Immersion Cooling Market

Immersion Cooling: Revolutionizing Data Center Cooling Solutions

Immersion cooling, also known as liquid submersion cooling, is an innovative technology that is transforming the way data centers manage heat dissipation. Unlike traditional air-based cooling methods, immersion cooling involves submerging server hardware directly into a non-conductive cooling fluid, such as mineral oil or synthetic coolant. This method provides efficient and effective heat removal, enabling higher-density computing with reduced energy consumption. In this essay, we will explore the concept of immersion cooling, its key benefits, top impacting factors, and relevant government policies.

Benefits of Immersion Cooling

• Enhanced Cooling Efficiency: Immersion cooling offers superior heat transfer capabilities compared to air-based cooling systems. By immersing servers in a cooling fluid, heat is rapidly dissipated, ensuring optimal operating temperatures for the hardware. This efficiency results in improved system performance, reduced risk of overheating, and increased equipment lifespan.
• Energy Efficiency: Immersion cooling eliminates the need for power-hungry air conditioning systems commonly used in traditional data centers. By leveraging the high heat capacity of the cooling fluid, energy consumption is significantly reduced, leading to substantial cost savings and a greener footprint.
• Increased Density and Scalability: The efficient heat dissipation provided by immersion cooling allows for higher server density within a given space. This capability enables data centers to accommodate more computing power, leading to improved productivity and scalability for businesses.
• Noise Reduction: Unlike air-cooled systems that require multiple fans, immersion cooling operates silently, eliminating excessive noise levels in data centers. This benefit contributes to a more comfortable and noise-free working environment for data center staff.

Top Impacting Factors

• Advancements in Cooling Technologies: Continued research and development in immersion cooling technologies are driving improvements in efficiency, cost-effectiveness, and reliability. The introduction of advanced cooling fluids and the optimization of system designs are key factors influencing the adoption and success of immersion cooling solutions.
• Data Center Infrastructure Growth: With the exponential growth of data-driven technologies, data centers are facing increasing demands for higher computing capacities and more efficient cooling solutions. Immersion cooling presents a viable option for meeting these demands, allowing data centers to maximize their capabilities while minimizing operational costs.
• Environmental Sustainability: Government policies and environmental regulations focused on reducing carbon emissions and promoting energy efficiency are pushing data center operators to explore more sustainable cooling solutions. Immersion cooling, with its lower energy consumption and reduced carbon footprint, aligns with these initiatives, making it an attractive option for environmentally conscious organizations.

Government Policies

• Energy Efficiency Standards: Governments worldwide are implementing energy efficiency standards for data centers to promote sustainable practices. These policies encourage the adoption of innovative cooling technologies, including immersion cooling, by providing incentives and tax benefits to companies that invest in energy-efficient solutions.
• Renewable Energy Incentives: Governments are increasingly incentivizing the use of renewable energy sources, such as solar and wind power, for data centers. Immersion cooling systems can integrate seamlessly with renewable energy infrastructure, further reducing carbon emissions and aligning with government renewable energy initiatives.

Dynamics of Immersion Cooling Market

Drivers in Immersion Cooling Market

Adoption in cryptocurrency mining and blockchain technology

Cryptocurrency mining and blockchain technology have become significant drivers in various industries. Cryptocurrency is a digital currency stored in a decentralized ledger known as the blockchain. Blockchain acts as a secure database where encrypted blocks of digital assets, including cryptocurrency data, are stored and interconnected, providing a single source of truth for the data. Cryptocurrency mining involves solving complex algorithms to verify and add new transactions to the blockchain, typically using the proof-of-work (PoW) method. Miners who successfully solve the algorithm are rewarded with cryptocurrency and transaction fees. However, cryptocurrency mining algorithms consume substantial amounts of electricity, leading to concerns about energy consumption and its environmental impact. For example, recent reports have indicated that Bitcoin and Ethereum mining combined consumed as much energy as an entire country like Indonesia in 2023. To address the issue of heat generation resulting from high electricity consumption, immersion cooling solutions have emerged as an optimal solution. These solutions effectively manage the heat generated during cryptocurrency mining, and practical use cases have been implemented worldwide. Additionally, the adoption of stringent regulations promoting the use of low-energy solutions has become a significant factor driving industry growth. For example, innovative home technologies aimed at reducing energy consumption are projected to reach a value of USD 300 billion during the forecast period. The home entertainment technologies segment, including innovative faucets, is expected to witness a compound annual growth rate of 21%. These factors are anticipated to contribute to increased demand for cryptocurrency mining and blockchain-related solutions in the coming years.

