SpaceX has allegedly presented confidential documents for an initial public offering in which the company would raise $75 billion at a valuation of $1.75 trillion. And according to CEO Elon Musk, orbital data centers will be a big part of SpaceX’s future.
In the last episode of TechCrunch Equity PodcastKirsten Korosec, Sean O’Kane and I discussed Musk’s vision, as well as that of other companies pursuing similar goals.
will take Significant technological development and massive capital expenditure. make orbital data centers a reality, but, as Sean noted, with “the opposition across the country to data centers in general,” executives like Musk and Jeff Bezos may be thinking, “The engineering challenge may be less than the social challenge here” on Earth.
Read a preview of our conversation, edited for length and clarity, below.
be: This has been a trend (I would say quickly forming) for the last half to a year, and we have different examples of it. We have SpaceX; I feel like, in some ways, Elon Musk was late to this trend. And for the moment, let’s leave aside the actual mechanics and viability of data centers in space. We could talk about that in a second if we want, but…
Kirsten: We have a very good history. We’ll link to it in the show notes.by the way. One of our most recent hires, Tim Fernholz, is incredible. Write all about physics and its limitations.
be: Yeah, I think it’s a really interesting engineering challenge. It’s a really interesting physics challenge. It’s a really interesting orbital mechanics challenge. But it is something that clearly a group of companies and people are going to try to pursue. [There’s] SpaceX will do it, with a sort of variation on what they are already working on with their Starlink network.
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There’s a startup that came out of Y Combinator, originally called Starcloud, that was actually one of the first that tried to build a big business around this, which just raised $170 million this weekyour rating [on] that made them a unicorn state.
Jeff Bezos is also trying to achieve this. This is a next-generation version of the competition we’ve seen between Starlink and Amazon’s Leo satellite network, and Blue Origin will also have its own satellite network online in the coming years.
So there’s going to be a lot of this happening, and it feels like it wasn’t happening a year ago. I know the way Elon Musk presents it: we know he’s allergic to bureaucracy, he also built a data center in Memphis. Perhaps now you know the challenges and risks that must be taken to avoid that bureaucracy.
There is a lot of opposition across the country to data centers in general. And these people say, “We have access to space, so let’s try to do it up there.” The engineering challenge may be less than the social challenge here in ours. [planet].
Kirsten: And it also generates excitement, right? If a company is about to leave [public] and they are working in data centers in space, this is something that people can have positive expectations about and ignore the limitations. It feels like a company that is working on something that is not old or outdated, but points to the future. And it’s really a great strategy when you think about it.
Antonio: It’s not like Elon Musk is the only one who does this, but he seems to be incredibly successful at saying, “Don’t judge my companies by how much money they’re making now, judge them by these big visions I can develop about what’s going to happen in the future.”
And getting back to the point that Sean was making, I think part of what’s interesting is [ask]: How does this fit with the broader data center rollout? How does this fit with the opposition and the idea that maybe people can’t build as many data centers as they would like?
I don’t think any of us are engineers who can really evaluate the viability of these plans. It certainly has a touch of fantasy to it, but even when they lay out these plans, it feels like a drop in the bucket in terms of computing capabilities compared to what they want to build on Earth. So there seems to be no scenario where this will replace a bunch of new data centers on Earth. It’s just kind of […] complement it.
be: The last two things I’ll point out that are really central to me is that, first of all, we’ve seen a pushback in some respects. [from] data centers, not just because of the opposition, but because maybe we don’t need that much, right? We see a lot of maneuvering by some of the AI labs about, “Well, maybe we don’t need to lease as much from this company,” or whatever. And if that becomes more true than it was five months ago, is suddenly all momentum lost for doing something as crazy as putting data centers in space? As long as it works, for a moment.
The other thing is that the idea of building these massive data centers in space, with all these satellites that make up the quote-unquote “data center,” is a business for SpaceX. And I think this is unique to them compared to these other companies: they are primarily a launch company, although they generate a lot of revenue from Starlink. They are the vehicle that takes data centers to space. They can reserve it as income for SpaceX.
And then it becomes this where, of course [Musk] he wants (whether it works or not, he would eventually have to prove it) but of course he wants to send more and more satellites into space because it means more revenue for SpaceX. And that makes SpaceX look better as a public company. And then you just follow the path until he finds something else to convince investors with.
