circular economy

The datacenter industry is transitioning from a linear “take-make-dispose” model to circular economy principles emphasizing longevity, reuse, refurbishment, and recycling. With equipment refresh cycles generating massive e-waste streams, embodied carbon comprising 5-20% of lifecycle emissions, and billions invested in construction materials, circular approaches deliver environmental and economic benefits. Leaders demonstrate waste heat recovery, extended equipment lifecycles, refurbishment programs, and construction material reuse, establishing pathways toward zero-waste datacenter operations.

overview

equipment lifecycle and refresh cycles

typical refresh timelines

Servers

• Traditional refresh: 3-5 years
• Hyperscale operators: 4-6 years increasingly common
• Performance per watt improvements drive refresh
• Warranty and support considerations
• Failure rates increasing after year 5
• AI workloads: specialized hardware, uncertain lifecycles

Storage Equipment

• HDDs: 4-6 years typical
• SSDs: 5-7 years (improving with technology)
• Storage density improvements drive replacement
• Data integrity concerns
• Performance improvements incentivize upgrade
• Hyperscale extends lifecycles when possible

Networking Equipment

• 5-7 years typical
• Longer lifecycles than compute
• Bandwidth requirements drive upgrades (100G to 400G to 800G)
• Software-defined networking extends hardware lifecycles
• Top-of-rack switches: shorter cycles (5 years)
• Core networking: longer cycles (7-10 years)

Power Infrastructure

• UPS systems: 10-15 years
• Batteries: 3-5 years (lead-acid), 10+ years (lithium)
• Transformers: 25-30 years
• Generators: 20-30 years with maintenance
• PDUs: 10-15 years
• Electrical switchgear: 25-30 years

Cooling Infrastructure

• Chillers: 15-20 years
• Cooling towers: 15-25 years
• CRAC/CRAH units: 10-15 years
• Pumps: 10-15 years
• Fans: 10-15 years
• Liquid cooling infrastructure: uncertain (new technology)

factors driving refresh

Performance Improvements

• Moore’s Law continuation (though slowing)
• 2x-3x performance per watt every 3-5 years
• Computational demand outpacing efficiency gains
• Specialized processors (GPUs, TPUs, custom ASICs)
• AI workloads driving rapid GPU refresh

Density Increases

• More compute per rack unit
• Higher memory density
• Storage capacity per drive increasing
• Rack consolidation opportunities
• Real estate savings from density

Energy Efficiency

• Lower operating costs from newer equipment
• Payback period: 2-4 years typical
• PUE improvements from efficient equipment
• Sustainability goals driving refresh
• Energy cost volatility incentivizes efficiency

Reliability and Warranty

• Failure rates increase with age
• Warranty expiration (typically 3-5 years)
• Parts availability declining
• Maintenance costs increasing
• SLAs requiring current equipment

Technology Obsolescence

• Software requirements exceeding hardware capabilities
• Security vulnerabilities in older equipment
• Lack of vendor support
• Compatibility issues
• Customer demands for latest technology

extended lifecycle strategies

Hyperscale Lifecycle Extension

• Google, Meta, Microsoft, Amazon extending to 6+ years when possible
• Custom server designs optimized for longevity
• Standardization reducing complexity
• White box servers enabling longer support
• Economic and environmental benefits

Maintenance and Refurbishment

• Component-level repair
• Proactive maintenance extending equipment life
• Predictive analytics identifying failures before occurrence
• Spare parts inventory management
• In-house repair capabilities

Performance Optimization

• Software optimization extracting more from existing hardware
• Workload placement on appropriate-age equipment
• Decommissioning underutilized servers
• Consolidation through virtualization and containerization
• Right-sizing equipment to workloads

cascade and redeployment

Tiered Workloads

• Newest equipment: performance-critical workloads
• Middle-age equipment: standard workloads
• Older equipment: batch processing, archival, development/test
• Maximizes utilization across lifecycle
• Delays retirement

