Investors hope tech for hog poop ponds can solve AI’s water problems

Data centers are usually under scrutiny for their massive hunger for energy. But their thirst may prove to be a bigger problem — with a juicy payoff for companies able to serve up solutions.

Amazon, Microsoft, Google, and other data giants have proven inventive at finding fixes for their energy problems, including by signing deals with cutting-edge clean power providers and engaging in complex energy arbitrage schemes. But they’ve been slow to deal with the water problem. Google used 6 billion gallons of water last year, mostly to cool data centers, compared to 4 billion in 2020.

In some ways, energy solutions are making the water problem worse, said Jason Pontin, a general partner at the climate-focused venture firm DCVC, who has led the firm’s investment in water tech, including in ZwitterCo. The evaporative cooling systems that are commonly used in data centers are more energy-efficient than conventional air conditioning, but release large volumes of water as steam. And the development of data centers in places with access to abundant, low-cost clean energy, like solar-rich Arizona or Dubai, are sometimes places under extreme water stress. And as AI-crunching chips get more powerful, their cooling needs rise.

Industrial water consumers have long worked under the assumption that the resource is essentially limitless and free, undermining any rationale for investing in conservation solutions. That is no longer tenable as record-breaking temperatures and drought become routine. Industries that used to rely on fresh groundwater are under growing pressure from consumers, shareholders, and regulators to cut back and find alternative sources.

“We’ve created this entirely new, amazing technology, but to think we can just suck water out of the ground to run it is nuts,” Pontin said. “Industrial water, polluted water, brackish water, atmospheric water, desalination — these are the sources that are going to drive the next century’s economic growth, so that’s why we’re betting in this space.”

ZwitterCo’s approach is focused on recycling: High-tech filters could make it economical to repurpose waste or other low-quality water for data centers’ needs and reduce their reliance on groundwater. Ecolab, a multinational water consulting firm, is rolling out new services for data centers to monitor their real-time water use, and estimates that simply making more efficient use of water in conjunction with existing data center technology could reduce a centers’ water use by one-third. LiquidStack, an US-based firm, is pitching data centers on systems that cool chips directly by piping a mix of water and chemicals across a cooling plate on their surface. The companies’ clients used to only ask about this service as a means to improve the performance of super-powerful, super-hot chips, said Angela Taylor, the company’s global strategy director. Now, an increasing number want it as a means to cut their water footprint. She sees a future where data centers in all but the hottest places could eliminate evaporative cooling altogether.

Big Tech is aware that it has a water problem. Google, for one, is committed to replenish more water to aquifers than it consumes by 2030, for example by setting up systems near its data centers to recycle municipal wastewater. “We are committed to finding sustainable ways to deliver our products and services and support the growing digital economy,” Ben Townsend, the company’s head of infrastructure strategy and sustainability, told Semafor.

For Pontin, the dual imperative that tech companies face in needing to grow their digital infrastructure footprint while also meeting sustainability goals is what creates an opening for savvy startups. “Every single problem that we care about in deep tech cannot be solved, or at least is much harder to solve, without solving the water problem,” he said.