CoreWeave, IREN, Equinix, Other 'Terrestrial' Data Center Plays In Focus As Jim Chanos Slams 'Space' Narrative
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Renowned short-seller Jim Chanos has issued a critique of the emerging “data centers in space” narrative, suggesting that if orbital computing is the future, then the current multi-billion dollar terrestrial infrastructure build-out is fundamentally doomed.
Chanos Takes Aim At ‘Space Data Center’ Hype
In a post on X on Feb. 3, Chanos questioned whether hyperscalers, neoclouds, and ex-Bitcoin (CRYPTO: BTC) miners currently racing to bring land-based capacity online over the next 2-3 years are effectively “terminal shorts.”
His skepticism targets the logic that space-based facilities could render massive Earth-bound investments obsolete.
‘Space Narrative’ Vs. Terrestrial Reality
The debate centers on whether the extreme power and cooling demands of AI are better met in orbit. Proponents like Gavin Baker argue that space offers “superior” economics because cooling is free in the vacuum and solar energy is 30% more intense without atmospheric interference.
However, Chanos’ “terminal short” comment appears to be a sardonic take on the valuation of companies doubling down on Earth-based hardware. Key companies in his crosshairs include:
- CoreWeave Inc. (NASDAQ:CRWV): Chanos has previously attacked CoreWeave’s economic model, arguing its ROIC (Return on Invested Capital) could hit 0% if GPU depreciation is faster than the company admits.
- IREN Ltd. (NASDAQ:IREN): He recently slammed the former Bitcoin miner's AI pivot, calling its 80% marginal EBITDA projections “hopium.”
- Equinix Inc. (NASDAQ:EQIX): As a premier terrestrial data center REIT, Equinix represents the “old world” infrastructure that the space narrative threatens to disrupt.
- Oracle Corp. (NYSE:ORCL): Chanos warns Oracle is “betting the company” on AI spending that may not monetize before the hardware becomes obsolete.
Economic Bottleneck: ‘Not Enough Rockets’
While some investors are enamored with the “Datacenters in the Sky,” Amazon.com Inc.’s (NASDAQ:AMZN) AWS CEO Matt Garman recently poured cold water on the idea.
Speaking at the Cisco AI Summit, Garman noted that server racks weigh roughly 1,000 pounds and the cost of lifting that payload is currently “massive.”
“There are not enough rockets to launch a million satellites yet,” Garman stated, calling the concept “pretty far” from reality.
Comparison Of Inputs: Earth Vs. Space
| Factor | Terrestrial Data Centers | Space-Based Data Centers (Project Suncatcher/xAI) |
| Power | Strained Grids / Gas Turbines | Constant Solar Power |
| Cooling | Expensive Liquid / Air Systems | Free Radiative Cooling to Vacuum |
| Latency | Fiber Optics (Glass) | Lasers In Vacuum (Faster Than Fiber) |
| Capex | High Land & Construction Costs | Extreme Launch & Transport Costs |
Depreciation ‘Time Bomb’
Even if data centers stay on the ground, Chanos remains a bear on the sector due to depreciation. He argues that while companies like Oracle and CoreWeave use 6-to-9-year depreciation schedules, the rapid pace of Nvidia Corp. (NASDAQ:NVDA) innovation renders chips obsolete in 3 to 4 years.
If the “Space Narrative” gains even a shred of operational traction by 2027, with Alphabet Inc.‘s (NASDAQ:GOOG) (NASDAQ:GOOGL) target for prototype launches, it could accelerate the perceived obsolescence of the billions currently being sunk into the ground.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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