By Paul Allen in strategic leverage — 12 Nov 2025

Microsoft-Backed VEIR Adapts Superconductor Tech to Slash Data Center Energy Constraints

VEIR, a Massachusetts-based startup backed by Microsoft, is applying superconducting transmission line technology originally developed for long-distance power grids to data center power distribution. Announced in November 2025, VEIR aims to solve a key emerging constraint in data center design: energy efficiency and thermal management at scale. Details on funding amounts were not disclosed, but Microsoft’s strategic support signals a push to overcome the growing energy bottleneck in data centers driven by AI workloads. VEIR’s approach fundamentally challenges conventional copper cabling methods that dominate current infrastructure.

Replacing Copper with Superconductors to Reset Energy and Cooling Constraints

Data centers today rely on copper power cables that suffer from resistive losses, converting an estimated 5-10% of electricity into heat during transmission within facilities. This generates significant cooling costs: for every megawatt of IT load, up to an additional 0.5 MW is consumed by cooling infrastructure, according to 2024 industry data. VEIR repurposes superconducting cables, which conduct electricity without resistance at low temperatures, effectively reducing power loss near zero within the data center’s power distribution system.

Instead of incremental efficiency gains common in server hardware or cooling optimizations, VEIR targets the energy flow infrastructure itself. By substituting copper cables with lightweight superconductors that operate near 77K (liquid nitrogen temperatures), VEIR cuts resistive loss by more than 90%, slashing wasted energy and the corresponding cooling load simultaneously. This repositioning shifts the constraint from server energy efficiency—which is approaching physical limits—to power delivery efficiency, a sector historically overlooked in scaling data centers.

How VEIR’s Superconductors Create Durable, Automation-Ready Leverage

Superconductors typically require complex cryogenic systems, making them impractical for dense data centers. VEIR’s innovation lies in integrating superconductors with compact, automated cryogenic cooling modules designed for modular data center aisles. The system self-monitors temperature and dynamically adjusts cooling, requiring minimal human oversight. This automated thermal management ensures reliability and reduces operational overhead, overcoming a principal adoption barrier for superconductors in commercial environments.

For example, instead of manual cooling adjustments common in traditional chilled water systems—where miscalibrations cause hotspots or overcooling—VEIR’s integrated modules use embedded sensors and AI-driven control to maintain optimal superconductor temperature precisely. This reduces failure risk and maintenance costs, creating a system that delivers savings not through one-off improvements but through persistent operational efficiency.

Why Data Center Operators Face a Power Delivery Limit Requiring New Tech

Data centers powering AI workloads consume 100+ MW facilities with strict uptime SLAs. Traditional electrical infrastructure upgrades—larger copper cables, thicker busbars—hit practical limits in weight, space, and thermal load. Macro trends project data center energy demand rising 15% annually, while grid constraints and sustainability mandates force operators to innovate or face capacity caps.

VEIR’s superconductors offer a direct response to this infrastructure plateau. By eliminating resistive loss, data center operators can:

Increase usable power capacity in existing spaces without costly construction
Reduce PUE (Power Usage Effectiveness) from typical 1.2-1.4 to potentially below 1.1, equating to 10-20% energy savings facility-wide
Lower cooling capital and operational expenditures by shrinking heat output from cables

This redefines the system-level constraint from electrical capacity and cooling scale to affordable modular superconductor adoption, a shift powered by VEIR’s cryogenic automation and scalable cable design.

How VEIR’s Path Differs from Alternatives Like Advanced Copper or Silicon Photonics

Attempts to improve data center power distribution have typically fallen into two camps:

Enhanced copper cables with better alloys or thicker gauges marginally reduce resistance but scale poorly in weight and space, increasing infrastructure complexity.
Optical interconnects like silicon photonics reduce signal power losses in data transmission but do not replace power delivery cables where bulk current and safety standards dominate.

VEIR bypasses these pitfalls by focusing on the power delivery layer rather than data signaling. Their superconductors handle hundreds to thousands of amperes over meters inside the facility with near-zero loss, a capability that neither improved copper nor photonics can replicate at scale and cost.

By targeting this specific but critical constraint, VEIR exploits a market gap where traditional methods plateau. Operators gain leverage by extending existing data center designs rather than remodeling entire electrical setups, accelerating adoption without wholesale infrastructure overhaul.

