Can AI Data Centers Cut Water Use Near Zero? Elon Musk And NVIDIA Say Yes

Elon Musk has endorsed NVIDIA’s argument that modern AI data centers consume far less water than critics often claim, as the industry faces growing scrutiny over its environmental footprint.

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NVIDIA Water Claims

NVIDIA said AI data centers account for only a small share of U.S. freshwater consumption, citing a Mar. 2026 estimate from the Manhattan Institute that placed the figure at roughly 0.2%, with most usage tied indirectly to electricity generation rather than on-site cooling.

The company argues that its latest cooling technology can sharply reduce direct water consumption. According to NVIDIA, facilities operating with 45-degree Celsius liquid cooling in cooler climates can rely on dry-cooling systems instead of traditional evaporative cooling towers.

Under that model, annual cooling-related water use can fall from roughly 2.6 million gallons per megawatt to nearly zero. NVIDIA has previously claimed its Blackwell platform delivers water efficiency hundreds of times greater than conventional air-cooled systems, while also lowering energy demand because cooling can account for up to 40% of a data center’s electricity consumption.

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Musk Backs NVIDIA

Musk’s support comes as NVIDIA pushes back against a common criticism of AI expansion, that rapidly growing data centers place unsustainable pressure on local water resources. The company describes its cooling architecture as a closed-loop system that continuously recirculates coolant rather than consuming fresh water supplies.

Ali Heydari, NVIDIA’s director of data center cooling and infrastructure, said the company’s DSX reference design for AI factories achieves “zero water consumption” while significantly reducing power requirements.

Critics argue the picture is more complex. A report from Berkeley Lab estimated that U.S. data centers consumed about 17.4 billion gallons of water directly in 2023 and another 211 billion gallons indirectly through power generation. Researchers project direct consumption could rise to between 38 billion and 73 billion gallons annually by 2028 as AI infrastructure expands.

Questions have also emerged around xAI’s operations in Memphis, where the company’s Colossus facility reportedly draws about 1.3 million gallons of drinking water per day from a local aquifer. The site has faced legal challenges and community opposition tied to environmental concerns. The dispute highlights a broader issue facing the AI industry: while new cooling technologies may reduce direct water use, regulators and local communities remain focused on the total environmental impact of increasingly large AI facilities.

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