A steel tube of 855 servers came off the North Sea floor wearing barnacles and anemones the size of cantaloupes, with six machines dead against eight of the 135 kept on land, and Microsoft shut the pr
Microsoft's 2018 Project Natick submerged 855 servers in the North Sea, which showed an 0.7% failure rate, significantly lower than the 5.9% rate of land-based servers. The underwater data center was powered by renewable energy and cooled by seawater, achieving a power usage effectiveness of 1.07. Microsoft discontinued the project, but a Chinese firm, HiCloud, launched a 24 MW underwater data center in 2026, highlighting the potential for efficient, sustainable data centers.
How this was made
The 30-second read
Why it matters
The deployment signals a new competitive frontier in AI compute infrastructure, potentially reshaping cost and energy dynamics for cloud providers.
Market read
While no US‑listed ticker is involved, the story may affect investors in AI‑hardware, renewable‑energy, and data‑center equipment sectors.
What to watch
Long‑term maintenance costs, corrosion risks, and regulatory hurdles for offshore deployments.
Background
Microsoft’s Project Natick proved underwater data centers can achieve low failure rates and high efficiency, but the company halted the program. A Chinese firm, HiCloud, has now deployed a commercial 24 MW offshore data center off Shanghai, scaling the concept.
Market effects
Demonstrates viability of offshore, renewable‑powered data centers, could influence AI‑infrastructure investment strategies.
Highlights China's push in offshore AI compute, may affect regional renewable‑energy and data‑center markets.
Shows a potential alternative to land‑based AI farms, relevant for global cloud providers and hardware suppliers.
Counterpoint
High logistical risk and permitting challenges may limit widespread adoption despite efficiency gains.
Key entities
- CompanyHiCloud
Chinese firm operating the 24 MW offshore data center.
- CompanyMicrosoft
Original developer of the underwater data center concept (Project Natick).
