SpaceX has reportedly filed confidential documents for an initial public offering in which the company will raise $75 billion at a $1.75 trillion valuation. And according to CEO Elon Musk, orbital data centers will be a big part of SpaceX’s future.
On the latest episode of TechCrunch’s Equity podcast, Kirsten Korosec, Sean O’Kane, and I discussed Musk’s vision, as well as other companies pursuing similar goals.
It will take significant technological development and massive capital outlays to make orbiting data centers a reality, but as Sean noted, with “the contrast going on across the country with 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 below, which has been edited for length and clarity.
Sean: This has been a trend—I would say a rapidly developing trend—in the last six months to a year, and we have different examples. We have SpaceX. I feel that in some ways, Elon Musk was late to this trend. And for now, let’s leave aside the actual engineering and viability of data centers in space. We could talk about that in a second if we want, but –
Kirsten: By the way, we have a really good story that we’ll link to in the show notes. One of our newest hires, Tim Fernholz, is amazing. He writes all about physics and its limitations.
Sean: Yeah, I think it’s a really interesting engineering challenge. It’s a really interesting physics challenge. It’s a really interesting orbital engineering challenge. But it’s something that clearly a bunch of companies and people are going to try and pursue. [There’s] SpaceX will do it, sort of a variation of what they’re 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 really one of the first to try to build a huge business around it, that just raised $170 million this week, their valuation [on] which turned them into a unicorn state.
Jeff Bezos is trying to do that too. This is a next-generation version of the competition we’ve seen between Starlink and Amazon’s Leo satellite network, and Blue Origin has its own satellite network also coming online in the next couple of years.
So a bunch of stuff like that is going to happen, and it’s like it wasn’t happening a year ago. I know how Elon Musk says it — we know he’s allergic to red tape, he’s built a data center in Memphis, too. Maybe now he knows the challenges and risks you have to take to bypass this bureaucracy.
There is a lot of opposition around the country about 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 at ours [planet].
Kirsten: And it also creates excitement, right? If a company is to go [public] and working in data centers in space, that’s something people can have positive expectations about and ignore the limitations. It feels like a company working on something that isn’t old and outdated, but signals the future. And it’s actually a great strategy when you think about it.
Anthony: Not that Elon Musk is the only one who does this, but he seems to be incredibly successful at saying, “Don’t judge my companies by the money they’re making now, judge them by these big visions I can describe of what’s going to happen in the future.”
And going back to a point Sean was making, I think that’s part of the interest [ask]: How does this fit with the broader data center rollout? How does it fit with the opposition and the idea that maybe people won’t be able to build as many data centers as they want?
I don’t think any of us are engineers who can really assess the viability of these designs. It certainly has a touch of fantasy to it, but even when they come up with these plans, it’s like a drop in the bucket in terms of computing capabilities compared to what they want to create on Earth. So, there doesn’t seem to be a scenario where this replaces a whole bunch of new data centers on Earth. It’s just one […] supplement to it.
Sean: The last two things I’ll point out that are really front and center for me are, one, we’ve seen a retreat in some ways [from] data centers — not just because of opposition, but because maybe we don’t need that many, right? We’re seeing a bunch of riders from some of the AI labs about, “Well, maybe we don’t need to hire so much from this company,” or whatever. And if that becomes something that’s more real than it was five months ago, do you suddenly lose all that momentum to do something as crazy as put data centers in space? Provided it works, at least.
The other thing is that the idea of building these massive data centers in space, with all these satellites that make up the “data center” is work for SpaceX. And I think that’s what’s unique about them compared to these other companies: They’re primarily a startup company, even though they generate a ton of revenue from Starlink. It is the vehicle that carries data centers into space. They close it as revenue for SpaceX.
And so this thing happens where, of course [Musk] he wants — whether it works or not, he’ll have to prove it eventually — but of course he wants to send more and more satellites into space because it’s more revenue for SpaceX. And that makes SpaceX look better as a public company. And then you just slide down the path until he finds something else to promote to investors.
