News Digest: Elon Musk has Stars in his Eyes – Literally
February 4, 2026
Beyond the mind-numbing financial stakes involved in the SpaceX-xAI merger, the February 2026 merger represents a tectonic shift towards the beginning of the end of AI’s reliance on terrestrial constraints. By acquiring xAI, Elon Musk is moving beyond the “Grok” chatbot to build the ultimate hardware play: Orbital Data Centres. This merger transforms SpaceX from a launch provider into the world’s first off-world compute sovereign, valued at over $1 trillion.
The “SaaSpocalypse” has exposed the fatal flaw of terrestrial AI: a 165% projected spike in power demand that has already sent local electricity bills soaring by 267%. Musk’s solution is to bypass Earth’s “broken processes” and cooling costs entirely. The combined entity’s FCC filing for a 1-million-satellite constellation aims to establish a solar-powered compute blanket around the planet.
In space, the two greatest overheads of AI, cooling and energy, are solved by the vacuum of space and unfiltered solar radiation. Musk estimates that within three years, the lowest-cost AI compute will be generated in orbit, far from the regulatory and environmental friction of land-based facilities.
This merger creates a “Digital High Ground” with profound implications:
- Infrastructure Sovereignty: By hosting xAI’s “agentic teams” in orbit, Musk creates a platform immune to terrestrial power grid failures or local data sovereignty laws. More importantly, he will delink the energy narrative from data center needs, a huge reprieve for many governments.
- Zero-G Cooling: The thermal management of massive GPU clusters is naturally handled by the cold of space, allowing for the “100x power” jump predicted by Nvidia for next-gen models.
- The Enterprise Edge: Much like OpenAI’s Frontier, this orbital network provides enterprises with “Shared Context” at a global scale, but with the added physical security of being literally out of reach.
As xAI’s agility merges with SpaceX’s heavy-lift capabilities, the frontier of AI is no longer a code-red in a Silicon Valley office; it is a shimmering ring of silicon and solar panels orbiting 500 kilometers above the Earth.
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