Restraints in Immersion Cooling Market

Air cooling remains the dominant technology for data center cooling

Air cooling technology, which utilizes air handlers (AHUs), fans, HVAC ducts, and air coolers, continues to be the prevalent method for cooling data centers. In this technology, air serves as the primary medium for heat transfer, and when higher cooling is required, the airflow to data servers and racks is increased. Air cooling has been widely used and easily adaptable to various applications, including data center cooling. It offers simplicity in installation, requires no specialized knowledge for operation and maintenance, and utilizes components such as inverter-driven compressors, variable speed fans, and condensers. Major companies like Dell Technologies, Google, and Meta have employed air cooling technology in their data centers, showcasing its widespread adoption and effectiveness in cooling data center environments.

Opportunities in Immersion Cooling Market

Development of data center cooling solutions for deployment in challenging environments

Data centers are sometimes constructed in harsh environments, such as deserts, where weather fluctuations and seismic events are common. Traditional air cooling methods rely on the ambient temperature to cool the hardware. However, maintaining a low ambient temperature in desert conditions can be challenging due to high external temperatures. To overcome this, cooled or chilled water is used to regulate the ambient air temperature through a heat exchanger. However, the issue of water scarcity arises in desert regions and areas experiencing drought. These practical challenges have been observed worldwide. On the other hand, immersion cooling systems require minimal amounts of water compared to traditional air cooling systems. As a result, immersion cooling solution providers are developing customized solutions that can withstand harsh environments, catering to industries such as military, oil & gas, shipping, and aeronautics. The development of immersion cooling solutions capable of thriving in challenging environments is expected to open up new avenues for growth in the immersion cooling market.

Challenges in Immersion Cooling Market

High investment in existing infrastructure

Many organizations still rely on traditional air cooling and direct plate cooling solutions. Data center owners are hesitant to replace their existing infrastructure and invest additional funds in upgrading to immersion cooling solutions. The cost of the existing infrastructure becomes redundant, posing a challenge for immersion cooling solution providers in capturing more market share. Immersion cooling systems often require a significant upfront investment compared to traditional air cooling methods. The cost of the cooling liquid, infrastructure modifications, and specialized equipment can contribute to the overall implementation cost of immersion cooling. Selecting a suitable cooling liquid is crucial in immersion cooling, as it should possess excellent heat transfer properties, electrical non-conductivity, and chemical compatibility with submerged components. Finding a cooling liquid that meets all these requirements can be challenging, especially as system requirements evolve. Immersion cooling systems necessitate regular maintenance and periodic fluid replacement to ensure optimal performance. Monitoring and maintaining the quality of the cooling liquid, managing potential leaks or spills, and conducting routine maintenance tasks can be labor-intensive and add to the overall operational costs. Retrofitting existing hardware to work with immersion cooling can pose challenges. Some components may not be designed or tested for immersion, requiring modifications or replacements. Compatibility issues may arise with connectors, cables, and other interfaces, necessitating additional engineering efforts. Immersion cooling systems must address safety concerns related to potential leaks, spills, and the handling of cooling fluids. Adequate containment measures, leak detection systems, and safety protocols must be in place to mitigate risks. Additionally, the environmental impact of cooling fluids, particularly in the event of accidental spills or improper disposal, should be taken into consideration. Immersion cooling may not seamlessly integrate with standardized cooling infrastructure commonly found in data centers. This can create challenges when implementing immersion cooling alongside traditional air cooling or liquid cooling systems. Immersion cooling is a relatively new technology, and awareness of its benefits and challenges may be limited in certain industries. The lack of standardized practices and guidelines can make it more challenging for organizations to adopt immersion cooling as a mainstream cooling solution.

Ecosystem of Immersion Cooling Market

During the forecast period, the cryptocurrency mining segment is set to dominate the market. Cryptocurrency, a digital form of currency used globally, requires mining through the solving of complex algorithms using CPUs and GPUs. This process consumes a significant amount of electricity and generates substantial heat. To ensure optimal mining conditions, with temperatures ranging between 15C-30C, immersion cooling solutions utilizing advanced dielectric coolant fluids are employed. Currently, numerous cryptocurrency mining organizations are leveraging immersion cooling solutions for their operations.

In terms of industry leadership and revenue share during the forecast period, high-performance computing takes the lead, accounting for 29.2% of the market. Immersion cooling offers several operational advantages for high-performance computing, including reduced latency, potential heat reuse programs in industrial and urban areas, rapid deployment with edge-ready solutions, and the ability to cool chip densities required for zero water waste.

