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First, some background:

Thermoeletric coolers use the Peltier effect to basically waste large amounts of energy to "pull along" some energy with it. Basically you cool one side of thermoelectric cooler by a factor of 1 and heat the other side by a factor of 5 (the numbers vary depending on many factors).

In this approach, heat is "forced", at a cost, to move away from your device.

Liquid cooling is where you put a liquid in pipes and run the liquid across the hot surface, then through a series of radiators and fans to keep the liquid cool.

In this approach, heat moves away naturally, but the fans and radiators help it do so more quickly.

If you intend to be energy efficient, then water cooling is the better choice for almost every application.

If you need to cool something below the ambient (room) temperature, however, a water cooler cannot do this. You will need to use a Peltier effect cooler (inefficient), a compressor-based cooler (like what a freezer uses, more efficient) or some other type of heat engine.

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