Following our previous studies on localized microwave heating (LMH) effects, including ejection of dusty plasmas in forms of fire-columns and fireballs, we present here more recent results of LMH ignition of thermite powders. We show that pure thermite powder can be ignited by relatively low-power (~0.1 kW) LMH, in air as well as underwater, hence generating energetic combustion and various byproducts. The insertion of hydrophobic thermite powder into water and its encapsulation therein are enabled by the bubble marble (BM) effect discovered in this study. We also show that BM's can be controlled and maneuvered underwater by magnetic field. A simplified theoretical model for BM formation and combustion agrees well with the experimental results. Potential applications, such as wet welding, detonation, material processing, and thrust generation, are considered.