It's easy to see the benefit in DC's in space if you look at a few ingredients:

1. The recent Iran drone attacks on AWS data centers

2. Growing anti-AI and anti data center sentiment at home, plus Larry Fink (ceo of Blackrock) in a recent interview being terrified of dissident groups using consumer drones to attack data centers.

3. Anthropic, Grok, and other AI vendors becoming more and more integrated into defense and military, plus increasingly reliance on AI for other national surveillance systems

Data centers are and will be targets, both for national military attacks as well as home grown dissident attacks, so they are proposing to move some of the critical workloads to somewhere that the only group that can attack the data center hosting the workload is a nation state with space launch capabilities. That significantly reduces the number of actors that can attack the data center. And if the US wants to they can probably bomb all the other space rocket launch facilities worldwide in less than 24 hours, leaving extremely limited capability to attack a space hosted DC.

Is it insane? Probably, but the US has done insane things with military budget before, and will continue to do so for a long time. If you are Elon, its a great time to milk that US defense budget for some more R&D, and even if the main project doesn't work out, he's still going to be able to keep some innovations within the company and apply them to Starlink and other more realistic endeavors.

Even with this benefit of the doubt, even stretching our suspense of disbelief as far as it can go, we are basically talking about a niche military application that inherently has a limited market value.

In other words, we can just assume this concept is possible and makes sense some level of financial sense for military, government, and high sensitivity use cases.

Well, find me a military contractor worth $1.5 trillion. Lockheed Martin is worth 1/10th of that.

Put Lockheed Martin and AT&T together and you’ve got about 1/5 of a SpaceX IPO target valuation.

Even if we make this assumption that the technology is marketable and has merit, it’s not like every company or government agency is going to want to switch to this technology. There are already a number of alternatives that can mitigate many to all of the risks that it solves.

The cost and complexity right now to deploy global services and their disaster recovery replicas to multiple distant data centers in the terrestrial world is already extremely low. Often, these features are offered as an off-the-shelf service.

California could sink into the ocean and my users wouldn’t even see a blip of downtime. Unless they live in California.

Heck, build some data centers underground in deep fortified bunkers if you want. That would be cheaper than launching them into space. They might even be easier to defend than satellites and space DCs because a foreign adversary can’t just launch a missile up in the sky to get to it.

Going back to not really suspending disbelief as much, I also think performance and latency is going to be an insurmountable problem. Right now as we speak Starlink residential service is about 10x slower than my home fiber connection at the same price. How is this technology going to compete with data center level infrastructure even in an optimistic scenario?

I can toss pennies per hour at Amazon for a relatively small VM with like 4GB of RAM and they’ll give that thing a 15 gigabit connection.

1 -- Signal jamming exists.

2 -- Space also belongs to the citizens and not the corporations.

3 -- The defense industry is the single worst most corrupt and idiotic industry we still shackle ourselves to.