Will Liquid Cooling Save Data Centers?

By Avestix Group

As we recently shared, the AI boom is driving a concurrent demand for state-of-the-art data centers. As a result, U.S. data center construction is expected to grow by 160 percent by 2030.

But this demand for new data centers comes at a price: it’s straining the U.S. energy supply.  

The reason? The energy consumption of data center racks “has more than doubled over the past two years, from 8 kilowatts to 17 kilowatts per rack.” And, as demand for AI continues to scale, that consumption is “expected to rise to as much as 30 kilowatts by 2027.”

The good news is that the increased hunger for energy is forcing the data center industry to rethink traditional power options. Many providers are already exploring cleaner energy sources — including solar power, wind power, geothermal power and clean-burning fossil fuels — to help offset the costs and environmental impacts.    

One solution that has taken hold in recent years is the use of liquid cooling technologies to help enhance data center efficiency and scalability. Twenty-two percent of data center operators now use direct liquid cooling methods. 

The Benefits of Liquid Cooling

What’s behind the transition to liquid cooling? 

The list of benefits is a long one, starting with the fact that old-school cooling systems — fans and air conditioning units — simply can’t deliver the same efficiencies and cost effectiveness liquid cooling can offer. 

Liquid cooling systems use advanced thermal conductivity, which has proven to be as much as 1,000 times more efficient than traditional refrigerating methods. Better still: the liquid systems use up to 90 percent less energy than conventional air-cooling systems.

Not only do liquid cooling systems use less energy, they also use far less water than traditional technologies. (This will undoubtedly come as welcome news to the citizens of Virginia, a state christened the “world’s undisputed data center capital”  because of the fact that 70 percent of all global internet traffic flows through Virginia-based data centers.)  

Additionally, liquid cooling systems work smarter than old-fashioned systems, according to a 2024 report from McKinsey. The newer systems “can keep electronics at a more consistent temperature by targeting the hottest spots. Not only does this prolong the life of the hardware, but it also allows the systems to “operate at higher speeds than those originally intended by manufacturers,” says McKinsey 

Meanwhile, liquid cooling also enables “higher rack densities,” which simply means that liquid-cooled data centers can concentrate more computing power into smaller spaces. Concentrated power reduces the need for additional data centers, which can further minimize water usage and other adverse environmental impacts.  

Liquid Cooling Market Growth Projections 

Given this list of enhancements, why does much of the industry continue to rely on outdated air-cooling systems?

“Most U.S. data centers remain air-cooled because much of the industry is built on traditional technologies,” says Susan Lindeque, CEO of Avestix. “Transitioning to liquid cooling not only requires a significant shift in operational procedures, it is also expensive. It requires new hardware, new training, meeting new compliance requirements, as well as modifications and integrations across an entire data center. “

Yet, despite these barriers, she says, widespread adoption of liquid cooling systems is inevitable.

“A 2025 report from MarketsandMarkets predicts the data-center liquid cooling market around the globe will grow from $2.8 billion this year to more than $21 billion by 2032,” she says. 

Much of this growth, Lindeque says, will follow related demands for green infrastructure improvements and carbon reductions.

“In light of that, the biggest takeaway from the report,” Lindeque says, “is its conclusion: ‘liquid cooling is no longer an option, but a necessity.’” 

Ready to Invest in a Better Tomorrow? 

Are you interested in leveraging the growing demand for green data centers in your investment strategy? Find out how The Avestix Venture Fund can help.

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