Portuguese data centres: a future under the waves?

In year 2018, Microsoft pioneered the first undersea data centre in the cold waters of the North Atlantic, close to the Orkney Islands. For two years, all appeared to go well with the experiment but then, for unclear reasons, Microsoft placed Project Natick on hold.

Immediately, China stepped into the breach and financed the developer HiCloud to prepare a competitive enterprise which opened commercially in year 2023 at Hainan, an island in the South China Sea.

The experience gained in Hainan has enabled a state-owned company, China Communications Construction, to announce the opening in May of a larger data centre, which has been located in coastal waters near Shanghai. This consists of a series of sealed capsules which house 2,000 servers and are capable of processing 5G workloads of data and Artificial Intelligence operations.

The massive capsules lie in a depth of around 30 metres and need only seawater for their cooling systems. They are designed to be virtually maintenance-free for a life of at least 30 years. Most importantly, they derive their energy requirements almost entirely from offshore wind turbines which have been constructed nearby.

The location is at the convergence of fibre optic cables, which will include the pending BRICS system and thus linked to the Lingang industrial estate, which includes a mega factory for the manufacture of Tesla electric vehicles.

This pilot underwater enterprise will be the first of many which are required to meet China’s expansion as the global leader of AI industry. It also serves as a model for the EU, which has a similarly long coastline to the Atlantic Ocean and is especially appropriate for locations in Portugal and Ireland, which now share the title of “digital gateway to the EU”.

In fact, it is relevant to compare the two countries whose economic characters are changing so much in the 21st century. (Portugal land area 92,000 hectares; population 10.5 million. Eire 70,000 hectares; 5.5 million)

Ireland was the first choice for foreign investment. Its capital, Dublin, accommodates the European headquarters of Google, Meta and Microsoft.  Anthropic is expected to follow suit. NVIDIA, OpenAI and Amazon all have significant representation. The country’s first data centres were all built in the vicinity of Dublin in the early years of the 21st century, thus bringing a temporary boost to jobs in the construction industry.

This concentration of digital talent brought an influx of highly-skilled foreign specialists in high-tech engineering. Compensation packages gave salaries at more than twice those already paid to homegrown, middle-to-top executive ranges and included generous allowances to meet domestic rentals or to invest in the purchase of residential property in Dublin’s fair city.

To the incoming tech companies and adventure capitalists, very favourable corporation tax rates were offered initially by the Irish government, but later intervention by the EU economists of Brussels reduced the advantages and, as was the case with Apple, large slices of previously given tax relief were reclaimed.

The Irish government’s claim that this sudden expansion of Information Technology presented “a core enabler of our technology-rich innovation economy” was increasingly challenged by disadvantaged consumers who complained that they were the hapless victims of a stealth tax derived from sharp spikes in prices for energy and real estate.

Although the GDP of the country shot up to benefit the elite, the polarisation of the economy meant that the majority of the populace suffered increasing rates of inflation and a degradation of the general way of life.

Now, 20 years later, the Portuguese have learned from the Irish experience by planning the influx of data centres for location on industrial estates, thus avoiding the “not-in-my-back-yard” objection by homeowners. However, as growth is driven by AI and the ominous tsunami of superior machine knowledge enabling independent decision-making processes, the economic consequences have yet to be fully understood.

The future construction of cyber world buildings in coastal waters could lead to a better “life under the ocean waves” with energy being catered for by floating wind-farms and the advantageous use of land to maintain our traditions and culture.

The cyber bureaucrats of Brussels should carefully monitor the Chinese enterprise and determine its potential application for the benefit of the European consumer.