I think destilled water is only relevant for watercooling, because the effort to keep it dielectic is too high, right?
Regarding the PSU the 92% Efficiency of Alphaminer PSU tells me that heat development of PSU (8%) is much less then heat development of Hashboards (92%). Is watercooling meaningful for PSU, due to "centralized" heat sources (like asics at the hashboards) or is it unsuitable?
Regarding coolant of immersion cooling i guess safety effort is a tradoff for other requierements. Obviously non flammable coolant is desirable, but i am not sure if one should take it absolute. For example pressurized Propan and Butan are coolants for heat pumps, low climate impact, low price, dielectric and good thermal characteristics, but flamable. I guess no one ever tried that as a coolant for mining hardware (i will neither), but i would not rule out that, because with highter safety effort the risk seems to be manageable.
With 92% efficiency that equates to 80Watts dissipation per KW of load, so at 4KW load the PSU will be dissipating 320Watts of heat.
This is not insignificant and will definately need good thermal managment. I think the Alpha Miner PSU's are designed for immersion cooling, though they do seem to list forced air cooled models as well.
Using anything flammable as a coolant is asking for trouble.
Butane/Propane when used as a coolant is used as a non-contact refrigerant much like R134a air-con refrigerant and is typically passed through a compressor into a heat exchanger. It is not used as a direct contact coolant like with immersion cooling.