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The advantage is solar power in space. They will never stop getting sunlight.
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In LEO you are about 50% of the time in the shadow of the Earth. Higher orbits or solar orbit (where you can get uninterrupted sunlight) require a lot more fuel and the further out the data center is, the higher the latency.
There's a very narrow band of sun-synchronous orbit with consistent enough sunlight to make orbital data centers viable. Even with a tight constellation of 500,000 to 1,000,000 satellites packed into that band, it still doesn't make economic sense compared to what terrestrial data centers can do. At 500,000 satellites you're looking at maybe 50 GW of solar power. Then factor in the lifespan of LEO at ~5 years you're looking at hundreds of satellite launches daily to maintain that infrastructure.

Now work is being done for increasing solar access (Starcatcher) and others are working on improving LEO refueling and repair capabilities, but I would say we're decade+ away from establishing any true compute infrastructure in orbit.

Solar and batteries get you through the entire day right here on Earth, plus you can shit in a toilet when you need to go on site to fix or upgrade something, not in a little tube. Plus you can probably just drive there instead of needing 15,000 feet/sec delta-v to get to orbit. And you can breathe. Surely the cost of batteries and panels do not exceed the costs and logistical pain-in-the-dick going into orbit will impose.
There is a 150 KW Solar Array on Space X's first Data Center In Space It was launched in June of 2026. Technology improves at a steady pace. Space solar power is new and will improve over time because it is not a mature technology. Also, in space solar power is continuous and receives more energy than on the ground. https://finance.yahoo.com/sectors/technology/article/spacex-...
Data Centers in Space are a practical engineering impossibility, as well as making no economic sense. Engineering and the laws of physics get on the way.

Just because Scott Manley refuses to call that out, so he can do another eight videos about it, don´t stop listening to somebody with the feet on the ground:

"Orbital Data Centers: Spacecraft Constraints and Economic Viability" - https://arxiv.org/abs/2604.27197

"Hot AI in Cold Space: Thermal-Crosstalk-Aware Scheduling for Sustainable Orbital AI Clusters" - https://arxiv.org/abs/2606.26150

"Above the Cloud: Building Data Centers in Space - Richard Campbell - NDC Copenhagen 2026" - https://youtu.be/eo7MEPgWGic

"Space Data Centers Are Dumb" - https://youtu.be/-w6G7VEwNq0

I don't think they are impossible, just impractically expensive. That should be no problem for AI companies and their infinite access to capital. Nobody wants datacenters to be built around here on the ground, so I say get to spending.

If it ends up bankrupting them, even better.

Good thing Elon's companies have a history of moving engineering impossibilities from impossible to slightly late.

Remember when globally competitive electric cars, re-usable boosters, catching a rocket with chopsticks, playing a fps game via a brain implant, and maintaining a satellite constellation at 480km LEO were also impossible?

>Data Centers in Space are a practical engineering impossibility,

Not really, thermal radiators are well understood and the size needed aren't really that unreasonable. Radiation hardening the GPUs is probably the single hardest problem along with actual launch costs.

>making no economic sense

Yes this is the real issue, Spacex would need to reduce the cost of launches by ~10x with Starship for it to ever be viable.

Nobody in this industry with a modicum of applicable expertise believes that orbital data centers make sense financially. Like colonizing Mars and most of Elon's pipe dreams, it's not the stated goal they believe in, it's getting fabulously wealthy from fat government contracts along the way.

Once you understand this about Musk, you realize that everything he is involved with works that way.

I think everyone misses the real point - they're completely outside the jurisdiction of any government.

Short of launching an ASAT and the risk of space debris, nobody will be able to shut them down.

have you ever seen a detailed photo of the ISS?

* https://images2.imgbox.com/64/4b/GhtUtq1m_o.jpg

look at how massive the solar panels and more importantly the thermal radiators are outside

compare to the size of the human habitat tubes

"AI" in space would demand as much if not even more for each node

Rather than reasoning on the feasibility of data centers in space, what are the constraints that prevent them from being built on Earth? What's the minimum cost of building and operating in the US the equivalent of a 1M satellites data center?
My bet is that all of this "Data centers in space" media campaign is just a cover for testing and launching military stations with an ability to attack ICBM's and ground targets all over the globe.
I am waiting to reserve my place in Elysium. "Get your ticket to that wheel in space while there's time ... The fix is in ... You'll be a witness to that game of chance in the sky"