Space is a vacuum. i.e. The lack-of-a-thing that makes a thermos great at keeping your drink hot. A satellite is, if nothing else, a fantastic thermos. A data center in space would necessarily rely completely on cooling by radiation, unlike a terrestrial data center that can make use of convection and conduction. You can't just pipe heat out into the atmosphere or build a heat exchanger. You can't exchange heat with vacuum. You can only radiate heat into it.
Heat is going to limit the compute that can be done in a satellite data centre and radiative cooling solutions are going to massively increase weight. It makes far more sense to build data centers in the arctic.
Musk is up to something here. This could be another hyperloop (i.e. A distracting promise meant to sabotage competition). It could be a legal dodge. It could be a power grab. What it will not be is a useful source of computing power. Anyone who takes this venture seriously is probably going to be burned.
Off on a tangent here but I'd love for anyone to seriously explain how they believe the "AI race" is economically winnable in any meaningful way.
Like what is the believed inflection point that changes us from the current situation (where all of the state-of-the-art models are roughly equal if you squint, and the open models are only like one release cycle behind) to one where someone achieves a clear advantage that won't be reproduced by everyone else in the "race" virtually immediately.