Column: Why Wall Street is betting on data centers in space
SpaceX's recent $2 trillion valuation is partly driven by Wall Street's belief in orbital data centers. This strategy aims to circumvent the growing public opposition and political costs associated with building terrestrial data centers, particularly in Northern Virginia. The company hopes to leverage decreasing launch costs to make space-based infrastructure a viable alternative to Earth-based projects facing increasing local resistance.
SpaceX's recent initial public offering, which saw the company's valuation soar to approximately $2.07 trillion, reflects a significant Wall Street bet on the future of orbital data centers. According to columnist Philip B.K. Potter, executive director of the National Security Data and Policy Institute at the University of Virginia, a key driver for this investment strategy is the escalating public opposition and political costs associated with building new AI infrastructure on Earth.
The article highlights the growing sentiment against data centers, particularly in Northern Virginia, which hosts nearly 70% of global internet traffic. Residents in areas like Manassas have actively campaigned against projects such as the "Digital Gateway" complex, a 37-building data center initially approved in 2023. A survey by the UVa National Security Data and Policy Institute found that Americans would require nearly $100,000 on average in compensation to support a new data center in their community, indicating a substantial economic burden for terrestrial development.
Potter argues that while orbital data centers are currently expensive, their appeal lies in offering cheap power, passive cooling, and the political advantage of being "in nobody's backyard." With SpaceX's reusable launch program continually reducing the cost of putting payloads into orbit, the company is uniquely positioned to bridge the cost gap between terrestrial and orbital data centers, a convergence that Wall Street may be anticipating sooner than expected as political opposition to ground-based facilities continues to rise.