Eight Companies Are Now Trying to Put Data Centers in Orbit
A startup called Starcloud raised another $250 million this week, valuing it at $2.3 billion, with plans for a constellation of 88,000 satellites. SpaceX has filed for up to a million. The pitch is free cooling and constant sunlight; the problem is everything else.
Starcloud, a company in Redmond, Washington, raised an additional $250 million this week — bringing its valuation to $2.3 billion — to build data centers in orbit. It has filed with American regulators for a constellation of 88,000 satellites. It is one of at least eight companies now pursuing the idea, and not the most ambitious: SpaceX has filed for a constellation of up to a million satellites intended for the same purpose, reportedly working with Anthropic. Google is investigating putting its own AI chips in space.
The argument for this is better than it first sounds. AI data centers on Earth have two brutal constraints: electricity and heat. They consume power on the scale of small cities, straining grids and raising bills, and nearly all of that power ends up as heat that has to be removed, usually with enormous quantities of water. In orbit, sunlight is available continuously and unfiltered by atmosphere, and heat can be radiated away into vacuum. Neither the power bill nor the neighbors exist.
The argument against is everything else. Launching mass to orbit is expensive even at today's much-reduced prices. Nothing can be repaired once it is up there — a failed component is a dead satellite. Radiation degrades electronics. Getting data up and down requires enormous bandwidth. And tens of thousands of new satellites in low orbit raise real questions about collisions and about astronomy, which the existing constellations have already made harder.
It is worth noticing what this tells you about the state of the AI boom, regardless of whether any of it flies. Serious investors are funding the construction of computing infrastructure in space — a plan that only makes sense if you believe demand will outgrow what the planet can supply. That is either foresight or the clearest bubble indicator yet produced, and the honest answer is that nobody knows which.