Geographic Cascading

• Equipment retired from Tier 1 datacenters deployed to Tier 2/3
• Hyperscale retiring equipment sold to enterprise
• Colocation providers offering varied equipment ages
• Global cascading (developed to developing markets)
• Extends total useful life

server recycling and refurbishment

refurbishment market

Market Size and Growth

• Billions of dollars in refurbished datacenter equipment
• Growing at 8-12% annually
• Driven by sustainability goals and cost savings
• Enterprises increasingly accepting refurbished
• Warranty and support improving

Major Players

• Iron Mountain: ITAD (IT Asset Disposition) services
• Iron Mountain acquired IronMountain Data Centers operates ITAD
• Specialized refurbishers: ServerMonkey, Curvature, Park Place Technologies
• OEMs entering market: Dell, HPE certified refurbished
• Hyperscalers developing internal programs

Refurbishment Process

• Data sanitization (NIST standards, DoD 5220.22-M)
• Component testing and validation
• Repair or replacement of failed components
• BIOS/firmware updates
• Cosmetic restoration
• Repackaging and warranty

Quality Standards

• Certified refurbished programs
• Testing protocols
• Warranty offerings (1-3 years typical)
• Performance guarantees
• Return policies
• Industry certifications (R2, e-Stewards)

remarketing and resale

Internal Reuse

• Hyperscale operators redeploying across datacenters
• Development and test environments
• Backup and archival systems
• Internal IT infrastructure
• Training and evaluation

Direct Sales

• Equipment sold directly to enterprises
• Bulk sales to refurbishers
• Auction platforms
• Online marketplaces
• Negotiated transactions

Donation Programs

• Nonprofits and educational institutions
• Developing country deployments
• Community organizations
• Tax benefits
• Corporate social responsibility

data sanitization

Critical Importance

• Data breaches from improper disposal
• Regulatory requirements (GDPR, HIPAA, etc.)
• Corporate liability
• Reputation risk
• Security paramount

Sanitization Methods

• Software overwriting (multiple passes)
• Degaussing (magnetic media)
• Physical destruction (shredding, crushing)
• Cryptographic erasure (SSD secure erase)
• Third-party verification
• Chain of custody documentation

Certification Standards

• NIST SP 800-88 Guidelines for Media Sanitization
• DoD 5220.22-M (outdated but referenced)
• NSA/CSS Storage Device Declassification Manual
• Industry certifications: NAID AAA
• Audit trails and certificates of destruction

e-waste challenges

Hazardous Materials

• Lead in solder and CRTs (older equipment)
• Mercury in switches and backlights
• Cadmium in batteries and chips
• Brominated flame retardants
• Beryllium in connectors
• Requires specialized handling and disposal

Volume of E-Waste

• 131 GW datacenter capacity analyzed
• Estimated 10-20 million servers
• 3-5 year refresh: 2-4 million servers annually
• Storage, networking, power, cooling equipment additional
• Tens of thousands of tons e-waste annually
• Growing rapidly with industry expansion

Improper Disposal

• E-waste exported to developing countries
• Informal recycling (burning, acid baths)
• Environmental contamination
• Human health impacts
• Regulatory violations
• Reputational damage

Regulatory Framework

• Basel Convention (international e-waste trade)
• EU WEEE Directive (producer responsibility)
• US state regulations (California, others)
• EPA guidelines
• Extended Producer Responsibility (EPR) laws
• Growing regulatory requirements

recycling best practices

certified recyclers

R2 Certification (Responsible Recycling)

• Industry-leading standard
• Covers data security, worker health and safety, environmental protection
• Downstream vendor management
• Annual audits
• Widely recognized
• Preferred for datacenter equipment

e-Stewards Certification

• Highest environmental and social standards
• Prohibits export to developing countries
• No prison labor
• Comprehensive tracking
• Third-party audits
• Stringent requirements

ISO 14001

• Environmental management system certification
• Broader than e-waste specific
• Demonstrates environmental commitment
• Process-oriented
• Complementary to R2/e-Stewards

material recovery

Precious Metals Recovery

• Gold in connectors and circuit boards
• Silver in contacts and conductors
• Platinum group metals in various components
• Palladium in capacitors
• Economic value significant (thousands of dollars per ton)
• Specialized smelting and refining

Base Metals Recovery

• Copper in wiring, heat sinks, transformers
• Aluminum in enclosures and heat sinks
• Steel in racks and structural elements
• Brass in connectors
• High recovery rates (80-95%)
• Significant economic value

