A San Francisco startup is the latest company to pursue the dream of an underwater data center, but could fall foul of regulators concerned about the facility’s environmental impact.

NetworkOcean plans to sink a 500kW data center contained in a capsule designed by the company into San Francisco Bay as part of a test of its technology.

Backed by the Y Combinator accelerator program, the company says it can eliminate water consumption and cut energy use by 30 percent. It claims to have 2,048 Nvidia H100 GPUs available to reserve.

Making a splash?

However, according to Wired, which first reported on NetworkOcean’s plans, the company has not sought permission from the authorities to sink its data center.

As a result of the publication’s inquiries, at least two agencies - Bay Conservation and Development Commission and the San Francisco Regional Water Quality Control Board - are said to have written to NetworkOcean to inform it that carrying out tests without a permit could see it landed with heavy fines.

Scientists say any disturbance of the bay or rising water temperatures caused by the data center project could have serious consequences for plants and wildlife.

The California startup’s founders, Sam Mendel and Eric Kim, met in high school and worked together building underwater magnetohydrodynamic (MHD) generators, a type of power generator that doesn’t contain a moving turbine and that can transform thermal or kinetic energy into electricity. It is not clear if NetworkOcean’s underwater data center uses an MHD, but on its Y Combinator page the company said Kim has patented a “renewable energy device.”

Mendel told Wired that NetworkOcean plans to test its data center for an hour, just under the surface of the water, and that the test will take place in a privately owned part of the bay that isn’t subject to permits or other regulatory oversight.

“We have been told by our potential testing site that our setup is environmentally benign,” he said.

The enduring appeal of underwater data centers

The prospect of hosting data centers in the sea is an alluring one. With power in short supply in markets around the world, using the ocean currents to naturally cool servers could potentially help operators make big savings and ease pressure on the grid.

Putting servers in a pressurized environment, without oxygen and dust particles, is also likely to help them run more efficiently and fail less often.

NetworkOcean is not the only startup pursuing this idea.

Chinese company HiCloud says it has underwater data center modules operating commercially, having installed its servers 35m deep on the seabed off the coast of Lingshui Li County, Hainan Province, last year.

The company plans to have 100 modules in the data center cluster, though it is unclear how many are currently operating. When complete, HiCloud says this would save 122 million kWh of energy per year (which is roughly 14MW), as well as 68,000 sqm (731,945 sq ft) of land and 105,000 tonnes of freshwater per year.

Data center startup Subsea Cloud already claims to operate 13,500 servers in underwater locations in Asia which will be rented to AI companies and those in the gaming industry. With permits secured, it hopes to be up and running next year, and says its servers do not impact the ocean’s temperature.

However, both companies may want to heed the fate of Microsoft’s Project Natick, which saw a subsea data center deployed off the coast of Scotland in 2018. The test system contained 855 servers, which were left unattended for 25 months and eight days. The company left 135 servers in a normal data center, alongside hardware running Microsoft's Azure cloud, to compare and contrast.

Only six of the 855 underwater servers broke, compared to eight of the 135 on dry land, with Microsoft pointing to the steady external temperatures as a factor for the success.

However, speaking to DCD earlier this year, Noelle Walsh, the head of the company’s Cloud Operations + Innovation (CO+I) division, said the project was over. "I'm not building subsea data centers anywhere in the world,” Walsh said.

"My team worked on it, and it worked. We learned a lot about operations below sea level and vibration and impacts on the server. So we'll apply those learnings to other cases."

In a separate statement, a Microsoft spokesperson added: “While we don’t currently have data centers in the water, we will continue to use Project Natick as a research platform to explore, test, and validate new concepts around data center reliability and sustainability, for example with liquid immersion.”