Immersion Cooling Firm LiquidStack Secures Series B Funding to Build Manufacturing in U.S.

Immersion cooling technology firm LiquidStack secured a Series B funding round of undisclosed amount from Trane Technologies (TT), the company said Wednesday.

The fresh capital will be used primarily to scale up manufacturing – with the startup aiming to announce a U.S. facility in the third quarter – research and development to expand the offerings, and commercial operations, said CEO Joe Capes in a press release. Currently the company's manufacturing operations are in Germany.

LiquidStack specializes in two-phase immersion cooling, in which computers are submerged in dielectric heat transfer liquid, as opposed to mineral oils used in other models. This type of liquid is more environmentally friendly to produce and less resource intensive than air cooling, currently the most common practice among bitcoin miners.

The two-phase system can reduce a data center's carbon footprint by over 1,500 tons of carbon dioxide equivalents per megawatt (MW). Data centers will also see a 40% reduction in the energy use of mechanical equipment, 33% lower capital expenditure and 32% less land use, the firm said. "A broader adoption of LiquidStack’s technology can also reduce water usage for powering and cooling data centers by over 300 billion liters per year," according to the press release.

Spending less on energy is a crucial selling point for bitcoin miners, whose biggest operational cost is electricity. Capes told CoinDesk that for every megawatt (MW) of energy used for the actual computing, LiquidStack's solution uses 0.02 MW for cooling, whereas other options use 0.1 MW to 0.7 MW.

The Marlborough, Massachusetts, company started out in the early days of bitcoin mining in Hong Kong, before being merged into German miner Bitfury in 2015 and then going off on its own again in 2021. "We were the first company in the world to not only deploy immersion cooling for mining, but to also do it at massive scale," Capes told CoinDesk, referring to two Bitfury sites in Central Asia.

Later, during the crypto bear market of 2019, LiquidStack pivoted away from mining "because we didn't want LiquidStack to be tied directly to the price of bitcoin," Capes said. The company worked with Dell and Microsoft in those years, he added.

Today, however, the company's pipeline of crypto is larger than traditional data centers or edge computing sites, said the CEO. While technically the firm has more clients in the non-mining segments, those are smaller contracts, Capes said.

Still, at $7.2 million per MW of infrastructure, the LiquidStack solution is not cheap.

"What we're finding in our [crypto mining] industry is that you you either pay now, or you pay later," said Capes, making the argument that the miners who don't spend enough to bring their operating expenses down, later find themselves unprofitable.

Trane Technologies is a heating and cooling tech firm that's been around for roughly 150 years. The company had $16 billion in revenues in 2022.

LiquidStack’s technology "is raising the bar for sustainable data center cooling," said Amber Mulligan, Trane's vice president of strategic sales and marketing, commercial heating, ventilation and cooling for Americas, told CoinDesk. The company will help Trane achieve its sustainability commitments, she continued, among them "reducing one billion metric tons of carbon emissions from our customers’ footprint by 2030 and achieving net-zero emissions by 2050."