From the coming SpaceX IPO excitement to Nvidia’s foray into space computing, data centers in space have become the tech industry’s new favorite talking point.

The space economy could become a $1.8 trillion opportunity by 2035, according to consulting firm McKinsey and Company. At the same time, while some major companies are ready to spend billions launching GPU-loaded satellites into orbit, not everyone on this planet is buying in yet.

Tech leaders like SpaceX CEO Elon Musk, Amazon founder Jeff Bezos, and Google CEO Sundar Pichai are framing data centers in space as a cost-effective solution to AI’s insatiable appetite for resources, such as land and power.

“Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment,” Musk wrote in a February post on SpaceX’s website.

Proponents of data centers in space make a simple case. Space data centers can get free power from the sun and don’t have to pay for real estate — and best of all, both resources are unlimited.

“I mean, space is called ‘space’ for a reason,” Musk wrote on the company site, adding in a laughing-crying emoji.

Critics wary of data centers in space say the endeavor is far more technically complicated, cumbersome, and expensive than it might appear. OpenAI CEO Sam Altman has also called the idea “ridiculous.”

“It’s a very wild idea,” said Kathleen Curlee, a space economy research analyst at Georgetown’s Center for Security and Emerging Technology.

“You could put a data center in space. It is not physically impossible,” said Matthew Buckley, a theoretical physicist and associate professor at Rutgers University’s department of physics and astronomy.

“I just don’t see why you would,” he added.

Tech giants like SpaceX and Google see big opportunities

Musk isn’t alone in his dreams of orbital data centers. Google’s Project Suncatcher aims to deploy an AI data center in low Earth orbit by 2027.

Last month, Blue Origin, the space technology company founded by Bezos, asked the federal government for permission to launch a network of 50,000 solar-powered data center satellites into orbit.

In its application, Blue Origin wrote that moving data centers into space would help ease the pressure on US communities and natural resources from energy- and “water-intensive compute.”

Earlier this month, Nvidia launched hardware for data centers in space. The company’s CEO Jensen Huang said in February that the economics of data centers in space “will improve.”

Investors can’t seem to get enough of data centers in space either.

Seattle-based space data center startup Starcloud announced this week that it had reached a $1.1 billion valuation following a $170 million Series A round led by Benchmark and EQT Ventures.

Starcloud reached unicorn status faster than any other startup to ever come out of Y Combinator, the company said in a press release.

Robinhood cofounder Baiju Bhatt, who became a billionaire when the stock-trading app went public in 2021, began investing in space data centers in 2024. The Wall Street Journal reported that his space solar power company, Aetherflux, is raising a new round of funding at a $2 billion valuation.

Space data centers have hidden costs

Scientists cited a litany of obstacles that space-based data centers face.

Buckley, the theoretical physicist, estimated that every data center launched into space would require 450 football fields of solar panels to power it.

That alone could cost $10 billion per data center, he estimated, on top of an additional $10 billion to launch it into orbit — and that’s not counting the cost of maintaining the data center in space.

Data center maintenance in space is a lot more complicated than maintenance on Earth, Curlee said.

“There’s the issue of space debris — they could get hit with a fleck of paint,” and sustain damage or go offline, she said.

Because of this, space data centers aren’t meant to last very long — maybe a maximum of five years.

“At the end of the day, the amount it would take to get data centers into space isn’t justifiable,” she said. “This is a long-term goal being presented as if it could be achieved in a couple of years.”