How Jeff Bezos Intends to Compete With Elon Musk in The Race For Space-Based Data Centres

The rivalry between Jeff Bezos and Elon Musk has entered a new dimension as both billionaires pivot toward 'orbital compute' to solve the energy crisis facing artificial intelligence.

On Thursday, 19 March 2026, Bezos' Blue Origin filed an application with the US Federal Communications Commission (FCC) for Project Sunrise, a massive constellation of 51,600 satellites designed to host data centres in space.

The move follows Musk's February 2026 announcement that SpaceX would merge with his AI startup, xAI, to create a trillion-dollar entity dedicated to building a solar-powered 'cloud' beyond the Earth's atmosphere.

Musk, who decided to merge SpaceX and xAI, recently detailed his vision for deploying data centres in space that will harness solar power to deliver higher computing power.

In a filing with the US FCC, Blue Origin proposed that the 'Project Sunrise' constellation would communicate via optical links by routing traffic through its TeraWave system among other networks.

TeraWave is a satellite communications service launched by Blue Origin in January to support enterprise, data centre, and government users. This constellation project differs from Amazon's plans to deploy its own constellation of satellites, called Amazon LEO.

Blue Origin said its designs for the Project Sunrise satellites are in progress, including revisions to its plans to mitigate orbital debris. 'The societal benefits of AI are fundamentally constrained by the availability and affordability of the computing infrastructure that powers it. Space-based data centres can help break this bottleneck,' the rocket company said in a regulatory filing on Thursday.

However, many analysts believe the economics of space-based data centres don't yet make sense. 'While we envision a future where space-based data centres become physically feasible, they currently remain rationally improbable,' Evercore ISI analyst Amit Daryanani said in a research note.

Blue Origin argues that its New Glenn rocket will make space-based computing accessible at 'previously unattainable' price points. This argument is similar to one made by SpaceX, which has made space-based computing a big selling point as it prepares for a potentially record-breaking public debut.

Insights Into SpaceX Constellation

Musk's SpaceX plans to launch a constellation of a million satellites that operate as orbital data centres, with a long-term goal of becoming a Kardashev II-level civilisation that can harness the sun's full power while offering AI-based applications for people on Earth. 'By directly harnessing near-constant solar power with little operating or maintenance costs, these satellites will transform our ability to scale compute,' he had stated.

This year, Starship will start delivering the V3 Starlink satellites to orbit, with each launch adding over 20 times the capacity of the current V2 Starlink satellites. SpaceX plans to launch the equivalent of a million tonnes of satellites annually to generate 100 gigawatts of AI capacity, assuming each tonne produces 100 kilowatts. The strategy will not involve ongoing operational or maintenance requirements.

'Ultimately, there is a path to launching 1 terawatt per year from Earth,' Musk said, adding that in two to three years, the lowest cost to generate AI compute will be in space. He believes this cost efficiency will enable companies to accelerate AI model training and data processing, supporting breakthroughs in physics and the development of new technologies.

The Road Ahead: 2026-2028

The race is now a sprint toward regulatory approval and launch cadence. Blue Origin is seeking several waivers from the FCC to accelerate its deployment, while SpaceX is already averaging one launch every 2.3 days in 2026. As the AI 'arms race' demands more power than Earth's grids can provide, the high ground of orbit is no longer just for surveillance or internet; it is becoming the new engine room of the digital economy.