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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. I'm Stephen Carroll and

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Speaker 1: this is Here's Why, where we take one news story

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Speaker 1: and explain it in just a few minutes with our

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Speaker 1: experts here at Bloomberg.

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Speaker 2: If you're a data center CEO, you're feeling pretty good

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Speaker 2: about your business today. Across the board, resources when it

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Speaker 2: comes to this data center expansion are extremely stretched. You

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Speaker 2: need so much more computing, and the supply is just

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Speaker 2: not keeping up with this demand. The development of AII

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Speaker 2: is totally blocked and bottlenecked by the development and speed

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Speaker 2: of growth of data centers.

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Speaker 1: They're the infrastructure underpinning the global artificial intelligence boom. As

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Speaker 1: AI gets more sophisticated, it needs even larger volumes of data,

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Speaker 1: So data centers are getting bigger and more power hungry.

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Speaker 1: Some tech giants are even building power plants to supply

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Speaker 1: these facilities. But now rocket companies like SpaceX and Blue

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Speaker 1: Origin are looking at another option that's out of this world.

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Speaker 1: Here's why outer space is the next frontier for data centers.

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Speaker 1: Our Space editor Bruce Einhorn joins us now for more. Bruce,

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Speaker 1: first of all, why is space being considered as a

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Speaker 1: good place for data centers.

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Speaker 2: In part because of some of the problems here on Earth.

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Speaker 2: So the proliferation of data centers is becoming quite controversial,

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Speaker 2: and there's increased demand, of course from data centers, and

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Speaker 2: so as people look around for possible alternatives, one option

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Speaker 2: is orbit. Take these gigantic data centers that people don't

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Speaker 2: want in their neighborhoods or anywhere nearby, Let's put them

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Speaker 2: somewhere else. And there could also be ways to address

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Speaker 2: some of the problems that data centers create here on

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Speaker 2: Earth when it comes to the impact that they have

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Speaker 2: on the environment.

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Speaker 1: So what are the challenges that would need to be

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Speaker 1: overcome to get a data center into space.

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Speaker 2: One is just the actual transportation, right getting these things

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Speaker 2: into space, and so currently there's something of a rocket

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Speaker 2: shortage at the moment because there is such demand to

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Speaker 2: be getting satellites into space. If suddenly you want to

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Speaker 2: start building large data centers in space as well, you're

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Speaker 2: going to need rocket capacity. And so that's one problem

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Speaker 2: at the moment is we don't have the rocket capacity.

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Speaker 2: That's something that companies like SpaceX hope that they'll be

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Speaker 2: addressing sometime soon with new rockets. Another issue is just

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Speaker 2: logistics just how you actually if and when they're operating

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Speaker 2: up there, how do you get all the information that

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Speaker 2: you need from there back down to Earth. There's also

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Speaker 2: issues about the space environment, things like radiation, and also

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Speaker 2: how to address things like you know, data centers create

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Speaker 2: a whole lot of heat. You have to have these

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Speaker 2: giant radiators in space that would then be expelling it out,

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Speaker 2: but you can't be sending it back in the direction

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Speaker 2: of Earth. You have to position it so that it's

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Speaker 2: going out into space away from Earth. So lots of

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Speaker 2: potential problems.

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Speaker 1: But it's some interesting challenges for these companies to be

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Speaker 1: thinking about. Ultimately, will this not be much more expensive

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Speaker 1: than building data centers on Earth?

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Speaker 2: That is a very good question, and it does seem

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Speaker 2: that it is going to cost a whole lot of money. Yes,

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Speaker 2: But as I was mentioning earlier, one possibility that rocket

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Speaker 2: companies look to is reducing the cost of access to space,

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Speaker 2: and so SpaceX, for instance, working on its giant Starship rocket.

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Speaker 2: If and when that rocket is ready to be launching

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Speaker 2: multiple times enough to be able to build these things,

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Speaker 2: the idea is that that will be lowering the cost

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Speaker 2: sufficiently that you'll be able to get these things up

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Speaker 2: there in a way that wouldn't break the bank.

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Speaker 1: Talk to us about who's involved in this, Who are

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Speaker 1: the key players that are thinking about and working on this.

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Speaker 2: Well, the first name, of course is SpaceX, and we

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Speaker 2: at Bloomberg have reported about SpaceX looking toward in IPO

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Speaker 2: sometime perhaps this year, and one reason that the company

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Speaker 2: would be moving ahead on that is to be able

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Speaker 2: to raise money to help fund this project of building

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Speaker 2: these data centers in space. So SpaceX is the first

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Speaker 2: company need to look to. Another one, of course, would

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Speaker 2: be Blue Origin, backed by Jeff Bezos. Not as advanced

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Speaker 2: when it comes to rocketry, but they have a new

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Speaker 2: rocket that they've launched. They've launched it twice, called the

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Speaker 2: New Glen Rocket, So that's getting them into the game

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Speaker 2: of heavy launch of satellites and potentially other things. So

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Speaker 2: Blue Origin is another company out there. There's also Eric Schmidt,

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Speaker 2: former CEO of Google. He controls a rocket startup called

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Speaker 2: Relativity Space seems to also have interest in this idea

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Speaker 2: of building data centers in space.

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Speaker 1: How soon could this become a reality. I'm guessing from

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Speaker 1: what you're telling me it's not too soon.

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Speaker 2: It's not going to happen very quickly that we're going

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Speaker 2: to have these big data centers up there, up and running.

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Speaker 2: That said, we do have some companies that are taking

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Speaker 2: the first steps and they're putting small things up in

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Speaker 2: orbit that are the beginnings of plans for data centers.

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Speaker 2: And so it's not something that is going to happen

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Speaker 2: this year, it's not going to be something happening next year.

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Speaker 2: But potentially it's not that far out because we do

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Speaker 2: have companies that are pretty serious about this, that are

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Speaker 2: raising money, and if all the other things fall into place,

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Speaker 2: for instance, getting the big rockets that you need to

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Speaker 2: be able to launch frequently to get these things up there,

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Speaker 2: it's possible that it's not that far out.

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Speaker 1: Okay, well, one to watch anyway. Bruce Einhorn, our Space editor,

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Speaker 1: thank you very much for joining us. For more explanations

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Speaker 1: like this from our team of three thousands journalists and

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Speaker 1: analysts around the world, go to Bloomberg dot com slash explainers.

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Speaker 1: I'm Stephen Carroll. This is here's why. I'll be back

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Speaker 1: next week with more. Thanks for listening.