Blue Origin and SpaceX compete for space AI

Jeff Bezos’ aerospace company is now a direct competitor of Elon Musk’s SpaceX after announcing that it’s creating the technology necessary to launch data centers in space. 

Blue Origin has been working on the technology to launch data centers in space for more than a year, meanwhile SpaceX wants to upgrade its satellites to handle AI computing. 

Blue Origin and SpaceX compete for space AI 

Jeff Bezos’ aerospace company Blue Origin has announced that it has been developing the necessary technology for artificial intelligence data centers in orbit for more than a year, according to reports citing people familiar with the matter.

The concept of data centers in space has gained significant attention among tech giants due to traditional Earth-based facilities consuming massive amounts of electricity and water. 

Data centers currently account for around 415 terawatt hours of electricity globally, which is roughly 1.5% of the total power consumption in 2024, according to the International Energy Agency. Large facilities can use up to five million gallons of water per day for cooling.

SpaceX reportedly plans to use upgraded Starlink satellites to host AI computing payloads and is pitching this technology as part of a share sale that could value the company at up to $800 billion. Musk denied the $800 billion figure on social media and called such reports inaccurate. 

He clarified that SpaceX conducts regular stock buybacks twice a year for employee liquidity rather than raising new capital.

Amazon founder Bezos predicted in October that gigawatt-scale data centers would be built in space within the next 10 to 20 years. He argued that the continuously available solar energy would eventually make space-based facilities more cost-effective than those on Earth.

“We will be able to beat the cost of terrestrial data centers in space in the next couple of decades,” Bezos said. 

What other companies are working on space data centers? 

Cryptopolitan reported that the Nvidia-backed startup, Starcloud, recently launched a satellite carrying an Nvidia H100 graphics processing unit to space. The company successfully trained and ran Google’s Gemma AI model in orbit for the first time. 

The company’s CEO Philip Johnston told CNBC the company’s orbital data centers would have 10 times lower energy costs than facilities built on earth. The startup plans to build a five-gigawatt orbital data center with massive solar and cooling panels measuring roughly four kilometers in both width and height.

Aetherflux announced its “Galactic Brain” project on December 9. The company aims to deploy its first low Earth orbit data center node in the first quarter of 2027, and thousands of satellites are expected to follow.

Axiom Space announced in April 2025 that it would launch its first two Orbital Data Center nodes to low Earth orbit by the end of this year. And even Google unveiled a “moonshot” initiative called Project Suncatcher in November, which aims to put solar-powered satellites into space equipped with Google’s tensor processing units.

Analysts from Morgan Stanley have noted that harsh radiation could damage the computer chips. There could also be difficulties in-orbit maintenance, space debris hazards, and regulatory issues related to data governance and space traffic management. Keeping orbital data centers stocked with the latest hardware could also prove costly.

However, recent analysis suggests the considerable carbon footprint of launching hardware into space could be offset within five years of operation, after which facilities could run indefinitely on renewable energy.

SpaceX is also reportedly looking to raise more than $25 billion through an initial public offering in 2026, which could boost the rocket maker’s valuation to over $1 trillion. 

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