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There’s a Blinking Warning Sign for the Data Centers in Space Industry

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Why This Matters

The challenges faced by Musk’s space-based data centers echo past failures like Microsoft’s underwater project, highlighting significant economic and technical hurdles. These obstacles could hinder the viability of orbital data centers, impacting future innovations in the industry. Understanding these risks is crucial for consumers and companies considering the next frontier of data infrastructure.

Key Takeaways

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It’s plain to see that Elon Musk’s ambition of putting data centers in space is a daring and risky undertaking.

Further underscoring the challenges, experts tell Reuters that a previous failed attempt at taking data centers off solid ground has alarming parallels that could spell doom for Musk’s plan for SpaceX.

In 2015, Microsoft deployed “Project Natick,” a cutting edge underwater data center off the coast of Scotland. Resembling the size and shape of a semi truck’s fuel tanker, it was designed to use seawater to cool itself and be largely self-sufficient once anchored to the seabed. The idea was full of promise: cooling a data center is one of its most costly aspects; now it was accomplishing it for free. It was also supported by wind power, providing an aspect of sustainability.

Flash forward to the present, however, and the data centers that are popping up everywhere are amid the AI boom are most decidedly not being built in the ocean. Sources told Reuters that the project was figuratively sunk by lack of client demand and unviable economics for reasons that could also plague Musk’s orbital facilities.

“These problems are likely to be more ​severe in space than under the sea,” Roy Chua, founder of industry research firm AvidThink, told Reuters.

Critically, both projects rely on modular units that are expensive to deploy, and once operational, can’t be upgraded or even repaired. Potential customers favored sticking to terrestrial facilities because they could be brought online quicker and be upgraded with the latest hardware — a more crucial capability than ever, because AI chips are constantly improving.

Once, or if, Musk deploys his orbital data centers, they’ll be “locked-for-life.” A new generation of AI hardware — perhaps one optimized for another type of AI architecture that becomes the cutting edge, as many in the industry believe large language models are an eventual dead end — could obviate Musk’s expensive satellites.

Experts have also been incredulous at Musk’s proposed size for each of these data center satellites, which according to company graphics will dwarf the International Space Station.

All that’s before we even begin to look at the exorbitant costs of getting these data centers into space at scale. Reminder: Musk wants to deploy one million of the satellites. Ars Technica editor Eric Berger estimated the barebones cost of doing that to be at least $1 trillion. Analysts at equity research group Moffett Nathanson, in a note cited by Reuters, said the cost would be trillions-plural.

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