How Liquid-cooled PCs Work

@ 2006/08/26
A liquid-cooling system for a PC works a lot like the cooling system of a car. Both take advantage of a basic principle of thermodynamics – that heat moves from warmer objects to cooler objects. As the cooler object gets warmer, the warmer object gets cooler. You can experience this principle firsthand by putting your hand flat on a cool spot on your desk for several seconds. When you lift your hand, your palm will be a little cooler, and the spot where your hand was will be a little warmer.

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Liquid cooling is a very common process. A car's cooling system circulates water, usually mixed with antifreeze, through the engine. Hot surfaces in the engine warm the water, cooling themselves off in the process.
Comment from Xploited Titan @ 2006/08/27
There's another difference. Engines of cars reach several hundreds °C. A watercooled computer doesn't reach such a big temperature difference.

That's why there's no need for 6000l/h+ 4m head pumps in a computer system.
Comment from Sidney @ 2006/08/27
Water cooling an engine is not the same as cooling CPU; there are water passages in the engine block and head to extract heat making it more effective.