LiquidStack: How This Company Is Taking On The $2.2 Billion Immersion Cooling Market

By Amit Chowdhry ● May 3, 2023

LiquidStack is one of the world’s largest liquid cooling companies for hyper-scale, edge, and high-performance computing. To learn more about the company, Pulse 2.0 interviewed Joe Capes, CEO and co-founder of LiquidStack.

Joe Capes’ Background

Joe Capes started in the Information Technology industry in 1992 when he joined APC. Those were the early days of local area networks and desktop systems.

“There were computer rooms, but data centers didn’t exist as a ‘thing.’ APC grew rapidly and was a NASDAQ darling during the 90s. We entered the mission-critical cooling space in 2000 through acquisition, and I globalized APC’s mechanical business by starting things up from scratch in EMEA, APAC, and LAM,” said Capes. “I left in 2003 and did several start-ups, including an advanced battery technology company for whom I helped raise a $21M Series A round. Then I co-founded Coolcentric, the first company to commercialize Rear Door Heat Exchangers. I rejoined APC in 2010 after Schneider Electric had acquired them. For almost another decade, I helped Schneider Electric reinvent its cooling business, supporting the integration of another acquisition in the mechanical space and leading global cooling business development for the company’s top 16 strategic accounts. Finally, I joined LiquidStack in 2019 after spending nearly two decades having a great career with Schneider Electric. I felt I could do more to contribute to the industry, bringing me to LiquidStack.”

Formation Of LiquidStack

Capes informed me that LiquidStack’s history started over a decade ago when in 2012, which is a small team of engineers gathered in a Hong Kong high-rise to form Allied Control Limited (ACL). Working in a space smaller than a standard shipping container, the company created the next revolution in immersion cooling.

“After bootstrapping the company for several years, they got acquired by Bitfury Group in 2015 where ACL was an R&D group captive to Bitfury’s development of blockchain technology,” Capes added. “I joined the team in 2019. Since then, I have overseen ACL’s spin-out into its own company, re-branded as LiquidStack and which ultimately pivoted us out of the crypto industry and into data centers, edge, and high-performance computing.”

LiquidStack was founded to drive continued performance gains in computing through LiquidStack’s breakthrough technology and unmatched experience deploying liquid-cooled data centers at scale. And they have the world’s largest liquid cooling install base and are the only company that has deployed immersion cooling at hyper-scale.

As the pioneer of 2-phase immersion cooling, LiquidStack’s cooling technology, products, and services are vital in reducing carbon footprint, mitigating water consumption for heat rejection, cutting e-waste, and massively lowering environmental impact. Together with their customers and partners, we help solve real thermal and sustainability challenges driven by the adoption of cloud services, AI, edge, and high-performance computing.

Challenges Faced Building The Company

One of the biggest decisions for the company was to pivot out of crypto in 2020. They did not want LiquidStack’s future to be pegged to the price of Bitcoin.

“I accomplished our Series A raise during the COVID-19 quarantine almost single-handedly, from my living room, without a roadshow. We recently closed a Series B raise with lead investor Trane during a historic stock market crash, tech meltdown, FTX implosion, and unforeseen banking failures,” Capes noted. “As they say, ‘Nothing of worth or value is usually easy.’”

Core Products

What are LiquidStack’s core products and features? The company’s core offerings include the DataTank 48U, a 2-phase immersion cooling tank for full-scale data centers; the DataTank Modular, which is for prefabricated and modular turnkey data centers with integrated 2-phase immersion cooling up to 1.5MW; MicroModular, a prefabricated and modular turnkey edge computing solution up to 250kW, and the DataTank 4U, which provides 2-phase immersion cooling for local edge and micro data center applications. LiquidStack also designs custom solutions.

“Our products reduce energy use by 41%, can eliminate water used for heat rejection, and cost 32% less, all while providing more than 28x the heat rejection capacity compared to air cooling. In addition, our technology cools servers without air conditioning, IT fans, bulky heat sinks, chillers, or air distribution systems,” Capes explained.

Evolution Of LiquidStack’s Technology

Since being formed, LiquidStack has pioneered two-phase immersion cooling and achieved numerous awards for the energy efficiency of its solutions. And as a result, 2-phase immersion cooling has rapidly gained attention and market share as an alternative to transitionary liquid cooling technologies such as direct-to-chip (cold plates) and 1-phase immersion cooling.

