Tidal turbines and wave energy converters will help power the data center, which is as powerful as several thousand high-end consumer PCs. It would take years to deploy a similarly sized data center on the land.
French marine engineering company Naval Group designed and built the subsea data centre for Microsoft. Since most of the world's population lives within about 120 miles of the coast, data needs to travel less distance to reach coastal people.
"The deployment of the Northern Isles datacenter at the European Marine Energy Centre marks a milestone in Microsoft's Project Natick, a years-long research effort to investigate manufacturing and operating environmentally sustainable, prepackaged datacenter units that can be ordered to size, rapidly deployed and left to operate lights out on the seafloor for years", researchers noted in the release.
The servers will receive renewable energy through an undersea cable which will also carry data back to shore.
Overall, Microsoft's aims with Project Natick are not only to bring lower-latency cloud computing to a larger number of people - the company points out that nearly 50% of the world's population lives near coasts - but also to create a more environmentally friendly data centre.
The software giant was able to cram 12 server racks into the data center, but those racks have enough storage for five million movies.
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As a major player in the cloud infrastructure market, Microsoft is keen on figuring out better ways to store and power its machinery.
"The world's oceans at depth are consistently cold, offering ready and free access to cooling, which is one of the biggest costs for land-based datacenters", the release said.
Microsoft is doing something that sounds very unusual at first glance; it has taken a fully functional data center and sunk it into the dark ocean depths.
The BBC reports that Microsoft has encased a tiny data center with 12 racks of servers in a cylinder that'll sit on the ocean floor for up to five years.
Microsoft is hoping that the offshore data center will have a lower failure rate than data centers on land.
Project Natick is now in its second phase, with the initial part of the program having determined that underwater data centres are feasible through the deployment of a submerged facility off the coast of California in 2016.