SpaceX is teaming up with Elon Musk’s Zee ahead of a planned initial public offering and billionaires’ efforts to raise funds.
The IPO is expected to generate tens of billions of dollars, giving Zee a new source of funds. Musk also says the arrangement aims to pave the way for space-based data centers, days after SpaceX filed plans to operate a million satellites for the project.
“In the long term, space-based AI is clearly the only path to scale,” Musk said in a post announcing the Zee deal, which also cited the benefits of solar power. “So the only logical solution is to channel these resourceful efforts into a place with greater power and space.”
The Information reported that SpaceX is spending $250 billion to acquire XZ, citing a person familiar with the deal.
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SpaceX also described the deal as creating “one of the most ambitious, vertically integrated innovation engines ever,” pointing out how the orbiting data centers could source all of their rocket and computing technology from SpaceX and Zee. (Z also had X or what used to be Twitter.)
“It’s always sunny in space!” Kasturi added. “Launching a constellation of a million satellites that serve as orbital data centers is the first step toward becoming a Kardashev II-level civilization, supporting AI-powered applications for today’s billions of people and ensuring humanity’s multifaceted future.”
To overcome this, Musk is betting that SpaceX’s more powerful next-generation rocket, the Starship, will soon be capable of commercial missions. In addition, he envisions Starship’s staging to be “200 tons per flight per hour,” enabling the company to deploy space-based data centers at a rapid clip.
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Still, circling data centers is an unpopular concept. A key challenge involves maintenance and creating a way to cool the GPUs when there is no air in the space to dissipate the heat. Others are already questioning the sheer size of a million-satellite constellation when the current Starlink network has only 9,600 satellites. Nevertheless, Kasturi predicts that his orbiting data centers will become mainstream in the near future as Earth-based data centers face a backlash to the environmental and energy toll.
“My guess is that within 2 to 3 years, the least-cost way to produce AI compute will be in space,” he wrote. “This cost efficiency alone will enable innovative companies to continue training their AI models and processing data at unprecedented speeds and scales, accelerating advances in our understanding of physics and the invention of technologies to benefit humanity.”
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About our expert
Michael Kahn
Senior reporter
Experience
I have been a journalist for over 15 years. I got my start as a schools and cities reporter in Kansas City and joined PCMag in 2017, where I cover satellite Internet services, cybersecurity, PC hardware and more. I am currently based in San Francisco, but previously spent over five years in China, covering the country’s technology sector.
Since 2020, I’ve covered the launch and explosive growth of SpaceX’s StarLink satellite Internet service, writing 600+ stories on availability and feature launches, but also regulatory battles over expanding satellite constellations, battles with rival providers like AST SpaceMobile and Amazon, and efforts to expand satellite-based mobile service. I’ve combed through FCC filings for the latest news and reached out to remote corners of California to test StarLink’s cellular service.
I also cover cyber threats, from ransomware gangs to the emergence of AI-based malware. Earlier this year, the FTC forced Avast to pay $16.5 million for secretly harvesting and selling its personal information to third-party clients, as revealed in my joint Investigation Along with the motherboard
I also cover the PC graphics card market. Pandemic-era shortages led me to camp out in front of a Best Buy to get an RTX 3000. Now I’m following how President Trump’s tariffs will affect the industry. I’m always eager to learn more, so please jump into the comments with feedback and send me pointers.
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