Rare Earth Elements

• Neodymium, dysprosium in hard drives (magnets)
• Europium, terbium in displays
• Yttrium in various components
• Currently low recovery rates (under 1%)
• Technical challenges
• Supply chain vulnerability driving recovery interest

Plastics Recovery

• ABS, polycarbonate, polypropylene in enclosures
• Flame retardant concerns
• Sorting and separation challenges
• Lower value than metals
• Increasing focus on plastic recovery
• Circular plastics initiatives

closed-loop programs

OEM Takeback Programs

• Dell: closed-loop recycled plastics in new products
• HPE: asset recovery services
• Lenovo: product takeback
• Cisco: refresh and return programs
• Circular economy focus

Material-to-Material Recycling

• Recovered plastics in new datacenter equipment
• Recycled aluminum in new enclosures
• Recycled steel in racks
• Closed-loop reducing virgin material demand
• Supply chain decarbonization benefit

Hyperscale Programs

• Google: circular economy initiatives
• Meta: equipment reuse and recycling programs
• Microsoft: Circular Centers
• Amazon: equipment remarketing and recycling
• Internal capabilities development

construction material reuse

structural materials

Steel Reuse

• Modular datacenter designs enable steel reuse
• Decommissioned facility steel salvaged
• Structural steel high recycled content (typically 90%+)
• Demolition vs deconstruction approaches
• Economic value in steel recovery

Concrete Recycling

• Crushed concrete for aggregate (roads, new concrete)
• Demolition concrete processing on-site
• Reduces landfill waste
• Lower transportation emissions
• Virgin aggregate alternative
• Quality challenges for structural applications

Modular Construction

• Prefabricated modules reusable
• Relocatable datacenters
• Reduced construction waste (up to 50% reduction)
• Factory-built quality
• Faster deployment
• Disassembly and reuse designed in

raised floor systems

Reusable Raised Floors

• Modular floor tiles removable and reusable
• Reconfiguration without waste
• Expansion and contraction flexibility
• Salvage value in decommissioning
• Secondary market for used floor systems

Alternative Approaches

• Slab cooling eliminating raised floors
• Overhead cooling distribution
• Reducing material intensity
• Operational benefits (airflow, efficiency)

mechanical and electrical infrastructure

Reusable Components

• Electrical panels and switchgear
• Transformers (if properly maintained)
• Generators (refurbishment market)
• UPS systems (component-level repair)
• Cooling equipment (chillers, towers)

Salvage Value

• Copper wiring high value
• Electrical equipment refurbishment market
• Mechanical equipment parts
• Decommissioning planning includes salvage
• Economic and environmental benefits

design for disassembly

Modular Design Principles

• Standardized components
• Mechanical fasteners vs adhesives
• Accessibility for disassembly
• Material separation ease
• Documentation for deconstruction

Material Selection

• Recyclable materials prioritized
• Minimize composite materials
• Identify materials for separation
• Avoid hazardous substances
• Circular design thinking

waste heat recovery projects

district heating applications

Potential

• Datacenters generate enormous heat
• 131 GW capacity: approximately 131 GW of waste heat (PUE 1.0 theoretical minimum)
• Typical PUE 1.5: 65 GW waste heat
• Equivalent to heating for millions of homes
• Currently almost entirely wasted

Technical Challenges

• Low-grade heat (30-40°C from air cooling, 40-60°C from liquid cooling)
• District heating requires 70-90°C typically
• Heat pumps can upgrade temperature (energy cost)
• Distance from datacenter to heat demand
• Seasonal mismatch (summer cooling need, winter heating demand)
• Infrastructure investment required

European Examples

• Helsinki, Finland: datacenters heating city
• Stockholm, Sweden: district heating integration
• Paris, France: datacenter waste heat projects
• Amsterdam, Netherlands: several district heating connections
• Regulatory support and infrastructure enabling

US Lagging

• Limited district heating infrastructure
• Suburban datacenter locations (far from dense heating loads)
• Lower energy costs reducing incentive
• Climate differences (milder winters in growth markets)
• Beginning to change with sustainability focus

bitzero nekoma pyramid (north dakota)

