[GMoromisato]

SpaceX valuation and ultimate success depends on two things:

1. AI demand continues to grow. 2. SpaceX's orbital data centers are profitable.

If both of those are true, then their current valuation is absolutely justified. I'm confident #1 will happen.

#2 is the big bet, and IMHO this is just an engineering/execution problem. All they need is (a) Starship to work reliably, and (b) a manufacturing line that can build a data center satellite at low cost.[1]

(a) is the harder of the two, IMHO, but they are well on their way. Once they successfully recover and refly a Starship upper-stage, they will iterate step-by-step until launch costs drop to the level they need.

Now assume that SpaceX succeeds. What if AI demand continues to grow and SpaceX orbital data centers are profitable? Think of their moat: they spent 10 years and billions of dollars developing a fully reusable rocket that happens to also be the largest rocket in the world, and that costs 1/10th of what other rockets cost (per kilo to orbit). Plus, they have an assembly line that can build data center satellites cheaply, and they start fabbing their own AI chips.

How is anyone going to compete with that? There are a bunch of data-center-in-space startups, but none have their own rocket--they're going to have to pay SpaceX to launch them. Blue Origin is developing a rocket as large as Starship, but it's not fully reusable--they will never get the cost down to Starship levels.

What's interesting is that all the AI companies, OpenAI, Anthropic, and even Microsoft and Google, are mostly leasing their data centers from someone else. They think compute is a commodity and the value is the trained model. But if SpaceX has the cheapest data center with the most capacity, they will be able to extract profits from the AI companies or (why not) compete against them with their own model (Grok).

In 10 years we'll see whether SpaceX succeeds or fails. If they fail at this, they will retrench back to a launch company (assuming they are still in business). But if they succeed, they will be a massive company, and the synergy between their businesses will be so obvious that everyone will say, "of course they succeeded!"

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[1] Don't be distracted by claims that "cooling in space is hard" or "radiation is a deal-breaker". Neither of those are insurmountable problems--they are just engineering problems. Crucially, they are problems that are easily solved by getting mass to space. If you can get mass to space cheap enough, those two problems are trivial to solve.

[positr0n]

Even if I do accept your claims that cooling in space is not insurmountable, you still would grant that launching and cooling (and shielding??) a data center in space still cost more dollars than building a data center on earth right? What is the use case that people will spend money to rent servers in space? I think nations have a strong enough grip on the internet now that the customer use case of "evading my country's laws" won't generate that much revenue.

Is the hope that power will be cheaper because solar panels have direct and continuous exposure to the sun?

[GMoromisato]

There is no physical reason why it can't be cheaper. For starters, solar power is 4x better in space, so you need 1/4th the area of panels. But also, data center costs are skewed by things like permits, environmental reviews, and (increasingly) lawsuits.

Terrestrial data center costs are only going up, while space tech costs keep going down. It is plausible (but not guaranteed) that they will intersect at some point.

[AtNightWeCode]

2. SpaceX's orbital data centers are profitable.

This will never happen.

[GMoromisato]

I'm never that confident about the future, and I hope I never am.

[pqtyw]

Yeah sure the technical problems are solvable if you throw money at them. I'm sure we could have had a colony on Mars by this point as well if NASA/etc. continuously spent insane massive amounts of money on every year since the 70s.

So what?

Why on earth would you want an AI datacenter in space? Like what would you gain by doing that at an absurdly higher cost than you could build on them earth?

"Free" energy? lol.. just build nuclear powerplants or loads of solar, wind and batteries on earth. Its still going to be cheaper...

> How is anyone going to compete with that? There are a bunch of data-center-in-space startups

A better question is why would anyone even try?

> are mostly leasing their data centers from someone else

It's really not. Building your own datacentres is very expensive and more importantly takes a lot of time. They need compute now, so it makes perfect sense to rent it from failing AI companies like xAI which bought a lot of chips but don't have anything to do with them since their models are just not very good.

> But if SpaceX has the cheapest data center with the most capacity, they will be able to extract profits

Well.. that would be a first one, since no similar industry works that way. Compute is a commodity so unless your literally run out of space on earth to build datacenters or Nvidia/etc. stop selling to anyone but SpaceX that can't really happen, can it?

[GMoromisato]

You just said that "building your own datacentres is very expensive and more importantly takes a lot of time."

I agree. If building data centers in space is cheaper and takes less time, then that's a win and a clear reason to do it.

Costs for terrestrial data centers keep going up and costs for space tech keep going down. At some point, they will intersect.

[wqaatwt]

> If building data centers in space is cheaper

So you don’t have an argument because everything you are saying is based on some absurdly speculative nonsensical premise?

> costs for space tech keep going down

How do you measure the cost of something which does not and has not ever existed. These data centers are a hypothetical concept nothing else.