Short Seller Jim Chanos Calls Elon Musk’s Orbital Datacenter Goals ‘AI Snake Oil’ — Says Need To See ‘Actual’ Savings – Constellation Energy (NASDAQ:CEG), NRG Energy (NYSE:NRG)

Short seller James Chanos has criticized the tech industry’s push towards developing orbital datacenters, outlining that space-based datacenters would cost more.

“AI Snake Oil”

In a post on the social media platform X on Wednesday, Chanos quoted a video that talked about Tesla Inc. (NASDAQ:TSLA) and SpaceX CEO Elon Musk’s vision to put datacenters in orbit following xAI’s merger into SpaceX.

“This is more AI Snake Oil from the Silicon Valley promoter class,” he said. Chanos added that the annual cost of electricity per MW for AI datacenters hovered around the $600,000 mark.

The figure makes up for about “5-7% of revenues on recently announced deals,” Chanos said. “Launch, radiation, insurance and redundancy costs would be greater,” he added.

Abundance Of Power In US

He then expanded on his views, sharing that grid power permitting was an issue, but it is being addressed. “Actual power is in abundance in the US, particularly when energy companies partner w/private power producers,” he said.

Chanos also warned against falling for orbital datacenter hype, asking stakeholders in the sector for “actual cost figures/savings,” when talking about the benefits of AI compute in space.

Michael Burry’s Nuclear SolutionFCC Invites SpaceX To Comment

The Federal Communications Commission (FCC) has invited SpaceX to comment on its orbital datacenter plans, which include a fleet of over 1 million Non-Geostationary Satellites (NSGO) placed 500-2000km above the Earth. The company has sought several waivers from the agency.

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