So LiquidStack began investing heavily in its Intellectual Property portfolio. And since 2020, the company filed 21 new patents. LiquidStack’s technological advancements include system integration, controls, and advanced fluid management. Plus the company believes standardization, interoperability, and concurrent serviceability of systems are critical.

Biggest Milestones

– In 2014, LiquidStack (then known as Allied Control (ACL)) built the most efficient data center in the world using 2-phase immersion cooling. And this 500kW data center, located in the hot and humid climate of Hong Kong, saved over 95% on cooling energy consumption compared to air cooling.

– After ACL’s acquisition by Bitfury in 2015, the companies jointly deployed over 160MW of 2-phase immersion-cooled data centers, including DataTank units operating at densities of up to 252kW per 48U rack. These sites are considered among the largest liquid-cooled data centers ever designed, constructed, and continuously operated.

– In 2021, ACL had closed a $10M Series A raise led by IT hardware manufacturer and integrator Wiwynn. And at this same time, ACL was rebranded as LiquidStack and completed a spin-out and stand-up of the new company. During the period, LiquidStack gained rapid commercial traction and build-up.
– LiquidStack had partnered with Standard Power to plan their first major US data center deployment in the colocation space in 2022. And the facility helps enterprises connect locally with data-intense technologies, including colocation, edge computing, cryptocurrency miners, hi-flux microprocessors, GPUs, ASICs, AI Accelerators, and 5G applications for unparalleled performance and cost savings.

– In March, LiquidStack secured Series B funding from Trane Technologies to advance sustainable cooling solutions for the high-growth data center market. And the investment will help further support the adoption of LiquidStack’s solutions and significantly reduce data center carbon footprint, water consumption, e-waste, and environmental impact. Plus LiquidStack will use the funding to accelerate manufacturing, R&D, and commercialization to rapidly expand LiquidStack’s product portfolio and delivery capabilities.

Customer Success Stories

LiquidStack is known for having one of the most extensive install bases of liquid cooling for data centers globally. And companies like Standard Power, Toyota, Microsoft, and NTT Data have all publicized their use of LiquidStack solutions. 2-phase immersion cooling drastically reduces data center carbon footprint, water consumption, and environmental impact.

For example, Microsoft stated it is seeking better ways to manage powerful new AI hardware in its cloud computing operations and focusing on immersion cooling technology. In 2021, the company test-drove a setup in which servers were dunked in tanks of cooling fluid (two-phase immersion system from LiquidStack) to manage rising heat densities.

Total Addressable Market

What is the total addressable market (TAM) size that LiquidStack is pursuing?

“Referencing external market studies and internal estimates, we believe the immersion cooling market reached $2.2 billion in 2022, growing at a 25% compound annual growth rate (CAGR). This growth is attributed to the high demand for cloud services and the emergence of AI, big data, IOT, and edge computing. So whatever you believe the market to be worth, it’s large and proliferating,” Capes revealed.
Differentiation From The Competition
What differentiates LiquidStack from the competition? Capes pointed out that their industry has reached the practical limits of air cooling. And the rise of AI, big data, edge computing, and advanced analytics calls for a new, transformational cooling method; traditional methods, such as mechanical or air cooling, cannot keep up with the demands of today’s new high-flux chips.
“We have the world’s largest install base of liquid cooling for data centers globally. Our immersion liquid cooling is a proven, highly scalable, environmentally safe, and sustainable solution to the growing thermal challenges of cloud, enterprise, edge, high-performance computing, and crypto-mining applications. In addition, 2-phase immersion cooling drastically reduces data center energy use and direct and indirect carbon footprint versus air cooling,” emphasized Capes. “LiquidStack 2-phase immersion cooling offers approximately twice the heat rejection capacity versus 1-phase options, better efficiency, and up to 50% higher value waste heat. However, direct-to-chip solutions have high comparative OPEX and still require air cooling, so efficiency gains are limited for these other liquid cooling options.”

Future Company Goals

What are some of LiquidStack’s future company goals?
“LiquidStack received substantial funding from Trane Technologies,” Capes concluded. “We are using some of these funds to open a US manufacturing site, increase investment into R&D and scale our commercial and services operations. In addition, building off our massive install base of products, LiquidStack expects to diversify its liquid cooling offer portfolio using advanced fluid technologies and harnessing the immense potential of waste heat re-use and repurposing. We see ourselves as a holistic leader in liquid cooling with the sole purpose of driving continued performance gains in computing through our breakthrough technology.”