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Elon Musk, Colossus and data centers in space

by Joe Miller

Elon Musk says the AI race will be decided by electricity. He built the world's biggest AI supercomputer in Memphis in months, powered partly by gas turbines, and now wants SpaceX to launch solar-powered data centers into orbit. Here's what he's doing, what's real, and what's a long shot.

Watch: the narrated video (6 minutes)

Musk's AI companies Colossus The power fight Data centers in space Space traffic The hard parts My take Sources

Plain-English explainer by Joe Miller, a nuclear engineer. Not investment advice. Figures are the latest public numbers we could find and change fast; sources are at the bottom of each page.

Musk's AI companies in one minute

Elon Musk started the AI company xAI in 2023. Its main product is the Grok chatbot, which is built into X (formerly Twitter). In February 2026, SpaceX bought xAI in a deal that valued xAI at about $250 billion and SpaceX at about $1 trillion. In July 2026 the AI side was renamed SpaceXAI. That merger matters for data centers: the company that builds the AI chips' homes is now the same company that owns the world's busiest rockets.

When	What happened
May 2025	Musk warns that AI will hit power limits by mid-to-late 2026: first a shortage of transformers, then of electricity itself.
Dec. 2025	xAI buys a third building in the Memphis area, aiming for nearly 2 gigawatts of AI computing.
Jan. 30, 2026	SpaceX asks the FCC to approve up to one million data center satellites.
Feb. 2, 2026	SpaceX buys xAI. Musk says space-based AI is the only way to scale in the long run.
Apr. 2026	The NAACP, Southern Environmental Law Center and Earthjustice sue over gas turbines powering Colossus 2.
July 2026	xAI becomes SpaceXAI. SpaceX says it is running 69 gas turbines and will replace them with a permitted 1.2-gigawatt gas plant by July 2027.
Oct. 30, 2026	A federal judge refuses to dismiss the turbine lawsuit.
Nov. 5, 2026	Musk announces two more data centers in Southaven, Mississippi, next to Colossus 2.

Colossus: the biggest AI supercomputer, built in months

Colossus is the giant computer that trains Grok. xAI turned an old Electrolux appliance factory in Memphis into a data center and had the first 100,000 Nvidia chips running in about four months, a job that normally takes years. Since then it has grown into a cluster of buildings in Memphis, Tennessee, and Southaven, Mississippi:

Colossus 1 (Memphis): about 230,000 GPUs and roughly 300 to 500 megawatts.
Colossus 2 (Southaven area): the first AI site built for about a gigawatt, about as much power as a large nuclear reactor makes.
The whole complex is aimed at nearly 2 gigawatts and a million GPUs. In November 2026 Musk announced two more buildings in Southaven.

Other companies now rent time on it. Google agreed to rent Colossus 2 capacity, and Anthropic agreed to rent all of Colossus 1, according to news reports collected on Wikipedia.

The power fight: turbines, batteries and lawsuits

The local grid couldn't deliver that much electricity fast enough, so xAI brought its own. It parked dozens of natural gas turbines on site, added 168 Tesla Megapack batteries to smooth out the power, and later added a 30-megawatt solar farm. SpaceX says it is running 69 gas turbines today.

That speed came with a fight. Neighbors and civil rights groups say the turbines ran without Clean Air Act permits and pollute nearby, mostly Black neighborhoods. The groups suing say the Southaven plant could emit more than 5,000 tons of nitrogen oxides a year. xAI argued the turbines were "mobile sources" that didn't need permits; on October 30, 2026, a federal judge rejected that and let the lawsuit go forward. SpaceX says it will replace the temporary turbines with a permanent, permitted 1.2-gigawatt gas plant by July 2027. In Southaven, the company has offered to buy more than 400 nearby homes and businesses from owners bothered by noise or pollution.

SpaceX's plan: solar-powered data centers in outer space

Colossus is running today. The orbital data centers are a plan filed with the FCC.

Musk's answer to the power shortage is to leave Earth. He says that within two to three years, the cheapest place to run AI will be in space. Here's the plan as SpaceX has described it:

Up to one million satellites. SpaceX filed with the Federal Communications Commission on January 30, 2026, for a constellation of up to one million data center satellites, orbiting 500 to 2,000 kilometers up. In June 2026 it named the project "Starmind" and the satellites "AI1."
Sunlight for power. Each satellite carries large solar panels. In the right orbit, a satellite can sit in sunlight almost all the time: no clouds, no night, no fuel, no power lines and no local grid to fight over.
Each satellite is about one rack of AI chips. SpaceX's figures put each AI1 at an average of about 120 kilowatts of computing, with a wingspan of about 70 meters and liquid radiators to get rid of the heat.
Starship does the lifting. The plan only works if launches get very cheap. SpaceX wants its giant Starship rocket to eventually fly as often as once an hour, carrying about 200 tons each time.
Starlink carries the data. The satellites would talk to each other and to the ground with laser links, much like the Starlink internet network SpaceX already runs.

