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.
It probably increases Elon's share of the combined entity.
It delivers on a promise to investors that he will make money for them, even as the underlying businesses are lousy.
You might only care about coding models, but text is dominating the market share right now and Grok is the #2 model for that in arena rankings.
They have no path to paying for their existence unless they drastically increase usage. There aren't going to be very many big winners in this segment and xAI's expenses are really really big.
Is the plan to have everyone so hopelessly dependent on their product that they grit their teeth and keep on paying?
Think about the stock return over a period - its composed of capital gains and dividends.
Now what happens capital gains disappears and perhaps turns into capital losses? Dividends have to go higher.
What does this mean? Less retained earnings / cashflows that can be re-invested.
Apple is the only one that will come out of this OK. The others will be destroyed for if they dont return cash, the cash balance will be discounted leading to a further reduction in the value of equity. The same thing that happened to Zuckerberg and Meta with the Metaverse fiasco.
Firms in the private sphere will go bust/acquired.