The idea of data centers in lower Earth orbit is not a far-off dream – it will be the newest way to max compute with minimal environmental impact

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Data centers are coming to the forefront of a new generation of AI technology that has the potential to impact nearly all aspects of life on Earth and beyond. It was one of several topics discussed at the LA Times Studios Inaugural Aerospace & Defense Summit Focused on Securing the “Orbital Frontier.”

Sophia Space is one of a handful of companies exploring said frontier with data centers in space, with several looking to begin testing technology in space by next year. The Pasadena-based startup founded by Dr. Leon Alkalai relies on technology developed by Jet Propulsion Laboratory (JPL) and Caltech to utilize a unique passive cooling system and solar panels that makes its Tile design feasible in the harsh environment of lower Earth orbit.

“Data centers in space are foundational infrastructure for the emerging space economy, for future national defense, and for enabling responsive disaster management and saving lives on Earth,” said Dr. Alkalai, who also serves as chief technical officer. He also is also the founder and chief executive of Mandala Space Ventures, a Pasadena-based venture studio that launched Sophia Space in 2023. “Space is hard, that is why the vast majority of Sophia Space engineers are battle-hardened space-flight engineers hired from JPL.”

The company uses technology that was developed from another project at Caltech. Sophia has built new intellectual property onto this existing thermal shedding technology that allows for a passive cooling system, greatly reducing the weight and size of a data center by removing one of the heaviest elements – a radiation system to cool the systems that process data.

Sophia raised a pre-seed round of $3.5 million and hired four engineers before closing an $11.5-million seed round earlier this year led by Alpha Funds, KDDI Green Partners Fund and Unlock Venture Partners. It now has about 25 employees in Pasadena and plans to expand into new lab space soon.

Access to space has its own unique advantages. Companies like Varda Space Industries in El Segundo have already started to utilize a microgravity environment for commercial uses by developing pharmaceuticals in space. Vast Aerospace in Long Beach is developing commercial space stations where orbital manufacturing could be performed.

Adding computing power in space opens myriad opportunities to impact technology in orbit as well as on earth. Ultimately, companies across the aerospace and defense spectrum envision hundreds of thousands of satellites and dozens of planned manned missions to space stations in orbit and on the moon. Satellites have the ability to monitor important elements of natural life and activity on Earth, everything from weather patterns and crop growth to troop movements, maritime activities or supply chains.

Examples range from tracking agriculture performance to ensure that goods are harvested at their peak to real time tracking of disasters like floods or wildfires to support emergency systems and save lives. Technology to monitor these events requires computer processing that may have seemed impossible even just a few years ago, but the proliferation of AI systems has begun to demonstrate the potential.

Currently, satellites are limited by capacity to transmit data to the terrestrial data centers which process data. Moving some of that functionality into space will greatly increase the ability to manage that process. Furthermore, chip manufacturers are experimenting with new types of data transmission utilizing light waves which are faster and have a greater capacity to send data.

In short, the data centers of the future could have much higher capacity to manage information, which means that the amount of hardware needed in space is projected to be lower than current system requirements.

“Eventually, the cost will be lower than on Earth, but in the early days, you are getting computing to a place and at a scale that has never done it before. They do it because there is not enough compute aboard the spacecraft. You can’t do anything real time,” said Rob DeMillo, chief executive of Sophia Space.

Terrestrial data centers are in high demand, with companies committing hundreds of billions of dollars to their construction over the next several years. However, their construction is not without controversy. Some municipalities have banned them due to their higher energy and water usage, as well as impacts on society such as noise pollution. Finding new sources for energy and water is a challenge, but required to cool facilities using traditional heating and cooling systems. For example, the City of Los Angeles temporarily banned new construction of data centers because of the energy requirements. Alternative sources such as nuclear microreactors could be one solution, but are a burgeoning technology that has yet to be deployed commercially.

In space, the lack of air and water creates a unique challenge to find new cooling technology. Liqui-cooled radiators are bulky, heavy, require a lot of power and break down, but would be extremely difficult to maintain in space. Plus, the costs to launch heavy equipment into space is cost prohibitive and there is a lack of availability from launch providers to move that amount of equipment into orbit. That’s why companies like Sophia Space are looking at novel solutions that feature the new lightweight, passively cooled thermal systems that are built into the design.

Launch capacity is a challenge that these companies will not solve on their own. Last month’s Blue Origin New Glenn rocket explosion during a Florida ground test demonstrates the challenges with orbital deployment. SpaceX and Rocket Lab dominate the launch market, with companies such as Blue Origin, Long Beach-based Relativity Space and others working to develop rockets that can deploy payloads into orbit and will eventually lower costs.

That is key to ensuring that data centers can compete financially. Google is working with San Francisco-based Planet on Project Suncatcher, an experimental moonshot research initiative to put data centers in space. Google estimates that launch costs need to fall to $200 per kilogram, which it identified as the point where the cost of launching and operating a space-based data center could become roughly comparable to the reported energy costs of an equivalent terrestrial data center on a per-kilowatt/year basis. It is projected that the price point could reach that point by the mid-2030s.

Current costs could be upwards of $20,000 per kilogram, which is in itself a dramatic decline from a decade ago.

Google and Planet are planning to launch two prototype satellites by early 2027 to test TPU hardware in space and validate the systems that it has developed.

“As optical communications improve and AI workflows become more integrated, shifting to edge compute and orbital data centers is going to become the standard way we operate.” said James Mason, chief space officer of Planet. “For instance, processing raw imagery near the sensor lets us quickly extract and deliver the most urgent information without waiting for massive file transfers.”

Mason anticipates that small but genuinely useful orbital clusters will be operating within two to three years and the amount of capital supporting companies that are scaling data center operations will eventually be injected into orbital data centers. Terrestrial data centers have hundreds of billions of dollars committed to their development. By comparison, VC space-tech investing surged last year to $11.1 billion, according to PitchBook data, an increase of 65% from $6.7 billion in 2024.

In addition to these companies, companies such as Los Angeles-based Orbital, Redmond, WA-based Starcloud, Houston-based Axiom Space and others have announced various levels of research and venture capital investment into orbital data centers. Moreover, countries such as China have also explored the potential for data centers in space.

The largest player in the industry, however, may be SpaceX, which controls the vast majority of launch vehicles and has demonstrated that it has the ability to create and monetize a commercial space product with its Starlink communications system. It cited the ability to harness energy from the sun as a cost-effective reason to deploy orbital data centers.

“We believe SpaceX’s reusable rockets, scaled satellite manufacturing and operational expertise can enable the cost-effective and rapid deployment of massive AI compute satellite constellations – with potentially millions of satellites – for orbital data centers,” the company stated in its S-1 filing with the SEC on May 20.

It went on to underscore that massive expansion of data center capacity to support growing compute demand from AI is significantly outpacing electricity generation on Earth. This supply and demand imbalance is already imposing unsustainable strains on terrestrial power grids, supply chains and the environment, and SpaceX estimated that it could begin deploying orbital AI compute satellites as early as 2028.

For Sophia Space, the competition means that they are on the right track to developing a commercially viable product. Initial versions of data centers are expected to be small and will support edge computing for people that need it now. As the technology improves, Sophia Space’s DeMillo anticipates larger deployments.

“We have a commercial customer pipeline. Our goal is to begin taking income this year,” said DeMillo of Sophia Space. “We understand that there will be hits and misses.”

“We’re not trying to compete with data centers on the ground. We’re an augmentation of those data centers.”