He isn't alone: Google (Project Suncatcher), Jeff Bezos's Blue Origin and several startups are working on the same idea. So far, only one data-center-class AI chip has worked in orbit: a single Nvidia H100 on the startup Starcloud's small satellite, launched in November 2025.

Space traffic: what a million more satellites would mean

The proposal is about 60 times everything in orbit today.

Low Earth orbit is already getting crowded. About 16,900 working satellites are up there today, and about two-thirds of them are SpaceX Starlinks. Add old rocket stages and broken pieces, and the European Space Agency tracks about 47,000 objects, plus an estimated 1.5 million pieces of junk between half an inch and four inches across, too small to track but big enough to wreck a satellite at 17,000 miles per hour.

Dodging is already constant. Starlink satellites made about 300,000 collision-avoidance moves in 2025, according to SpaceX's own report to the FCC. The Outer Space Institute estimates that if every satellite stopped dodging, a major collision would be expected within about four days.
The nightmare is a chain reaction. Scientists call it the Kessler syndrome: one collision makes thousands of pieces, those pieces hit other satellites, and the debris keeps multiplying until some orbits become too dangerous to use for years.
Astronomers are worried too. Bright satellites streak across telescope images. A 2021 study estimated that with 65,000 megaconstellation satellites, about 1 in 15 points of light in the night sky would be a moving satellite. A million would be far more. Astronomers and the public have filed objections with the FCC.

What SpaceX says, and what the rules are

Low orbits clean themselves. At these altitudes, thin air slowly drags dead satellites down, where they burn up. In 2026 Starlink is lowering about 4,400 satellites to around 300 miles up so that any that fail will fall back faster.
Planned retirement. Since 2022, the FCC has required satellites in low orbit to be brought down within five years after their mission ends. SpaceX says it brought down 260 old Starlinks in the six months to May 2026 and that more than 99% of its retirements work as planned.
Automatic dodging and room to spare. SpaceX says its satellites steer around danger on their own, and that its data center satellites would sit in separate bands of altitude, from about 300 to 1,240 miles up, with room left for other companies.
But it's asking for a break. FCC rules normally require half of a constellation to be in orbit within six years of approval. SpaceX asked the FCC to waive that for the million-satellite plan.

What to expect

The FCC hasn't approved the application. Based on how it has handled Starlink, the most likely outcome is approval in stages, a smaller first batch with conditions on brightness, altitude and disposal, with more allowed only if the first satellites behave. China, Amazon and others are planning large constellations too, so space traffic will grow no matter what. The real fix is something that doesn't fully exist yet: a worldwide traffic system, like air traffic control, that shares satellite positions and sets the rules of the road. Until then, every company is mostly policing itself.

The hard parts

Problem	Why it's hard
Getting rid of heat	On Earth, air and water carry heat away. In a vacuum there's nothing to carry it, so every watt has to be radiated away by big radiator panels.
Size of the solar panels	About one square kilometer of solar panels for each gigawatt. Colossus alone would need about two square kilometers in orbit.
Launch cost	Still thousands of dollars per kilogram today. Starship has to get far cheaper and fly far more often.
Radiation	Cosmic rays flip bits and wear out chips. Satellites need shielding or error-correcting designs.
Repairs and upgrades	AI chips go out of date in a few years. In orbit, you can't send a technician; you replace the satellite.
Space junk and the night sky	A million more satellites raises collision risks, and astronomers have asked the FCC to weigh the effect on their work.
Approval	SpaceX's FCC application is still pending. It also asked to waive the rule that half a constellation must be in orbit within six years.

Experts quoted by Fortune think a working system is at least three to five years away, with mass production after 2030. Small test satellites are likely sooner; a startup's second satellite, drawing about 8 kilowatts, is planned for early 2027.

My take as a nuclear engineer

Musk is right about the problem. The limit on AI in America isn't chips anymore; it's electricity, transformers and the years it takes to connect to the grid. Colossus proved you can build fast if you bring your own power, but it also showed the cost: when you skip the permits, the neighbors pay in dirty air and the courts get involved.

Space solar is real physics, but it's a long way from a press release to a power plant. The sunlight is free and constant, and SpaceX is the one company that could launch at that scale. But cooling, repairs and launch cost are engineering problems nobody has solved at gigawatt size. I'd expect test satellites in the next few years and meaningful computing in orbit in the 2030s, if Starship delivers. In the meantime, the AI race will be won or lost on the ground, with gas, nuclear, solar, batteries and power lines. See your electric bill and why Big Tech is buying nuclear.

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Who's writing this? I'm Joe Miller, a nuclear engineer. I spent my career around power plants, so when the AI boom turned into a race for electricity, I started digging. This site explains what I've found in plain English. My story is at criticalmassbook.com.

Sources

Checked November 14, 2026.