Nvidia has unveiled a warm-water cooling system that it claims can significantly cut water consumption in data centers—potentially eliminating "pretty much all water usage" within the facility itself, as stated by an Nvidia executive in a press release. "The water consumption challenge for data centers is largely solved," Josh Parker, Nvidia’s chief sustainability officer, told Axios recently. However, that addresses only part of the water equation. As long as AI data centers rely on fossil fuels—a choice tech companies are increasingly making—the water savings stop at the facility’s boundaries.

The crux of the issue lies in how Nvidia measures water use. According to its blog post, the company essentially draws a perimeter around the data center: everything inside is counted, while everything outside is disregarded. To be fair, Nvidia’s system does appear to deliver on its facility-level promise. The coolant operates in a closed loop, filled once and recirculated for the facility’s entire lifespan, meaning no fresh water is consumed for cooling chips. In favorable climates, the company says this can result in a 100% reduction in on-site water usage. The problem is that water consumption outside the data center—primarily from electricity generation and chip manufacturing—can double or triple the total water footprint. This means Nvidia’s solution addresses roughly a quarter to a third of an AI data center’s overall water consumption.

The new system is cleverly designed, pumping coolant into racks at 45°C (113°F). While that temperature feels hot to humans, it’s cool for computer chips. After passing through a server, the coolant emerges at 55°C (131°F), carrying substantial heat away from the hardware, Nvidia noted. At that temperature, outside air in most climates can dissipate heat via passive radiators without requiring evaporative cooling or, in some cases, even fans. A data center without fans or chillers would not only use less water but would also be more efficient and quieter. Yet no data center can function without an electricity supply, and many types of power plants are themselves major water consumers.

Fossil fuel power plants are among the largest water users in the U.S., consuming 2.7 billion gallons per day, according to the U.S. Geological Survey—most of it for evaporative cooling. Natural gas plants use 1.17 liters of water per kilowatt-hour of electricity generated, per a recent study. Coal plants are even more water-intensive, using 2.2 liters per kilowatt-hour. Today, fossil fuel plants collectively generate about half of all data center power, according to the International Energy Agency (IEA). Hydropower dams, which supply around 10% of data center power, don’t consume water directly in the same way, but evaporation from their reservoirs results in about 6.8 liters lost per kilowatt-hour generated. Geothermal energy, which tech companies are beginning to explore, varies widely—its water usage can be higher or lower depending on the specific technology. Some enhanced geothermal startups, like Fervo, have pledged to use mostly "degraded" water that would otherwise go unused.

Wind and solar power, on the other hand, use vanishingly small amounts of water—about 0.01 liters and 0.03 liters per kilowatt-hour, respectively—including the water needed for manufacturing and cleaning solar panels. While renewables are providing a growing share of new electricity capacity, the IEA projects that natural gas and coal will supply more than 40% of the new electricity needed to meet data center demand through 2030. Without major changes to that trajectory, data centers will still consume large amounts of water, regardless of what Nvidia does within its walls.