The Space Data Center Race Heats Up

SpaceX CEO Elon Musk has weighed in on the growing conversation about space-based data centers with some eye-popping numbers. According to Musk, the Starship rocket could deliver somewhere between 300 and 500 gigawatts worth of solar-powered AI satellites to orbit each year. That's a lot of computational power floating above our heads.

The discussion started when Salesforce Inc. (CRM) CEO Marc Benioff shared a video on X Wednesday showing Musk discussing the economics of orbital versus ground-based data centers. Musk responded with specific figures, noting that average electricity consumption in the U.S. runs around 500 GW (for context, Federal Energy Regulatory Commission data shows the U.S. generated over 4,151 terawatt-hours of electricity last year, which works out to roughly 473 GW when averaged across 8,760 hours).

Here's where it gets interesting. "At 300 GW/year, AI in space would exceed the entire US economy just in intelligence processing every 2 years," Musk said. In his view, Starship has already cracked the hard part: getting massive amounts of stuff into orbit cheaply.

The Real Bottleneck: Making the Chips

But there's a catch, and it's a big one. "Chip production is therefore the major piece of the puzzle to be solved," Musk explained. He suggested that the "Tesla Terafab is needed" to meet demand. The TeraFab is a proposed chip foundry from Tesla Inc. (TSLA), reportedly being developed alongside Intel Corp. (INTC). Notably, Tesla pulled the plug on its Dojo Supercomputer team earlier this year, suggesting some strategic shifts in how the company approaches computing infrastructure.

So while SpaceX might have solved the rocket equation for getting hardware into space, the semiconductor manufacturing capacity to fill those rockets with AI chips simply doesn't exist at the necessary scale yet.

Everyone Wants a Piece of Orbital Computing

Musk isn't alone in thinking about gigawatt-scale computing in space. Last month, Blue Origin CEO Jeff Bezos touted the potential cost-effectiveness of data centers in orbit. Bezos is also reportedly backing a new startup called Project Prometheus, focused on AI applications in automotive, aerospace, and scientific research. Musk, predictably, called Bezos a "copycat," since Project Prometheus could compete with Musk-backed ventures. The rivalry between the two billionaire space entrepreneurs continues unabated.

Meanwhile, Alphabet Inc. (GOOGL) (GOOG) CEO Sundar Pichai has outlined Project Suncatcher, an initiative aimed at launching a low Earth orbit data center powered directly by solar energy in space.

The race to commercialize orbital computing is clearly heating up. Whether the economics actually work out remains to be seen, but when multiple tech billionaires start talking about the same moonshot idea, it's worth paying attention.