Liquid Cooling vs. Air Cooling: What's Right For Your Data Center?

As power-hungry workloads like AI and HPC become the norm, data centers face mounting pressure to rethink their thermal strategies. Traditional air cooling has long been the industry standard, but with rising rack densities and energy costs, many operators are exploring liquid cooling as a more efficient alternative.

In 2024, the global liquid cooling market was valued around $4.18 billion and is projected to reach $13.2 billion by 2029.

In this post, we’ll compare the two approaches—breaking down their benefits, trade-offs, and ideal use cases—to help you decide what’s right for your environment.

Understanding the Basics

Air Cooling

In a traditional air-cooled data center, chilled air is delivered through a raised floor or overhead ducts and drawn into the front of servers and other IT equipment. As the air moves through the hardware, it absorbs heat and exits out the back, where it’s captured and returned to cooling units (CRAC or CRAH) to be re-cooled and recirculated. This continuous loop keeps equipment within safe operating temperatures.

Common configurations of air cooling in the data center include:

• Cold aisle containment. Cold aisles are enclosed using doors and roof panels to contain and direct cold air to IT intakes.

• Hot aisle containment. Hot aisles are enclosed so exhaust air is directly returned to cooling units without mixing with the room’s ambient air.

Liquid Cooling

Liquid cooling is an advanced method of removing heat from IT equipment using liquid—rather than air—as the primary cooling medium. Because liquids conduct heat far more efficiently than air, this approach enables more effective cooling at higher densities, making it ideal for power-intensive workloads like AI and HPC.

Common types of liquid cooling include:

• Immersion cooling. Server components are submerged in a dielectric fluid that transfers heat away from the hardware. The fluid is thermally conductive to remove heat efficiently, but electrically non-conductive to avoid damaging electronics. There are two types of liquid immersion cooling: single-phase systems that circulate liquid using pumps, and two-phase systems that rely on fluid boiling and condensation to transfer heat.
• Direct-to-chip cooling. Coolant flows through cold plates that are mounted directly onto the hottest components, like CPUs or GPUs. The liquid absorbs heat and carries it to an external heat exchanger or facility water system. Some air cooling may still be needed for other components.
• Rear door heat exchangers (RDHx). A liquid cooled panel is mounted on the back of a server rack to remove hot exhaust air before it re-enters the room. The heat exchanger uses facility water to remove heat from the air, reducing demand on room-level cooling systems.

Key Comparison Factors

When comparing liquid cooling and air cooling in data centers, several key factors come into play.

• Cooling efficiency. Liquid can transfer heat far more effectively than air, enabling tighter temperature control and better performance under heavy workloads while adhering to the ASHRAE thermal guidelines.
• Density and scalability. Air cooling often hits its limits beyond 10-15 kW per rack, while liquid cooling easily supports the high-power densities required by AI and HPC environments.
• Energy consumption and sustainability. Liquid cooling generally uses less energy for heat removal, contributing to improved sustainability. This approach may involve higher upfront costs for specialized infrastructure but can lead to lower long-term operating costs through efficiency and reduced cooling needs.
• Risk and reliability. Air cooling is well-understood and widely deployed in data centers, while liquid cooling introduces new risks (e.g., leaks) but also reduces the likelihood of thermal hotspots and equipment failure in high-density scenarios.

When to Consider Air Cooling

Traditional air-cooling systems remain a practical choice for low to medium density deployments running workloads that don’t require intense compute power. It can also be ideal for facilities with existing infrastructure and limited budgets, where the cost and complexity of retrofitting for liquid cooling might not be justified.

For many data centers, especially those with stable workloads and well-managed airflow, air cooling continues to offer a reliable and cost-effective solution.

When to Consider Liquid Cooling

Liquid cooling is well-suited for environments running AI, machine learning, HPC, or any workload that demands high-density racks, where traditional air-cooling struggles to keep up.

It’s an efficient option for organizations prioritizing sustainability, as it significantly reduces energy consumption related to cooling and helps lower overall carbon footprint. For modern, compute-intensive operations, liquid cooling offers both performance and environmental advantages.

When to Consider a Hybrid Approach

Data center managers should consider a hybrid approach when they need to support a combination of traditional and high-density workloads within the same facility. This strategy allows operators to continue using air cooling for low- to medium-density racks while deploying liquid cooling only where it’s most needed—such as in zones running AI, HPC, or CPU-intensive applications.

A hybrid setup is also ideal during transitional phases, where upgrading the entire facility to liquid cooling isn’t feasible due to budget, infrastructure, or operational constraints. It offers a flexible, cost-effective way to gradually improve efficiency and scalability without a full-scale overhaul.

Future Outlook

Future trends in data center cooling are being shaped by the rise of AI, sustainability goals, and increasing rack densities. Key trends to watch include:

• Wider adoption of liquid cooling. As AI and HPC workloads become mainstream, more data centers may begin to deploy liquid cooling, especially direct-to-chip and immersion cooling.
• AI-driven cooling optimization. Machine learning algorithms may dynamically adjust cooling systems to reduce energy use and prevent hotspots.
• Edge-friendly solutions. Data centers may leverage modular cooling solutions designed for decentralized, space-constrained environments.
• Renewable energy integration. Using heat reuse systems and renewable energy can turn waste heat into usable energy for nearby buildings or processes.

Bringing It All Together

Data centers are constantly evolving to meet the rising demands of AI and high-density computing and corporate sustainability goals. Whether liquid cooling or traditional air cooling is the best approach for your data center, Data Center Infrastructure Management (DCIM) software plays a pivotal role in optimizing performance. DCIM provides real-time visibility into rack temperatures, airflow, cooling system efficiency, and can measure KPI metrics like Power Usage Effectiveness (PUE), Delta-T Per Cabinet, and Latest Temperature Per Cabinet.

Using DCIM to monitor power and environmental conditions helps managers to identify hotspots, decommission inefficient equipment, track thermal trends, and make accurate informed decisions about when and how to deploy advanced cooling methods.

As cooling strategies diversify and grow, DCIM will become essential for maintaining uptime, maximizing efficiency, and navigating the transition from traditional to next-gen infrastructure.

Want to see how Sunbird’s DCIM can help you optimize data center cooling? Get your free test drive today.