[Edaily Marketin Soyoung Park Reporter] NXN Systems, a domestic energy tech startup that utilizes waste heat from data centers, has entered a pre-Series A funding round.

NXN Systems aims to connect data centers and smart farms into a single energy system by utilizing waste heat. Currently, the company is leveraging the revenue and waste heat generated by distributed computing infrastructure, starting with Bitcoin mining. The company plans to use the funds raised in this investment round to commercialize “FarmSquared,” a business model (BM) that combines revenue from the production and sale of agricultural products.

Growing Tomatoes in Extreme Environments Using Waste Heat from Distributed Servers

According to the domestic investment banking (IB) industry on the 29th, the Korean startup NXN Systems is seeking investment. The company previously raised funds from Kingsley Ventures during its seed round. It was also selected for the Ministry of SMEs and Startups’ Deep Tech TIPS program in April 2023.

NXN Systems was founded by CEO Choi Sang-deok, a former member of the National Pension Service’s Fund Management Headquarters. CEO Choi believed it was crucial to find ways to efficiently utilize energy that had already been produced. To solve this problem through practical technology, he joined forces with a co-founder who is an expert in energy process design, and they founded the company in 2022.

NXN Systems focused on the fact that heat is wasted on one end while new heat is produced on the other, both at significant cost. The company designs and operates data centers and heat consumers as a single integrated energy system. In doing so, it takes into account factors such as the distance to heat consumers, seasonal demand, thermal storage facilities, and control methods.

CEO Choi stated, “Connecting the two facilities first allows for a reduction in the use of conventional heating fuels at greenhouses and industrial facilities.” He added, “By supplying recovered heat to external consumers, data centers can reduce the thermal load on their cooling equipment and, depending on the system design, cut cooling power consumption and operating costs.” He continued, “In particular, when using equipment that relies on water evaporation—such as cooling towers—this approach reduces the cooling tower’s heat load, which in turn helps conserve water.”

NXN Systems is currently conducting a Proof of Concept (PoC) for FarmSquared in Mongolia. Through the PoC, the company recovered heat generated by a Bitcoin mining server with a capacity of approximately 24 kilowatts (kW) using a water-cooling system. The heat was then stored in a thermal storage tank and utilized for nighttime greenhouse heating. According to the company, the tomato harvest period in unheated Mongolian greenhouses lasts only about two and a half months. The company aims to extend the period during which tomatoes can be cultivated and harvested to up to eight months through waste heat-based heating.

He stated, “Through the Mongolian PoC, we are pursuing benefits such as: △ economical and clean heating to replace coal; △ expansion of the foundation for food self-sufficiency through year-round production of fresh vegetables; and △ creation of sustainable local jobs.”

Mongolia is one of the coldest regions in the world, with winter temperatures dropping below -40°C. The long winters and high heating costs make it a challenging environment for year-round production of fresh vegetables. The company has successfully produced cherry tomatoes at FarmSquared in Mongolia. The locally produced cherry tomatoes are currently being supplied to E-Mart stores in Mongolia.

Accelerating Commercialization in Mongolia… Targeting Domestic Heat Demand Sources as Well

NXN Systems will invest the funds raised in this Pre-Series A round

into the commercialization

of FarmSquared. CEO Choi recently met with the project team for the “Agro-City” Special Economic Zone—a large-scale agricultural and food industry development project being promoted by the city of Ulaanbaatar, Mongolia—to discuss collaboration opportunities.

Agro-City is a project aimed at fostering cutting-edge agriculture and food industries within an economic zone spanning approximately 9,000 hectares (ha). Both sides are currently discussing the details of introducing PalmSquared to the greenhouse complex within the economic zone. Through this initiative, the company aims to scale up the technology—which has been validated in Mongolia—to the commercialization stage. The plan is to contribute to the transition to eco-friendly heating and improve self-sufficiency in fresh vegetables.

The funds raised will also be used for domestic business development and research and development (R&D). CEO Choi stated, “In Korea as well, there are many facilities that require a steady supply of hot water, such as hotels, resorts and spas, industrial laundries, reusable container washing facilities, and food processing plants,” adding, “We can improve cost-effectiveness for locations that rely on LPG, diesel, or electric heaters because they lack access to city gas.”

The company is also researching a method that combines its technology with Direct Air Capture (DAC). The plan involves linking recovered heat, data center airflow, and thermal management systems with DAC to capture carbon dioxide (CO₂) and supply it to smart farms. For example, during winter—when heating is critical—heat is prioritized for greenhouses. When demand decreases, surplus heat sources are utilized for DAC.

CEO Choi emphasized, “NXN Systems aims to build data centers that generate greater economic value with the same amount of electricity while also supplying heat to the surrounding community,” adding, “Having started with Bitcoin mining and accumulated operational capabilities, we will expand into AI infrastructure and continue to demonstrate a model that simultaneously supplies computing power and thermal energy.”