Short Seller Jim Chanos Critiques Elon Musk's Orbital Datacenter Vision
Short Seller James Chanos has voiced his skepticism regarding the tech industry's ambition to establish orbital datacenters, claiming that these space-based solutions would incur higher costs.
In a post on X on Wednesday, Chanos referenced a video discussing Tesla Inc. (NASDAQ: $TSLA) and SpaceX CEO Elon Musk's vision of placing datacenters in orbit following xAI's merger with SpaceX. He remarked, "This is more AI Snake Oil from the Silicon Valley promoter class." Chanos pointed out that the annual electricity costs for AI datacenters are around $600,000 per MW, which accounts for approximately 5-7% of revenues on recently announced deals.
Chanos elaborated, stating, "Launch, radiation, insurance, and redundancy costs would be greater," emphasizing the need for tangible savings when discussing the benefits of AI compute in space.
Abundance of Power in the U.S.
He further expanded his perspective, acknowledging that while grid power permitting poses challenges, these issues are being resolved. "Actual power is in abundance in the US, especially when energy companies collaborate with private power producers," he stated.
Chanos cautioned against the allure of orbital datacenter hype, urging stakeholders to demand actual cost figures and savings. "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," he advised.
Michael Burry's Call for Nuclear Energy
Investor Michael Burry, famed for his role in The Big Short, has suggested that nuclear energy could play a significant role in bridging the supply-demand gap for AI data centers. He has urged President Donald Trump and Vice President JD Vance to expedite a $1 trillion nuclear power and grid expansion initiative.
Independent power producers such as Constellation Energy Corp. (NASDAQ: $CEG), Vistra Corp. (NYSE: $VST), and NRG Energy Inc. (NYSE: $NRG) could benefit as the demand for power from AI data centers rises.
FCC's Interest in SpaceX's Plans
The Federal Communications Commission (FCC) has invited SpaceX to comment on its orbital datacenter proposals, which involve deploying a fleet of over 1 million Non-Geostationary Satellites (NSGO) positioned 500-2000 km above the Earth. The company has requested several waivers from the agency.
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