Summary of Key Points in Plain Language
In the past half-month, more than a dozen environmental protection companies that were originally engaged in waste incineration, automobile exhaust treatment, sanitation, and wastewater treatment have suddenly all crossed over into the AI computing power business. Some spent 7.5 million yuan to acquire a semiconductor company to enter the upstream materials sector of AI optical modules; others utilized their waste incineration plants to develop a new model of generating electricity from waste for computing power; and still others secured a large computing power service contract worth 1.1 billion yuan, acting as contractors for this service. This cross-industry move is not just a random attempt to hype a concept. The fundamental reason is that the traditional environmental protection businesses have reached a growth ceiling, and the policy requirement that AI computing power must use green energy has unexpectedly provided these companies with an entry ticket into the computing power market. The players in this market have clearly differentiated: a few have already made substantial profits from computing power, while others are struggling to break even on their large contracts, and some have even had to scale back their operations due to lack of returns. Despite the seemingly abundant opportunities in the computing power sector, for companies accustomed to steady, slow-paced profits, there are many hidden challenges.
---
Three Typical Approaches for Environmental Protection Companies Entering the Computing Power Business
Previously, environmental protection and AI computing power were completely unrelated industries. Now, the players entering this market have adopted three different strategies:
1. Acquiring Upstream Assets: Companies like Wuhan Tianyuan bought 60% of a company that produces indium phosphide semiconductor materials for 7.5 million yuan. Indium phosphide is a critical upstream material for 800G/1.6T optical modules and core AI hardware. It’s like a奶茶 shop owner who, instead of just opening more stores, buys an exclusive tea garden to control the entire industry’s supply of raw materials. This company already holds 29 related patents and plans to invest over 60 million yuan in building a production line, moving their business directly to the top of the AI industry chain and avoiding the price wars in the computing power rental market.
2. Leveraging Green Energy: Companies like Wangneng Environment have several waste incineration plants that generate electricity. Previously, they could only sell this electricity to the grid at a low price, making only a small profit. Now, they use the electricity to power their own computing power facilities, reducing their energy costs significantly. Their first computing power project generated revenue in June, making them one of the few in the industry to complete the entire process from contract signing to payment. It’s like a waste plant owner also running an internet cafe, with the electricity costs covered by their own operations.
3. Providing Computing Power Services: Companies like Aikelong, which originally focused on automobile exhaust treatment, have now started taking on computing power service contracts. They signed a 5-year contract worth 1.1 billion yuan with a major AI client and plan to invest up to 1 billion yuan in high-performance servers to offer packaged computing power resources. This approach is similar to taking on a long-term annual contract from a large company, then renting space and purchasing equipment to execute the service, earning profits from the service fees.
---
Four Underlying Reasons for the Environmental Protection Companies’ Cross-Industry Move
The sudden convergence of these two unrelated industries is not coincidental; four favorable factors have come together:
1. Traditional Businesses Are Stuck in a Growth Deadlock: The traditional environmental protection market is mainly characterized by competition for existing assets. Most of the necessary wastewater treatment and waste incineration plants have been built, and new large contracts are scarce. Government subsidies are also decreasing, meaning profit growth is slowing down. Companies need to find new sources of growth.
2. Policy Support: The government’s “East Data, West Computing” initiative requires that new large-scale computing centers use at least 80% green energy. Environmental protection companies already have substantial green energy assets from waste incineration and biomass power generation, giving them an immediate advantage over others competing for green energy sources.
3. Suitable Assets for the New Business: Environmental protection companies have developed expertise in large-scale infrastructure projects and equipment maintenance, which aligns well with the capital-intensive nature of computing power businesses. They also benefit from low loan interest rates, as the computing power industry relies on borrowing to purchase servers and earning profits from service fees.
4. High Profit Potential: The demand for AI computing power in China increased by 417% in the first quarter of 2026, while supply only increased by 128%, creating a large gap. The annual computing power market size has exceeded one trillion yuan and is expected to double by 2030. This lucrative market presents a clear opportunity for companies with struggling traditional businesses.
---
Differentiation Among Players in the Computing Power Market
The quality of environmental protection companies entering the computing power business varies significantly. It’s no longer the case where a simple announcement could boost stock prices. The companies now need to show tangible results:
- Top-tier Players: These have already made substantial profits. For example, Yingfeng Environment generated 674 million yuan from computing power rentals in the first half of 2026, compared to zero last year, making computing power a core revenue source. Wangneng Environment also completed the entire process and earned revenue in just the second month, proving that this business is viable.
- Middle-tier Players: These have large contracts but have not yet made a profit. Aikelong, for instance, has a 1.1 billion yuan contract but faces low margins on computing power assembly and services, with revenue increasing by 35% while net profit declining by 11.5%.
- Late-stage Players: These are still in the initial stages of setting up their operations. Wuhan Tianyuan’s semiconductor company has not yet generated revenue, and the production line is still under construction. Many companies are still in the investment phase, far from making a profit.
- Withdrawn Players: Some companies, such as Aibulu, saw their computing power business profits drop significantly in the first half of 2026 and have decided to scale back their operations.
---
Challenges Faced by Environmental Protection Companies in the Computing Power Market
Environmental protection companies, accustomed to “heavy assets, long cycles, and stable returns,” face several inherent challenges in the fast-paced and competitive computing power industry:
1. Slow Return on Investment: Core computing hardware (such as GPUs) depreciates quickly, and the cost of electricity is a major expense, leading to a much shorter payback period compared to traditional environmental projects.
2. Limited Access to High-End GPUs: Overseas restrictions on high-end GPUs and tight chip production mean that environmental companies, which have no experience with semiconductor supply chains, may miss out on market opportunities.
3. High Implementation Costs: Computing power facilities require high-quality power supply, which increases costs significantly. Waste power generation plants, while efficient for long-term operations, become a burden when the computing servers become obsolete after only a few years.
4. Fierce Competition: The computing power market is highly competitive, with operators, established IDC providers, and various cross-industry players vying for customers. Environmental companies, with their weaker operational capabilities, often struggle to compete.
The next 12 to 18 months will be a critical period for the industry. Only those companies that can control green energy costs, stabilize their supply chains, and build strong customer bases will survive. Those that simply follow the trend without solid strategies will likely fail.