For scale, our earlier analysis cites about 66 billion liters, roughly 17.5 billion gallons, of direct on-site water use across all US data centers in 2023, which is small nationally but concentrated locally. A single large project can be significant: one California developer sought about 750,000 gallons a day, roughly 260 million gallons a year, which shows how site-specific the numbers are. See our pieces on the real environmental impact of data centers and the data center water lawsuits.

"And pay zero fines"

This is misleading. Water use by a data center is typically permitted and billed like any other industrial use, so there is nothing to fine unless a rule is broken. The data center water disputes we have covered involve specific legal questions, such as a nitrate pollution settlement or a denied water supply request, not a blanket absence of penalties. The claim reads as rhetoric, not a finding.

The image

The picture shows a large cylindrical pod under water with a crane barge and wind turbines above, and a label reading "Nexus Ocean Data." Reports on the Shanghai facility name Hailanyun or HiCloud. We found no coverage of a company called Nexus Ocean Data, and the image has the polished look of an illustration or a generated picture. We cannot prove how it was made, but it should not be treated as a photograph of the real facility.

Advantages and limits of underwater data centers

Sealed, fixed hardware is the main trade-off. A land data center can swap a failed server in minutes. An underwater module is built to run for years without servicing, which suits some workloads and not others, especially as AI hardware refreshes quickly. For how the chips themselves are changing, see our coverage of inference silicon efficiency.

How to check a viral infrastructure claim

1. Find the original project name and operator. Here, search for Hailanyun and HiCloud, not the label in a picture.
2. Look for two independent outlets that report the same figures.
3. Check scale. "Has a data center" and "has a 24 MW data center" are different claims; a first phase can be far smaller than the plan.
4. Be suspicious of absolutes such as "no water," "zero fines" or "no one is talking about it."
5. Treat images with caution unless a credible outlet credits them to the facility.
6. Separate engineering from comparison. A claim about a design can be true while a comparison with other countries is unsupported.

Bottom line

The core of the post holds up: reports describe a wind-powered, seawater-cooled underwater data center off Shanghai. The surrounding claims do not. The scale is smaller than the rhetoric implies at the first phase, "no fresh water" is not documented as a total, the image is unverified, the 30 million gallon figure has no source, and the claim that nobody is talking about it is easy to disprove. The technology is genuinely interesting and the open questions are practical ones: repair, ocean heating, cost and whether it scales to the 500-megawatt idea.

Related reading

• The real environmental impact of AI data centers
• Data center water lawsuits: Amazon and Imperial Valley
• The AI data center backlash map
• SpaceX orbital data centers and space compute
• Virginia data center power tax and AI pricing

Facts about the Shanghai facility come from news reports found by search and have not been checked against company filings. Figures vary by source. The viral post's image could not be verified.