Project Description

• Repurposed Nekoma Pyramid (former missile site)
• Zero Carbon Displacement energy strategy
• Waste heat from servers heats on-site greenhouse
• Agricultural integration
• Year-round operation

Significance

• Demonstrates waste heat agricultural use
• Cold climate ideal for datacenter
• Greenhouse heating valuable in North Dakota winters
• Circular approach: computing + agriculture
• Scalable model

Technical Approach

• Server waste heat captured
• Piped to greenhouse
• Supplemental heating as needed
• Greenhouse produces food locally
• Carbon offset from local food production

industrial process heat

Applications

• Manufacturing processes
• Food processing and drying
• Chemical production
• Water desalination (lower grade heat)
• Industrial preheating

Requirements

• Proximity to industrial facility
• Compatible heat demand profile
• Temperature requirements match
• Economic viability
• Long-term commitment

Examples

• Limited US examples
• European industrial symbiosis projects
• Growing interest as carbon costs increase
• Waste heat as revenue stream

data city texas (planned)

5,000 MW Capacity

• Massive waste heat generation
• Waste heat recovery exploration
• Potential industrial applications
• Texas industrial base proximity
• Economic development opportunity

Possibilities

• Industrial process heat
• Desalination (Texas water stress)
• Greenhouse agriculture
• Aquaculture
• District heating (limited in Texas climate)

thermal storage integration

Concept

• Store datacenter waste heat
• Release for heating when needed
• Seasonal storage (summer to winter)
• Daily storage (day to night)
• Buffer supply-demand mismatch

Technologies

• Sensible heat storage (water tanks)
• Phase change materials
• Thermochemical storage
• Geological storage (aquifer thermal energy storage)
• Improving economics

future potential

Heat Pump Integration

• Upgrade low-grade datacenter heat to higher temperature
• Coefficient of performance (COP) 3-5 typical
• Economic with carbon pricing or heat sales
• Technology mature, application growing
• Key enabler for district heating

Policy Incentives

• European carbon pricing makes waste heat valuable
• US could implement similar incentives
• Renewable heat incentives
• Infrastructure investment support
• Planning requirements for waste heat use

Co-Location Strategy

• New datacenters sited near heat demand
• Industrial parks with datacenter integration
• Campus heating (universities, medical centers)
• Urban datacenters with district heating
• Planning enabling circular approaches

supply chain sustainability

supplier engagement

Hyperscale Leadership

• Google, Meta, Microsoft, Amazon requiring supplier sustainability
• Scope 3 emissions 50%+ of total
• Supplier renewable energy requirements
• Carbon reporting requirements
• Audits and verification
• Supplier scorecards

Requirements

• Science-based emission reduction targets
• Renewable energy commitments
• Efficiency improvements
• Circular practices (recycling, reuse)
• Transparency and reporting
• Continuous improvement

Impact

• Suppliers investing in renewables to maintain hyperscale business
• Cascading effect through supply chain
• Taiwan Semiconductor Manufacturing Company (TSMC): renewable energy for chip fabrication
• Server manufacturers: supply chain decarbonization
• Component suppliers: efficiency and renewables

sustainable materials sourcing

Conflict Minerals

• Tin, tantalum, tungsten, gold (3TG)
• Often from conflict regions (Democratic Republic of Congo)
• Human rights concerns
• US Dodd-Frank Act Section 1502
• Due diligence requirements
• Responsible sourcing critical

Rare Earth Elements

• Critical for electronics, hard drives, magnets
• China dominance in supply chain
• Environmental concerns in mining and processing
• Supply chain vulnerability
• Recycling increasingly important
• Alternative materials research

Recycled Content

• Using recycled materials in new equipment
• Plastics, metals, glass
• Lower embodied carbon
• Circular economy enabler
• Dell, HPE, others increasing recycled content
• Customer preferences driving adoption

transportation optimization

Equipment Shipping

• Servers, storage, networking shipped globally
• China manufacturing dominance (Foxconn, Quanta, others)
• Shipping emissions significant
• Ocean freight vs air freight carbon intensity
• Regional manufacturing reducing transportation
• Supply chain localization trends

