Sam Altman suggests SpaceX, Musk investment scammers

OpenAI chief executive Sam Altman has escalated his feud with Elon Musk, accusing the billionaire of scamming investors with claims SpaceX could operate data centres in space by 2028.

SpaceX raised $US85.7 billion ($123b) in June in the largest share market float in history, valuing the satellite and Starlink internet group at $US1.8 trillion.

But on Friday the shares fell 4.5 per cent to a record closing low of $US145.30 since it first listed on the Nasdaq at $US150, leaving nearly every investor nursing losses who bought shares on market.

On Sunday, Altman accused Musk of “selling public market investors on short-term data centres in space,” suggesting the plan as a key sales pitch to mum-and-dad investors was unrealistic and amounted to a scam.

The public scolding came after Musk used SpaceX-owned social media platform X to claim Altman “takes scamming to a whole new level”.

The insults are personal, but the commercial contest behind them is more consequential. Mr Musk and Mr Altman are competing for capital, computing power and influence over the development of artificial intelligence. Neither is willing to concede the other a dominant position.

Data centres in space sit at the centre of that contest because they offer SpaceX a potentially enormous new market beyond satellite launches and broadband.

Musk says SpaceX will have a prototype data centre in orbit by 2027. Mr Altman’s scepticism suggests the timetable is not merely ambitious, but an implausible sales pitch to gullible mum-and-dad investors.

Independent experts are uncertain as to whether commercial data centres in space by 2028 are a realistic goal. Or more pie in the sky from Mr Musk, as a man with a history of making grand claims that fail to materialise.

Data centres in space?

Analysis of expert opinion by investment bank UBS identified a long list of obstacles, including power supply, heat dissipation, cooling, radiation shielding, communications and maintenance.

Cooling the data centres that become notoriously hot on earth may be the most difficult problem to solve. UBS’ expert suggested 80 per cent of a space data centre’s weight could be made up in cooling equipment alone.

“As such, the ability to scale compute in (space) orbit is less dependent on chip performance and more dependent on how efficiently heat can be rejected per unit mass and surface area,” UBS wrote.

It also warned the radiation in space could degrade systems or hardware. Maintenance is another obvious constraint, given damaged equipment cannot be repaired as easily as a server inside a suburban data centre.

Even if they do work at a small scale, UBS accepts it’s not certain whether they would be cheaper to operate in space, than earth.

The theoretical attraction is that solar panels in orbit could provide continuous power and reduce one of the largest costs associated with artificial intelligence infrastructure.

But those savings would need to outweigh the expense of launches, specialised hardware, radiation protection, communications systems and the replacement of failed equipment.

Despite this, UBS sides with Mr Musk over Mr Altman.

The investment bank believes SpaceX can overcome the technical hurdles and begin earning revenue from orbital data centres by 2028.

It estimates the business could generate annual revenue of $US200 billion by 2031 by providing 200 gigawatts of computing capacity.

That forecast implies an extraordinarily rapid build-out. It also deserves scrutiny because UBS discloses that it received fees for work conducted on SpaceX’s behalf during the last 12 months.

Musk says flying data centres by 2027

On Monday, Mr Musk upped the stakes by claiming a data centres would be flying in space by 2027 and even taunted Mr Altman that he may not be able to see it from earth if he’s imprisoned for unspecified offences Musk alleges.

“Maybe you can come see them (the data centres) if your parole officer approves,” he told Altman on X. “After stealing an open source AI charity, you then stole all of Apple’s phone technology! Wow.”

The Nightly does not suggest Altman is guilty of any offences, only that this is what Mr Musk publicly claimed.

The vicious falling out between the billionaire pair marks a new low in the relationship that started as friends in 2015, when they co-founded ChatGPT-operator OpenAI.

In 2026, Mr Musk tried to sue Mr Altman for $US150 billion for forcing him out of OpenAI in 2018, but a US court dismissed the claim.

For SpaceX investors, the central question is whether space data centres can become a viable business fast enough to support expectations already embedded in a $US1.8 trillion valuation. The truth over the space data centres is yet to play out.