Short seller James Chanos has criticized the tech industry’s push towards developing orbital datacenters, outlining that space-based datacenters would cost more.
In a post on the social media platform X on Wednesday, Chanos quoted a video that talked about Tesla Inc. (NASDAQ:TSLA) and SpaceX CEO Elon Musk‘s vision to put datacenters in orbit following xAI‘s merger into SpaceX.
“This is more AI Snake Oil from the Silicon Valley promoter class,” he said. Chanos added that the annual cost of electricity per MW for AI datacenters hovered around the $600,000 mark.
Don’t Miss:
The figure makes up for about “5-7% of revenues on recently announced deals,” Chanos said. “Launch, radiation, insurance and redundancy costs would be greater,” he added.
This is more AI Snake Oil from the Silicon Valley promoter class. Currently annual electricity costs for AI data centers are about $600K per MW, which is only about 5-7% of revenues on recently announced deals. Launch, radiation, insurance and redundancy costs would be greater. https://t.co/F7P3IYSQ1t
He then expanded on his views, sharing that grid power permitting was an issue, but it is being addressed. “Actual power is in abundance in the US, particularly when energy companies partner w/private power producers,” he said.
(2) And while grid power permitting is a current problem, it is rapidly being addressed in business-friendly jurisdictions. Actual power is in abundance in the US, particularly when energy companies partner w/private power producers, as we have seen in many recent deals.
Chanos also warned against falling for orbital datacenter hype, asking stakeholders in the sector for “actual cost figures/savings,” when talking about the benefits of AI compute in space.
(3) So before you fall for the “Data Centers in Space” hype, ask your favorite Silicon Valley promoter to show some actual cost figures/savings, first.
Investor Michael Burry, of “The Big Short” fame, has said that nuclear energy could help bridge the gap between supply and demand for AI data centers, urging President Donald Trump and Vice President JD Vance to fast-track a $1 trillion nuclear power and grid expansion plan.