Microsoft’s Investment as a Strategic Signal on AI’s Energy Scaling Limits

Microsoft’s backing of VEIR is more than financing; it is a positioning move reflecting their awareness of AI cloud scale energy constraints. Recent disclosures show Microsoft consumed roughly 1.5 terawatt-hours on data center operations in 2024, making even 2% efficiency improvements worth tens of millions annually in energy cost reduction.

Microsoft’s funding enables VEIR to scale pilot deployments inside Azure data centers, validating this superconducting approach in real-world environments. This builds durable competitive advantage since the capital intensity and cryogenic engineering expertise required are barriers for most data center suppliers.

Microsoft is effectively extending its leverage beyond software and AI compute into physical infrastructure innovation—a multidimensional play that addresses the energy constraint in AI scaling.

Broader Implications: Unlocking AI Growth by Evolving Data Center Constraints

VEIR’s superconducting power delivery exemplifies how identifying the real bottleneck—here energy loss in distribution, not compute efficiency—transforms system design and unlocks new scales of operation. It bypasses incrementalism by redeploying technology from long-distance transmission lines into modular data centers with automated cryogenics.

This reorientation parallels other infrastructure moves like Alloy Enterprises’ AI server cooling innovations that seek to break the mounting constraints in AI hardware scaling. Together, these show a critical pattern: leveraging physical systems engineering to extend overall platform capacity rather than relying solely on software advances.

For operators and investors, VEIR’s model highlights the unseen leverage in power infrastructure that typically goes unnoticed but cumulatively dictates AI system viability and expansion costs.

VEIR’s superconductors paired with automated cooling offer a technological lever few data center owners have considered: cutting 90% of internal power line losses and the associated cooling burden simultaneously. Deploying this tech is a positioning move that reshapes fundamental cost structures and long-term operational overhead.

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Frequently Asked Questions

What are superconducting cables and how do they improve data center power distribution?

Superconducting cables conduct electricity without resistance at low temperatures, effectively eliminating power loss during transmission. In data centers, replacing traditional copper cables with superconductors can reduce resistive loss by over 90%, significantly cutting wasted energy and cooling costs.

Why is energy efficiency a major challenge in large-scale data centers?

Data centers today lose 5-10% of transmitted electricity as heat due to resistive losses in copper cables, which increases cooling demands. For every megawatt of IT load, up to an additional 0.5 MW may be consumed by cooling systems, raising operational costs and limiting scalability.

How does VEIR’s technology address the cooling overhead in data centers?

VEIR integrates superconductors with automated cryogenic cooling modules that maintain optimal low temperatures near 77K. This automated thermal management reduces heat from power cables by cutting resistive losses, lowering cooling capital and operational expenditures substantially.

What limits traditional copper cable upgrades in data centers?

Upgrading copper cables by increasing thickness or using better alloys only marginally improves efficiency but raises issues with weight, space, and heat generation. These upgrades hit practical limits, preventing scaling beyond certain power delivery thresholds in data centers.

How much energy savings can data centers expect by adopting superconducting power cables?

Data centers can reduce their Power Usage Effectiveness (PUE) from typical values of 1.2-1.4 to below 1.1, which translates to 10-20% facility-wide energy savings. This is achieved by cutting power line resistive losses by over 90% and reducing associated cooling energy needs.

Why is Microsoft investing in superconducting power delivery for data centers?

Microsoft is strategically backing VEIR to overcome the growing energy bottleneck in AI data centers. Even a 2% efficiency improvement can save tens of millions annually, given their 1.5 terawatt-hours yearly data center energy consumption in 2024.

How does VEIR’s solution differ from optical interconnects or enhanced copper cables?

VEIR focuses on the power delivery layer rather than data signaling. Their superconductors carry hundreds to thousands of amperes with near-zero loss over meters, a capability neither enhanced copper nor silicon photonics currently offers at scale and cost.

What challenges do superconductors face in dense commercial data centers, and how does VEIR address them?

Superconductors typically require complex cryogenic cooling, making them impractical. VEIR's compact, automated cryogenic cooling modules with sensor-driven AI control simplify thermal management, reduce maintenance costs, and enable reliable, scalable deployment.