Data centers in space? Why some prominent tech leaders say that's not so crazy.

By William Gavin Proponents think space-based data centers would power AI cheaply. But achieving that vision would be complex, and widespread usage is easily a decade away. Data centers are in hot demand as firms across the world adopt artificial intelligence. The artificial-intelligence boom has driven up demand for data centers, sending companies into an expensive scramble for more resources that has sparked resistance in locales housing the facilities. But some technology executives see a place where energy would be cheap, temperatures hospitable and community backlash nonexistent: outer space. "The lowest-cost way to do AI compute will be with solar-powered AI satellites," SpaceX and Tesla Inc. (TSLA) Chief Executive Elon Musk said Wednesday at the U.S.-Saudi Investment Forum, adding that he believes that will become a reality within five years. Musk said last month that SpaceX plans to scale up its third-generation Starlink satellites to perform autonomous construction in space, though he didn't provide much extra detail. However, it sounds like his goal is to upgrade some Starlink V3 satellites to become data centers. SpaceX, which dominates the launch industry, plans to begin launching those satellites in 2026 aboard its Starship rocket, which is still going through testing. The idea sounds a bit wonky, but it's been floated by other prominent leaders as well. "I do guess that a lot of the world gets covered in data centers over time," OpenAI CEO Sam Altman said in July. "But I don't know, because maybe we put them in space." Data centers - facilities that contain information-technology infrastructure that stores, manages and processes data - have been around for decades. In 2014, they accounted for 1.8% of total U.S. electricity usage. But by 2030, that could go up to 9%, according to consulting firm Bain & Co. See: Big Tech needs a staggering $1.5 trillion to fund the AI boom. This is the complex playbook it's using to get it. Proponents of space-based data centers say they would offer better access to cheap solar energy and reduce the amount of money needed for cooling systems or batteries. Companies would theoretically also be able to avoid opposition from communities that don't want data centers in their backyards and sidestep regulations that bog down construction on Earth. Alphabet Inc. (GOOGL) (GOOG) recently announced Project Suncatcher, which would aim to create compact constellations of solar-powered satellites carrying Google's advanced tensor processing units. The company said that in "the right orbit," solar panels can be up to eight times more productive in space than on Earth. The tech giant plans to send two prototypes to orbit by early 2027. Earlier this month, the startup Starcloud sent a satellite equipped with a Nvidia Corp. (NVDA) H100 graphics processing unit to space. Crusoe, an AI-infrastructure startup best known for its work with OpenAI, plans to deploy its cloud platform on a Starcloud satellite scheduled for a late-2026 launch. Additionally, Lonestar Data Holdings said in March that it had successfully tested a small data center on the moon, while Axiom Space launched an orbital-data-center prototype to the International Space Station in August. "There's a lot of opportunity," Axiom CEO Jonathan Cirtain said Wednesday at a Deutsche Bank conference. He added that while 90% of data currently created in space is lost, additional infrastructure could mitigate that issue. "If you can create information products in space and send [that data] to the ground, you can immediately generate new value of the assets that people are deploying in space," Cirtain noted. But logistics would be complex. Critics see difficulties ensuring data centers are protected against radiation, space debris and weather. There's also the issue of maintenance and hardware upgrades, which could prove challenging. "As an engineer, just saying 'I'm going to put data centers in space because I've heard space is cool' makes no sense," Shey Sabripour, CEO of satellite-communication company CesiumAtro, said Wednesday at the Deutsche Bank conference. Sabripour added that data centers generate a lot of heat, and dumping that into space wouldn't be "as easy as everyone thinks." There's also the issue of cost. It's likely to take at least a decade before space-based data centers would be economically sound, according to Phil Metzger, a science professor at the University of Central Florida. That's about how long it will take for launch costs to fall below $200 per kilogram, according to Alphabet. At that price point, launch and operating costs for a space-based data center could be "roughly comparable" to the energy costs of a data center on Earth, eliminating some concerns. Thales Alenia Space, a joint venture between European aerospace companies Thales Group (THLLY) (FR:HO) and Leonardo (FINMY) (IT:LDO), notes that space-based data centers would need launch vehicles that are 10 times less emissive than current options in order to be more environmentally friendly than ground-based data centers. An architect at the firm told the BBC such launchers may be commercially viable before 2037 - but that's still more than a decade away. "We will be able to beat the cost of terrestrial data centers in space in the next couple of decades," Amazon.com Inc. (AMZN) and Blue Origin founder Jeff Bezos said at a conference last month. "Space will end up being one of the places that keeps making Earth better." -William Gavin This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 11-20-25 1339ET