Space Data Centers: AI's Next Frontier?

The tech industry is grappling with where to house the vast infrastructure required for artificial intelligence, with some leaders suggesting space-based data centers. Elon Musk and Jeff Bezos are prominent advocates for this concept, envisioning orbital facilities to support AI's growing processing demands. SpaceX has proposed a constellation of up to one million satellites for orbital data centers.

Industry analysts acknowledge that the technological obstacles can be overcome. However, the crucial question remains whether a viable business case exists for operating data centers in orbit. Current terrestrial data center investments reached $61 billion in 2023, with capacity expected to double by 2030, despite challenges like environmental impact and resource scarcity.

Bezos, through Blue Origin, has long championed moving industrial activities off-world. He predicts that space data centers could become cheaper than terrestrial ones within two decades. Musk, associated with SpaceX's potential IPO in June 2026, anticipates this cost-competitiveness within three years, contingent on Starship's full reusability by 2026.

Start-ups and established tech giants like Google are also entering this space. Despite interest, articulating a clear business model that justifies the immense costs and complex architecture is still a challenge. Current estimates suggest orbital data centers could be three times more expensive per watt of computing power than their Earth-bound counterparts.