Economics of Orbital vs. Terrestrial Data Centers

> FCC is easier to deal with than multiple layers of environmental, planning, power, and water concerns at the local, state and federal levels.

If you get fed up of multiple layers of concerns and US specific bureaucracy, you simply move to a different country where a single authority is desperate to not only remove hurdles but might even give subsidies to someone that wants to employ lots of people to put up solar panels and give them a bit of surplus power and hot water. Chips and solar panels fit as easily in shipping containers as they do in spacecraft. The FCC actually has to handle the concerns of entities more concerned by the environmental impact of your megaconstellation because it's a 1km^2 wide missile travelling at 17,500 mph which much of the rest of the space industry is expected to expend propellant to evade where orbits intersect, which is a bit more concerning than 5km^2 of slightly less green fields and some question marks about water abstraction, and there aren't other authorities you can turn to. (Space is underregulated in terms of not having any practical traffic management beyond launch and spectrum licensing, but that's more risk rather than dream libertarian business opportunity; the FCC can still kibosh your project, you just won't get anyone clearing debris out your way)

Technically there is more space in space than Earth, but once you start factoring that convenient orbits for earth data transfer involve carving a high speed path which intersects with other spacecraft also moving at high speed and not all with as much control as they'd like it starts to look a lot less capacious. The Earth not about to run out of coastal regions with unbuilt land any time soon.

(SBSP has its own similar issues, of course)

The LLMs they hope to have in those data centers already silently accept wrong results.

this does not makes sense from dollars pov to me, I ran a back of napkin session with claude & gemini on this and the short of it is you need a magical weightless radiator for cooling and even then it wont work because the launch costs need to be sub $100 before this can be feasible. this does not even factors the 5y amortization and LEO orbit drag correction.

It then occurred to me that they (all major AI companies) know all of these facts but still pushing for it so there must be another reason. Then I recalled the offhand statement from the openAI lady about govt backstop for infra, which was strongly opposed by public and AI czar. this might be be a backdoor way of injecting that backstop capital in terms of subsidies now for results in 5 years or so. and needless to say after pilot programs those will fail spectacularly.

Scenario A: Someone breaks a window and the homeowner buys a replacement.

Scenario B: A homeowner adds a new window to their home.

Scenario C: A homeowner buys an online-course to learn how to make windows and then adds one to their home.

Scenario A has approximately no benefit to the economy. The homeowner is no better off (same number of windows) but had to spend money. The window maker might be better off, but only to the same extent that the homeowner is worse off.

I totally agree that Scenario A is not a benefit to the economy. That's the "broken window fallacy".

But Scenario B is definitely better for the economy. The homeowner has decided that having a new window is better than having the money. So the homeowner is better off. The window maker is also better off because they get the money. This is what happens when a billionaire buys a yacht.

Scenario C is the best. The homeowner has a new skill, which they can use to add more windows to their house or maybe their neighbors' houses. Over time, the amount of money spent on window-making will decrease, but the number of windows will stay constant or increase. That's a net benefit. And the online-course creator still made money.

This is what Musk is doing. He is developing new technologies that enable new capabilities and/or make existing things cheaper (e.g., electric cars, access to space, rural internet connectivity).

There is also Scenario D: The homeowner doesn't buy a new window but just keeps his money under his mattress. This is clearly the worst for the economy. Hording money like that means that there is less money circulating and lowered economic activity. The window maker is worse off, and even the homeowner is worse off if they would like to have a new window.

Billionaires who don't spend their money are the real danger, not the ones who tweet too much.

Investing their money is slightly better in that it makes the price of borrowing cheaper. But that only helps up to a point. Someone has to spend money or else there's no point in being able to borrow some. So I wish more billionaires were following Scenario C.

> Will…

I think “won’t”. I could be wrong of course, but I imagine efforts to put servers into orbit will die before anything is launched. It’s just a bad idea. Maybe a few grifters will make bank taking suckers’ money before it becomes common knowledge that this is stupid, but I will be genuinely surprised if real servers with GPUs are launched.

I don’t mean to be facetious here. But saying “will” is treating it as inevitable that this will happen, which is how the grifters win.