Elon Musk wants to launch 1 million data-center satellites into space, but experts warn it won't work

SpaceX confidentially submitted a filing to the Securities and Exchange Commission on April 1 with purported plans to launch data center satellites into space, Reuters reported.

What's happening?

On April 1, Bloomberg reported on SpaceX's confidential SEC filing, citing "people familiar with the matter." 

An initial public offering, or IPO, is a company's stock market debut, marking the first time its shares are available for purchase. 

In addition to sparking speculation that SpaceX's IPO could be the largest ever, the filing grabbed attention for its plans to "bypass power and water limits on Earth" by launching nearly a million data center satellites into space.

Reuters recounted a somewhat similar effort by Microsoft, "Project Natick," which aimed to build undersea data centers. Project Natick was ultimately "abandoned more than two years ago due to a lack of client demand and unviable economics," the outlet said.

According to five data center experts consulted for the report, Microsoft's failed attempt to build data centers at sea ought to serve as a "cautionary tale" for SpaceX. Both endeavors were inherently costly and involved equipment that can't "be expanded, repaired or upgraded."

AvidThink founder Roy Chua warned that SpaceX's plan almost certainly faced larger, higher hurdles than Project Natick.

"These problems are likely to be more ​severe in space than under the sea," Chua explained. Satellite industry analyst Tim Farrar said that even if the project were technically feasible today, it wouldn't necessarily mean data center satellites were viable. 

For example, there is a common misconception that the vacuum of space would make cooling easier, but instead, the vacuum of space works more like a vacuum-insulated drink tumbler that can hold a temperature for much longer, as vacuums greatly slow down heat transference since they lack molecules. It's a challenge that could be solved, but Farrar's concern is the cost involved to solve it.    

"The problem is not whether something can work, but whether it makes sense economically versus simply building more capacity on the ground," Farrar commented.

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Why is this concerning?

Many experts have projected a bright future for investments in space exploration and development, with SpaceX among the most notable, though CEO Elon Musk has developed a reputation for overpromising and underdelivering. In 2019, he confidently asserted that a million autonomous Tesla robotaxis would be in service by 2020, but the electric vehicle manufacturer has yet to realize that goal in 2026.

Musk's current focus on space-based data centers comes at a time when financial experts expressed credible concerns of an AI bubble driven by hype and vibes rather than fundamentals, and the fantastical nature of Musk's plan did not allay those fears.

At the same time, public opinion has been rapidly souring on AI for an entirely different set of reasons, from the prospect of job losses and hiring disruptions to emerging evidence that AI adversely affected students' learning.   

As for data centers in space, it was difficult to consider the seemingly unviable proposal through the lens of sharply rising, bipartisan public hostility toward the facilities, which began to grow in number as AI adoption continued.  

Initially, communities near data centers raised objections — but after their unprecedented energy demand drove up electric bills nationwide, resistance to their construction coalesced.

In short, AI firms and their data centers have worn out their welcome on Earth in many respects, but that doesn't make shooting them into space technologically or economically feasible. For experts like Farrar, the thinking is that while it may work, it's a risky bet that may take decades to recoup the necessary investment capital. 

What's being done about it?

Experts like Analysys Mason researcher Claude Rousseau suggested data center satellites might be a self-solving problem.

"I strongly believe that there'll be no ​way in the foreseeable future that ⁠space‑based data centers can replace ground data centers," Rousseau told Reuters.

It's not just analysts who are skeptical; Sam Altman called the concept "ridiculous," and other analysts deemed it "peak insanity."

Here on Earth, local action has been exceptionally effective — in the final quarter of 2025, communities brought about the cancellation of $98 billion in data center development.

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