Whitney Shepherd

When assets are expensive, create assets!

Got to tour my first Data Center yesterday.  Here are some takeaways from it.  Note, I’m not an expert in Data Centers and these thoughts are more from a curious investor standpoint.   First off, special thank you to Allison Boen and Shell who was kind enough to host myself, Zach and Joe during the lunch and learn session with industry leaders from Green Revolution Cooling, Supermicro, Shell and AMD to name a few.. The data center we went into was a Shell Data Center.  It’s their largest.    With our HVAC background, and our recent exit of Flow Service Partners, our first thought on data centers was, let’s dig into the cooling side of things.  Here are some takeaways. 1.  Immersion cooling is a need, not a want. The rise in kW per rack and TDP due to the growth in AI and GPU processing is resulting in rack densities that are simply too hot to be cooled through computer room air conditioning ("CRAC" - i.e., traditional AC).  For those that don’t know, this is when you cool the server racks in a dielectric fluid that is safe for computer components.  Picture attached.   2.  Companies should be excited about this! Immersion cooling has immense benefits - decreasing total cost of ownership, increase in computing densities, decreasing failure rates and increasing hardware lifespans, and increasing the number of racks able to run at once due to less space needed for cooling tanks. The dielectric fluid Shell is producing is recyclable and environmentally friendly. And don't even get me started on the noise factor of CRACs vs. immersion cooling tanks.…the sound would make you go crazy if you stayed in there there too long.   3. The current resistance and hesitancy to adopt immersion cooling techniques can be boiled down to two factors. One being the capital outlay needing to retrofit facilities (this will become less of an issue as new data centers are built to be liquid cooling friendly) and the other being the lack of warranties offered on some of the chips. Some companies currently offer product warranties, but most do not. Once more warranties are offered, I think the floodgates towards liquid cooling adoption will be opened. 4. Some hyperscalers and operators are currently utilizing immersion cooling for ~30% of total cooling efforts. If a data center is already hooked into the grid and can draw a predefined amount of power, then immersion cooling is the only way to get more density without generating a higher level of draw from the grid. This could result an additional 35% of total power usage that goes to conventional HVAC systems switching over to cool racks. 5. All this boils down to I think the industry will more and more shift towards immersion cooling.  There was even talk of combining direct to chip and immersion cooling.   From an @lpfirstcapital  standpoint, we left less bullish on finding a pure play service company to focus on immersion cooling.  Just not many service opportunities on them.  The manufacturers such as GRC will handle service in house, or existing service providers that have relationships with get certified through GRC or Submer to service the immersion cooling tanks.   It is one thing to read about the developments in AI and how they are impacting the growth and exponential trajectory of data centers, but it is another thing to see it first-hand. The presenters noted we are currently in the "early adoption" phase of immersion cooling. In my opinion, the sooner companies adopt these practices, the better off they will be. If you are looking for an investment in the data center space, would love to chat.