Orbital Data Centers: A waste of space?

The concept of orbital data centers has moved from theoretical curiosity to a topic of serious consideration. The proposition is, at least conceptually, compelling: relocating compute infrastructure to orbit would effectively eliminate land constraints, provide access to near-continuous solar energy without atmospheric attenuation, and enable alternative cooling mechanisms that do not rely on water. In an environment where terrestrial limitations are becoming increasingly binding, space offers a fundamentally different operating paradigm.As SpaceX prepares for its $1.75tn IPO, a critical question remains: do the physics underpinning orbital data centers support their economic viability?In this report, we examine the fundamental technical constraints associated with deploying and operating data centers in orbit. Specifically, we analyse the challenges related to power generation, thermal management, radiation exposure, and the complexities of high-bandwidth, low-latency connectivity with both terrestrial and space networks. We then assess how a range of companies—spanning established hyperscalers, aerospace leaders and emerging startups—are attempting to address these issues. Finally, we evaluate whether orbital data centers can evolve from a conceptual solution into a commercially and financially viable component of the global digital infrastructure stack within a realistic investment horizon.