It's a matter of deploying it for cheaper or with fewer downsides than what can be done on earth. Launching things to space is expensive even with reusable rockets, and a single server blade would need a lot of accompanying tech to power it, cool it, and connect to other satellites and earth.

Right now only upsides an expensive satellite acting as a server node would be physical security and avoiding various local environmental laws and effects

> Right now only upsides ...

You are missing some pretty important upsides.

Lower latency is a major one. And not having to buy land and water to power/cool it. Both are fairly limited as far as resources go, and gets exponentially expensive with competition.

The major downside is, of course, cost. In my opinion, this has never really stopped humans from building and scaling up things until the economies of scale work out.

> connect to other satellites and earth

If only there was a large number of satellites in low earth orbit and a company with expertise building these ;)