Musk Touted Data Centers in Space to SpaceX IPO Investors. Peter Zeihan Calls the Idea 'So Many Levels of Dumb'

Daragh Thomas

Sun, July 26, 2026 at 6:00 PM GMT+3 5 min read

SPCX -1.36%

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Elon Musk's SpaceX pitched orbital data centers as a central part of its record-breaking IPO, but geopolitical analyst Peter Zeihan says the physics may not cooperate.

In a recent video, Zeihan argued a one-gigawatt orbital data center would require roughly 500 Starship launches to assemble.

High-end chips cannot survive radiation in space, Zeihan said, so the entire facility would need shielding. That shielding would weigh roughly 20 million pounds.

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"There's so many levels of dumb to this," Zeihan said, adding that anyone raising funds on the concept "thinks you're stupid."

Space Is Cold, But It Doesn't Cool

GPUs run extremely hot, and on Earth, data centers use air and water to carry that heat away. Space has neither, so there is nothing to carry the heat off. The only way out is radiator fins, spanning tens of square kilometers. Zeihan estimated those radiators alone would cost $250 billion.

Wall Street analysts are less brutal, but not by much. Energy research firm Wood Mackenzie recently modeled the full cost of a 1 GW orbital data center at roughly $170 billion. Much less than Zeihan's estimates, but still three times the cost for an Earth-based facility.

What SpaceX Actually Promised

Following its February acquisition of xAI, SpaceX pitched itself to IPO investors as a vertically integrated AI company, not just a launch provider.

Its S-1 says orbital AI compute satellites could begin deploying as early as 2028. The company claims these satellites will carry over 100 kilowatts of compute per metric ton, with a long-term target of 100 gigawatts launched per year.

For now, the real money remains on Earth. Anthropic agreed in May to pay SpaceX $1.25 billion per month through May 2029 for capacity at its terrestrial Colossus data centers, a deal either side can end with 90 days' notice.

The filing's own risk factors concede that orbital compute involves unproven technologies, or "technologies that do not exist," and may not achieve commercial viability.

Traders Are Fading the Timeline

Kalshi traders give a 1-megawatt orbital data center just a 14% chance of going live before January 2029, despite the S-1's 2028 target. Odds rise to only 39% before 2035.

SPCX was priced at $135 in June, the largest IPO in Wall Street history, but the stock has slid to $116 since. Zeihan, for his part, left the door open. If the rules of physics change, he said, he reserves the right to change his mind.

Image: Shutterstock

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