Elon Musk believes the best way to solve the difficulties of building AI data centers on earth is to move them into outer space. His merger this week of his rocket company SpaceX with his artificial intelligence company xAI could help get them there.

And he isn’t the only one thinking that way.

“The only logical solution…is to transport these resource-intensive efforts to a location with vast power and space. I mean space is called ‘space’ for a reason,’” Musk wrote Monday when announcing the merger.

Musk has successfully launched ambitious projects before, like developing mass market electric vehicles and creating reusable rocket engines to carry people and cargo into space. This time, Google, OpenAI and others are also looking to create data centers in space

AI data centers’ huge demand for both power and water means growing AI technology will require alternatives.

“We are tending to exceed the ability to generate the power (needed),” said David Bader, distinguished professor of data science at the New Jersey Institute of Technology. “I think it is a necessity for looking not on terrestrial ground but looking to space to provide some of these solutions.”

Space offers better access to solar energy, and the environment also keeps the tech cool and bypasses the need for land.

“There are clearly technical challenges to making this a viable endeavor, but these seem to be engineering constraints as opposed to physics,” said a Deutsche Bank Research analyst note on orbital AI data centers last month, noting that many companies were exploring ways to make it work.

Google announced plans in November to test orbital AI data centers by launching two test satellites as early as next year.

“In the right orbit, a solar panel can be up to eight times more productive than on earth, and produce power nearly continuously,” Google said in a statement at the time. “In the future, space may be the best place to scale AI compute.”

Sam Altman, CEO of OpenAI, last summer considered buying rocket company Stoke Space to put data centers in orbit, according to the Wall Street Journal.

And in November, Washington-based AI start-up Starcloud launched a test satellite with an AI server aboard a SpaceX rocket.

“In space, you get almost unlimited, low-cost renewable energy,” said Philip Johnston, cofounder and CEO of Starcloud.

Johnston predicted that, within 10 years, all new AI data centers will be in orbit, which could also solve the growing backlash to AI data center construction.

The cost of providing data centers with the electricity needed is likely driving up electric bills for consumers. A Bloomberg News analysis found that areas near data centers saw an increase in electricity costs of as much as 267% compared to five years ago.

Bader said a hard number for the increased electrical cost to consumers is tough to determine due to the lack of public information on data center usage, but it is clear that consumers are paying more because of AI energy demands.

“As the demand goes up with the limited supply, the cost to consumers in those markets also tends to increase,” he said.

Data centers can also create water shortages for neighboring communities. A large data center can use up to 5 million gallons of water per day, the equivalent to the water use of a town of 10,000 to 50,000 people, according to the Environmental and Energy Study Institute.

“The Earth may be becoming a complicated place for Big Tech’s data center development,” said Mark Muro, a senior fellow at Brookings Metro. Political backlash in many communities is making it harder to get approvals for more construction, he added.

No matter the technological hurdles of moving data centers to obit, Big Tech needs to find new ways to deliver the needed gigawatt power, Muro said.

“It’s not just consumers’ electric bills going up,” he said. “It’s Big Tech’s power bills going up immensely too. They’re already paying top dollar.”

Musk predicted Monday that orbital data centers will be more cost effective than earth-bound ones “within two to three years.” Experts disagree: Deutsche Bank estimates it will be well into the 2030s before orbital data centers “reach close to parity.”

Musk has a history of overpromising technological advance timelines. But data centers in space could eventually happen. The cost of launching satellites to space is coming down just as the costs of building and operating AI data centers on earth are rising.

“Two or three years may be a stretch,” said Bader. “But I would believe in three to five years, it would more comfortably be a regular deployment for AI data centers to be able to do that processing in space.”