Construction Materials

• Steel, concrete, equipment to site
• Heavy loads, high emissions
• Local sourcing reduces transportation
• Supply chain optimization
• Logistics planning

Just-in-Time Considerations

• Reducing inventory (economic benefit)
• More frequent shipments (emission increase)
• Warehouse locations
• Balance efficiency and emissions

green logistics

Low-Carbon Transportation

• Ocean freight: lowest emissions per ton-mile
• Rail: lower than trucking
• Electric trucks emerging
• Biofuels for aviation (long-term)
• Route optimization

Packaging Reduction

• Minimizing packaging materials
• Reusable packaging systems
• Recycled and recyclable materials
• Take-back programs
• Vendor collaboration

industry initiatives and partnerships

circular economy commitments

Ellen MacArthur Foundation

• Leading circular economy organization
• Corporate partnerships
• Best practices development
• Circular economy framework
• Datacenter sector engagement

World Economic Forum

• Circular economy initiatives
• Public-private partnerships
• Policy advocacy
• Industry collaboration

industry collaborations

Open Compute Project (OCP)

• Open source hardware designs
• Modular, repairable designs
• Extended lifecycles through standardization
• Supply chain collaboration
• Circularity in design principles

Green Grid

• Datacenter efficiency and sustainability
• Best practices development
• Metrics standardization (PUE, WUE, CUE)
• Circular economy working groups

European Data Centre Association (EUDCA)

• European datacenter industry association
• Circular economy focus
• Waste heat recovery advocacy
• Policy engagement
• Best practices sharing

certifications and standards

Cradle to Cradle Certification

• Product-level certification
• Material health, circularity, renewable energy, water, social fairness
• Growing in datacenter equipment
• Driving circular design

LEED Certification

• Green building certification
• Materials and resources credits
• Construction waste management
• Recycled content
• Several datacenter LEED certifications
• Meta Kansas City: LEED Gold

EU Ecodesign Directive

• Product efficiency and circular requirements
• Extending to servers and data storage
• Repairability, recyclability requirements
• Driving design changes
• Global impact (products designed for EU used globally)

economic benefits of circular approaches

cost savings

Extended Lifecycles

• Deferred capital expenditure
• Reduced e-waste disposal costs
• Maintenance vs replacement trade-off
• 6-year vs 3-year lifecycle: 50% capex reduction
• Economic sustainability alignment

Refurbished Equipment

• 40-70% cost savings vs new
• Warranty and support available
• Performance adequate for many workloads
• Growing acceptance
• Enterprises increasingly adopting

Material Recovery Value

• Precious metals significant value
• Base metals recovery revenue
• Salvage offsetting disposal costs
• Economic incentive for recycling
• Supply chain revenue stream

risk mitigation

Supply Chain Resilience

• Reduced dependence on virgin materials
• Diversified sourcing (recycled materials)
• Price volatility hedging
• Geopolitical risk reduction
• Long-term availability

Regulatory Compliance

• Anticipating future regulations
• Extended Producer Responsibility (EPR)
• E-waste regulations
• Carbon pricing
• Early adoption competitive advantage

Reputation and Brand

• Corporate sustainability goals
• Customer preferences for sustainable providers
• Investor ESG expectations
• Competitive differentiation
• Employee attraction and retention

new revenue streams

Waste Heat Sales

• District heating revenue
• Industrial heat sales
• Long-term contracts
• Stable revenue stream
• Improving economics with carbon pricing

Equipment Remarketing

• Refurbished equipment sales
• Refurbishment services
• ITAD services revenue
• Material recovery value
• Business model diversification

Circular Services

• Consulting on circular practices
• Equipment lifecycle management
• Recycling services
• Supply chain optimization
• Emerging business opportunities

challenges and barriers

economic barriers

Capital Investment

• Circular approaches may require upfront investment
• Refurbishment facilities
• Waste heat recovery infrastructure
• Material recovery capabilities
• Payback period uncertainty

Cost Competitiveness

• New equipment often cost-competitive with refurbished
• Performance improvements incentivize new
• Virgin materials cheap (externalities not priced)
• Economic case requires long-term perspective

technical challenges

Design for Circularity

• Existing equipment not designed for disassembly
• Composite materials difficult to separate
• Adhesives vs mechanical fasteners
• Proprietary components
• Industry standardization needed

