The rapid growth of data centers worldwide, fueled by companies outsourcing data storage and the rising use of energy-intensive artificial intelligence, is creating a pressing challenge: how to keep these facilities cool. A recent outage at CME Group, the world’s largest exchange operator, brought this issue into focus. Trading on its currency platform and futures markets for foreign exchange, commodities, Treasuries, and stocks was halted late Thursday due to overheating at data centers operated by Dallas-based CyrusOne, which runs more than 55 centers across the U.S., Europe, and Japan. CyrusOne confirmed on Friday that engineering teams were on-site near Chicago to restore the cooling systems.

Data centers generate immense heat because high-powered AI and cloud servers consume vast amounts of electricity while continuously running. Traditional air-cooling methods often struggle to handle the heat produced by stacked server racks, and if temperatures exceed safe limits, servers can malfunction or shut down. “The chips in data centers need to remain within certain temperatures, or they either malfunction or shut down,” said Daniel Mewton, partner at law firm Slaughter and May.

To tackle these challenges, many operators are turning to liquid cooling systems, which use water or specialized coolants to remove heat far more efficiently than air. However, liquid cooling can create its own difficulties, such as leaks, corrosion, specialized maintenance requirements, and significant water usage. Companies like Microsoft are experimenting with closed-loop designs that recycle water between servers and chillers, eliminating the need for fresh water, while other solutions focus on capturing and reusing waste heat. Although data center outages are generally rare due to strict contractual uptime requirements, failures caused specifically by cooling problems are even less common, with power issues being the main cause of disruptions, according to Mewton.

The rising global demand for data centers has also triggered a surge in acquisitions and investments in cooling technologies. Cooling can account for as much as 40% of a data center’s energy usage, making it a critical and lucrative sector. In November, Eaton announced a $9.5 billion deal to acquire Boyd Corporation’s thermal business to meet AI-driven cooling demand, while Vertiv is pursuing a $1 billion acquisition of PurgeRite Intermediate to expand its liquid cooling offerings.