Of course it's the economics, not the physics, that are the challenge. We have thousands of existence proofs that you can launch a computer into orbit and have it work. The question is not, can you do it. The question is, why would you do it instead of putting that same computing capacity in a building somewhere?
It's not an either/or proposition in general but it is at the small scale. If I'm going to spend a million dollars on computing equipment, I can spend it on a terrestrial installation, or a space installation, or put some if it towards each, but anything I put towards one takes away from the other. If the economics of a terrestrial installation are much better than a space installation, why would I allocate any of my money to space?
Most of the conversation here seems to boil down to:
"Putting a data center in space is very hard and makes no sense."
"Putting a data center in space is actually pretty easy."
But by "hard" we mean "difficult to the point of being extremely economically uncompetitive with putting computers in a building," and by "easy" they mean "technologically feasible and the basic concept of computers in space has been done many times already."