Waste Heat Utilization

• Low-grade heat technical challenges
• Infrastructure requirements
• Distance limitations
• Seasonal mismatch
• Economic viability

Material Recovery

• Rare earth element recovery technically challenging
• Mixed plastics separation
• Hazardous materials handling
• Processing costs
• Technology improvements needed

market and policy barriers

Lack of Infrastructure

• Limited district heating in US
• E-waste processing capacity
• Material recovery facilities
• Logistics networks
• Investment needed

Regulatory Gaps

• No comprehensive US e-waste regulation
• Limited extended producer responsibility
• Weak enforcement
• Inconsistent state regulations
• Policy advocacy needed

Market Acceptance

• Refurbished equipment perceived as inferior
• Warranty and support concerns
• Performance requirements
• Risk aversion
• Education and track record needed

future outlook

short-term (2025-2027)

Extended Lifecycles Standard

• 5-6 years becoming standard for servers
• 7-10 years for networking
• Cost and sustainability benefits
• Technology maturation supporting extension

Refurbishment Growth

• Market growing 10%+ annually
• Hyperscale refurbishment programs expanding
• OEM certified refurbished programs
• Enterprise adoption increasing

E-Waste Regulation

• State regulations expanding
• Federal regulation potential
• EPR laws spreading
• Circular economy policy focus

medium-term (2027-2030)

Waste Heat Recovery Scaling

• Multiple district heating projects operational
• Industrial symbiosis examples
• Co-location strategy adoption
• Policy incentives enabling

Circular Design Standard

• OCP and industry initiatives driving
• Modular, repairable equipment
• Standardization enabling circularity
• Design for disassembly principles

Material Recovery Improvements

• Rare earth element recovery improving
• Plastics circularity advancing
• Urban mining economic
• Closed-loop material flows

long-term (2030+)

Zero-Waste Datacenters

• 95%+ material recovery and reuse
• Waste heat fully utilized
• Circular business models dominant
• Economic and environmental alignment

Regenerative Approaches

• Beyond sustainability to regeneration
• Net positive environmental impact
• Ecosystem services integration
• Circular economy leadership

Industry Transformation

• Circular economy core business strategy
• Product-as-a-service models
• Equipment leasing vs ownership
• Performance-based contracts
• Fundamental business model evolution

conclusion

The datacenter industry’s transition to circular economy principles represents fundamental business model evolution from linear “take-make-dispose” to regenerative systems maximizing resource productivity. With 3-5 year refresh cycles generating massive e-waste streams, 5-20% embodied carbon in construction, and waste heat equivalent to heating millions of homes currently discarded, circular opportunities abound.

Equipment lifecycle extension—hyperscalers reaching 6+ years—defers capital expenditure, reduces e-waste, and lowers lifecycle emissions. Refurbishment markets growing 8-12% annually offer 40-70% cost savings while diverting equipment from landfills. Certified recyclers (R2, e-Stewards) recover precious metals, base metals, and plastics, though rare earth element recovery remains challenging. Construction material reuse—modular designs, steel salvage, concrete recycling—addresses embodied carbon.

Waste heat recovery, exemplified by Bitzero Nekoma’s greenhouse heating and European district heating projects, transforms waste into resource. Data City Texas’s 5,000 MW project explores industrial applications. Technical challenges—low-grade heat temperature, infrastructure requirements, seasonal mismatch—yield to policy incentives and heat pump integration.

Supply chain sustainability—hyperscale operators requiring supplier renewables, recycled content, transparency—cascades circular principles upstream. Open Compute Project drives circular design standards. LEED certifications (Meta Kansas City) and Cradle to Cradle frameworks establish benchmarks.

Economic benefits—cost savings, risk mitigation, new revenue streams—align sustainability and profitability. Challenges persist: upfront investment, technical barriers, regulatory gaps, market acceptance. Yet trajectories point toward zero-waste datacenters by 2030+, circular business models, product-as-a-service, and regenerative approaches. The industry’s circular transformation will define resource efficiency in the digital age, with datacenter leadership potentially catalyzing broader economy-wide transition from linear to circular paradigms.