The main reason is that generating energy in space is very cheap and easy due to how ridiculously effective solar panels are.

Someone mentioned in the comments on a similar article that sun synchronous orbits are a thing. This was a new one to me. Apparently there's a trick that takes advantage of the Earth not being a perfect sphere to cause an orbit to precess at the right rate that it matches the Earth's orbit around the sun. So, you can put a satellite into a low-Earth orbit that has continuous sunlight.

https://en.wikipedia.org/wiki/Sun-synchronous_orbit

Is this worth all the cost and complexity of lobbing a bunch of data centers into orbit? I have no idea. If electricity costs are what's dominating the datacenter costs that AI companies are currently paying, then I'm willing to at least concede that it might be plausible.

If I were being asked to invest in this scheme, I would want to hear a convincing argument why just deploying more solar panels and batteries on Earth to get cheap power isn't a better solution. But since it's not my money, then if Elon is convinced that this is a great idea then he's welcome to prove that he (or more importantly, the people who work for him) have actually got this figured out.