Elon Musk has officialized the merger of xAI with SpaceX, creating an entity valued at US$1.25 trillion aimed at moving data centers to space to address AI's energy crisis. This vertical integration combines space transport, connectivity, and AI processing. The plan leverages infinite solar energy in orbit to cut operational costs.
This week, the financial market reacted with surprise to Elon Musk's announcement of the merger between xAI and SpaceX. The new entity, valued at US$1.25 trillion, marks a bold step to tackle energy challenges in training AI models. xAI, burning nearly a billion dollars monthly in its race against OpenAI, finds key financial support in this deal, as Musk pushes his vision of off-Earth computing infrastructure.
The core proposal involves launching data centers into space using the Starship rocket, which can carry 200 tons per flight at nearly hourly frequency. This would enable deploying up to a million satellites serving as orbital computing nodes. The key advantage is constant solar energy, free from clouds or nights, eliminating 40% of current terrestrial operational costs tied to electricity. Musk estimates that within less than three years, space computing will be the cheapest option for AI.
However, technical hurdles are substantial, particularly cooling. In the space vacuum, heat dissipates only via infrared radiation, an inefficient process requiring massive radiators and closed-loop cooling systems. The weight of these components could become the main bottleneck, outweighing launch costs. Additionally, cosmic radiation poses risks to circuit longevity at 500 kilometers altitude.
From an investment perspective, this merger vertically integrates SpaceX's transport, Starlink's connectivity, and xAI's processing, potentially forging a monopoly if thermal engineering challenges are overcome. Otherwise, it might become history's most expensive experiment. The entity is gearing up for an IPO that could raise up to US$50 billion.
