The European Space Policy Institute (ESPI) is sounding the alarm, urging Europe to swiftly formulate a comprehensive strategy for space-based data centers. According to the think tank, failure to do so risks ceding a crucial component of future digital infrastructure to global competitors.
ESPI highlights the growing activity in the United States and China, where companies are aggressively pursuing in-orbit cloud computing. This includes significant interest from figures like Elon Musk of SpaceX, as the industry explores leveraging space to address the escalating processing and energy demands of artificial intelligence.
A recent ESPI report, published November 18, indicates that approximately 70 million euros ($81 million) in private capital has been invested in space-based data center projects, or related enabling technologies, over the last five years. Examples include Lonestar, a lunar data storage startup based in Florida, and Starcloud, headquartered in Washington, which recently launched its first small satellite.
Starcloud-1, weighing around 60 kilograms, is equipped with an Nvidia processor designed to execute AI models in orbit, including variations of Google’s Gemini. However, realizing commercially viable capacity for Starcloud and similar ventures requires extensive solar arrays and large radiators in orbit to dissipate gigawatts of heat. This need for scale presents a significant engineering hurdle in deploying full-scale orbital compute, ESPI emphasizes.
While advances have been made, launch costs, thermal management, and in-orbit assembly remain major challenges. Europe has contributed early elements, such as ESA’s PhiSat AI processing missions and a European Union-funded feasibility study, but ESPI emphasizes the rapid pace at which other nations are moving toward operational systems.
NASA is currently managing over two dozen AI-driven edge computing projects, including experiments on the International Space Station to process sensor readings in space. China has launched the first 12 satellites of its Three-Body Computing Constellation, a planned 2,800-satellite AI computing network designed for heavy in-space processing to minimize latency and downlink bottlenecks.
McKinsey analysts project that data centers could require as much as $6.7 trillion in investment by 2030, with AI workloads driving approximately $5.2 trillion of this figure. According to Analysys Mason research director Claude Rousseau, "There is an increasing need in orbit for storage and processing in space for in-situ operations, and to complement terrestrial-based data centre markets."
Rousseau added, "Given the strong demand from government customers for connectivity, it is a natural fit to launch space data centres in various forms to meet their growing needs for sovereignty of operations, coupled with an increase in use of AI and to strengthen data security.”
Elon Musk, also CEO of xAI, stated in October that the upcoming V3 generation of Starlink broadband satellites, intended for launch on SpaceX’s Starship, could be scaled to function as orbiting data centers linked via high-speed lasers. "SpaceX will be doing this," he confirmed.
Speaking at the Italian Tech Week conference in Turin, Jeff Bezos, founder of Amazon and Blue Origin, predicted gigawatt-scale data centers would be deployed in space within the next 10 to 20 years. Amazon also owns Amazon Web Services, a cloud computing provider, and is developing a low Earth orbit broadband constellation called Amazon Leo to compete with Starlink.
ESPI cautions that Europe risks becoming reliant on foreign orbital compute capacity without immediate and coordinated action. To maintain competitiveness, the think tank recommends the European Union take decisive steps.