AI boom pushes tech giants to cut data centres’ thirst for water

Data centres, the sprawling warehouses of computer servers, are increasingly under scrutiny for their voracious consumption of water and electricity. As the demand for artificial intelligence grows, tech giants are facing public backlash over their energy and water usage. However, these industry leaders are optimistic that a solution lies in a new closed-loop cooling system.

Nvidia, a major American chipmaker, claims to be able to eliminate water consumption almost entirely in some of its facilities that utilize its DSX system for AI data centres. This bold assertion comes amid mounting pressure from consumers and regulators for the industry to reduce its environmental impact. In 2025, data centres worldwide consumed 222 billion litres of water for cooling purposes, a figure that could nearly triple to 644 billion litres by 2030 if no adaptive measures are taken.

The closed-loop cooling system works by circulating liquid directly through the servers, bringing the temperature of the chips closer to the liquid. While this approach significantly reduces water usage, it also presents a trade-off with energy consumption. Cooling the liquid still requires energy, typically through air conditioning, which adds to the overall power demand.

To mitigate this, Nvidia operates the liquid at a higher temperature, around 45°C, compared to the standard 32°C in most closed-loop systems. This allows the company to avoid the need for continuous cooling through air circulation, thereby cutting down on electricity usage. However, this still requires additional measures such as fans or a mix of methods to regulate air temperature, especially in extreme climates or during heat waves.

Other tech giants, including Microsoft, Amazon Web Services (AWS), and Meta, have also adopted closed-loop systems, claiming to have no net water loss. While these companies have expanded their data centre footprints significantly since 2022, their water usage efficiency has improved by 25% at Microsoft and 37% at AWS, according to their latest sustainability reports.

Despite these advancements, the industry lacks standardization in reporting environmental, social, and governance (ESG) efforts. SpaceX, a newcomer to the data centre scene since acquiring AI company xAI, has not published an ESG report and received the lowest score from ratings agency MSCI. The low water cost compared to electricity makes companies less inclined to prioritize water usage reduction solely on financial grounds.

Upgrading older data centres to more water-efficient technology also presents a significant challenge due to the high costs involved. However, the size and power of newer data centres mean they require less cooling initially, reducing their water consumption. Moreover, the water used in the manufacturing of chips and servers indirectly contributes to the overall water footprint of data centres.

In the United States, hidden water usage in electricity generation and chip production can be twice the direct water consumption by data centres themselves.