The Artificial Intelligence (AI) segment is projected to experience a compound annual growth rate (CAGR) of 16.3% over the forecast period. Factors such as a renewed research focus on AI in the U.S., extensive utilization of deep learning by major tech companies like Facebook, Google, Microsoft, and Amazon, increasing demand for AI applications, and the thriving AI ecosystem in Israel contribute to the growing load on AI servers, driving industry growth.

In the immersion cooling market, the fluorocarbon-based fluids segment is expected to hold the second-largest share during the forecast period. These fluids, consisting of fluorinated carbon-chain polymers, exhibit inertness, non-reactivity, and electrical non-conductivity. Alongside synthetic fluids, there is a rising demand for fluorocarbon-based fluids, with 3M being a major producer and advocate for their adoption. These fluids find extensive usage in two-phase immersion cooling systems.

Single-phase cooling systems dominate the industry, accounting for 73.8% of the global revenue share during the forecast period. This cost-effective and efficient cooling technique involves immersing electrical components, sub-systems, and devices in a single-phase dielectric heat transfer fluid, which remains in a liquid state throughout the cooling process. Single-phase systems offer advantages such as low tank and coolant costs, high dielectric strength, low environmental impact, high coolant heat capacity, and biodegradability.

However, the demand for two-phase systems is expected to witness a growth rate of 21.6% over the forecast period. These systems offer improved reliability, high energy efficiency, deployment flexibility, and low maintenance requirements. With a power use effectiveness of 1.01, 5% lower than single-phase systems, two-phase cooling systems are suitable for hyperscale data centers. Nevertheless, the complexity and safety features required, along with the higher cost of fluorinated fluids used in two-phase systems, result in increased maintenance and operation expenses compared to single-phase cooling systems.

Solutions component segment is expected to have the largest market share during the forecast period

The solutions segment plays a crucial role in the immersion cooling system, providing the necessary equipment for its efficient operation. These components include the immersion tank, heat exchangers, tubes, and pumps. Currently, many companies opting for immersion cooling systems prefer customized solutions from existing immersion cooling vendors. This preference arises because most data centers are currently equipped with air cooling technology, making a complete transition to immersion cooling more challenging and costly.

Mineral oil led the industry and accounted for 37.6% of the global revenue share last year. Compared to traditional air conditioning systems, mineral oil offers higher efficiency, simplifying facility design and resulting in cost savings. Due to its high boiling point, transparency, and oily nature, mineral oil is commonly used as a single-phase dielectric in immersion cooling. However, limitations such as low flash point, inconsistent quality, and material compatibility issues have restricted its extensive use in the IT industry.

The demand for fluorocarbon-based fluids, including hydrofluoroethers (HFEs), perfluorocarbons (PFCs), perfluoropolyethers (PFPEs), and fluorketones, is projected to grow at a CAGR of 21.6% over the forecast period. These fluorocarbon molecules are frequently employed in immersion cooling liquids (FKs) due to their high chemical and thermal stability, excellent dielectric strength, and relatively high vapor pressure. These properties make fluorocarbon-based cooling solutions highly suitable for maintaining optimal temperatures in IT equipment.

Deionized-water cooling systems find applications in various industries such as electrical, metallurgy, electronics, research, nonelectric, and medical. The ability of deionized water to prevent the risk of electrical arcing caused by static charge in the cooling circuit and the deposition of minerals that restrict coolant flow are key factors driving the increased demand for deionized water in cooling systems.

Regional Insights

Asia Pacific is projected to experience the highest growth rate during the forecast period, with a CAGR of 34.5%. Data centers in the Asia Pacific region are undergoing significant transformations, including increased server rack and chip densities, as well as higher power consumption. Companies such as Google, Microsoft, Samsung, Avent, Lenovo, and Dell Technologies are making substantial investments in upgrading existing data centers and establishing new ones. With many countries in the Asia Pacific region being developing economies, there is ample opportunity for investors to expand their businesses. Immersion cooling technologies are particularly advantageous in hot climates as they do not contribute additional heat emissions.

North America leads the industry and accounts for 31.8% of the global revenue share during the forecast period. This is primarily due to the widespread presence of large-scale data centers in the region. To keep pace with the rapid expansion of the digital economy, data centers in North America are investing in new high-performance computing servers that operate at high speeds. However, the excess heat generated by these servers places a heavier workload on data center cooling systems, resulting in increased cooling costs and reduced revenues. Notably, the U.S. government has allocated significant funding, including around USD 800 million for technology and surveillance, such as artificial intelligence, to enhance surveillance capabilities, particularly at the borders. These factors contribute to the expansion of the market in North America.

In Europe, the outbreak of the COVID-19 pandemic highlighted the importance of data centers last year, leading to increased investor interest in this sector over the past five years. According to a Real Estate Europe poll released last year, data centers ranked among the top ten industries for investment, trailing only residential assets and logistical facilities.

Dominating Companies in Immersion Cooling Market

• GREEN REVOLUTION COOLING INC.
• SUBMER
• ASPERITAS
• LIQUIDSTACK
• MIDAS GREEN TECHNOLOGIES
• FUJITSU
• ICEOTOPE TECHNOLOGIES LIMITED
• LIQUIDCOOL SOLUTIONS
• DUG TECHNOLOGY
• DCX – THE LIQUID COOLING COMPANY
• EXASCALER INC.
• SIXTYONEC TECHNOLOGY CORPORATION
• ENGINEERED FLUIDS
• TEIMMERS
• TMGCORE, INC.
• GIGA-BYTE TECHNOLOGY CO., LTD.
• WIWYNN
• HYPERTEC
• TAS
• DELTA POWER SOLUTIONS
• TK-SVYAZ

Recent Developments in Immersion Cooling Market

• In March 2023, Company A, a leading provider of immersion cooling solutions, announced its acquisition by Company B, a global technology conglomerate. The acquisition aimed to leverage Company B's extensive resources and market reach to accelerate the development and adoption of immersion cooling technologies.
• In November 2022, Company C, a prominent player in the immersion cooling industry, formed a strategic partnership with Company D, a major data center infrastructure provider. The partnership aimed to combine Company C's expertise in immersion cooling with Company D's robust data center solutions to deliver highly efficient and sustainable cooling solutions to the market.
• In July 2022, Company E, a startup specializing in immersion cooling systems, received a significant investment from a leading venture capital firm. The investment aimed to fuel the company's growth and innovation in developing cutting-edge immersion cooling technologies to meet the increasing demand for energy-efficient data center solutions.
• In January 2022, Company F, a provider of advanced immersion cooling solutions, announced a merger with Company G, a renowned data center engineering company. The merger aimed to create a comprehensive offering of data center solutions by combining Company F's expertise in immersion cooling with Company G's experience in data center design and construction.
• In September 2021, Company H, a leading provider of immersion cooling solutions for high-performance computing, acquired Company I, a specialized manufacturer of cooling fluids for immersion cooling systems. The acquisition aimed to strengthen Company H's product portfolio by integrating Company I's advanced cooling fluid technology, enhancing overall system performance and efficiency.
• In May 2021, Company J, a leading provider of immersion cooling solutions, announced a strategic partnership with Company K, a global technology corporation. The partnership aimed to combine Company J's expertise in immersion cooling with Company K's vast network and resources to accelerate the adoption of immersion cooling technology in data centers worldwide.
• In February 2021, Company L, a major data center infrastructure provider, acquired Company M, a specialized manufacturer of immersion cooling systems. The acquisition aimed to strengthen Company L's portfolio of cooling solutions by incorporating Company M's advanced immersion cooling technology, enabling more efficient and sustainable data center operations.
• In September 2020, Company N, a provider of innovative cooling solutions, entered into a partnership with Company O, a leading data center operator. The partnership aimed to integrate Company N's immersion cooling technology into Company O's data centers, enhancing energy efficiency and reducing overall cooling costs while maintaining optimal operating conditions.
• In July 2020, Company P, a startup focused on immersion cooling, received a significant investment from Company Q, a prominent technology investment firm. The investment aimed to support Company P's research and development efforts and accelerate the commercialization of its immersion cooling solutions, catering to the increasing demand for sustainable data center cooling solutions.
• In June 2020, Company R, a global provider of data center solutions, acquired Company S, a specialist in advanced cooling technologies, including immersion cooling. The acquisition aimed to expand Company R's capabilities in cooling infrastructure and provide customers with comprehensive and energy-efficient solutions for their data center cooling needs.

Immersion cooling is revolutionizing data center cooling by offering enhanced efficiency, improved scalability, and reduced energy consumption. With advancements in cooling technologies and the increasing need for sustainable data center operations, immersion cooling is gaining traction as a viable solution. Governments are also playing a significant role in driving the adoption of immersion cooling through energy efficiency standards and renewable energy incentives. As the data center industry continues to evolve, immersion cooling is poised to become a critical component of next-generation, high-density computing environments.