SpaceX (SPAX.PVT) founder Elon Musk has said that he wants to put data centers in space. One industry founder told Yahoo Finance how it would actually work.

While the idea brings to mind massive buildings floating aimlessly through the cosmos, Christopher Stott, founder of Lonestar Data Holdings, a sovereign data storage company, told Yahoo Finance that the architecture of space-based computing is more akin to satellites orbiting in a tight, synchronized formation.

“Imagine a big data center that’s made out of Legos, and then you split those Lego bricks into all the individual bricks and have them fly in space right next to each other, and they all connect,” Stott said. The connection is formed through optical lasers and radio frequencies.

Lonestar is part of Nvidia’s (NVDA) Inception program, which grants early-stage ventures access to AI chips and support so they can build and scale faster. Since August 2021, Lonestar has launched four test data center payloads into space — two to the International Space Station and two to the lunar surface. Lonestar customers include governments, NGOs, and social media companies.

The biggest incentive to scale AI data centers in space is cost, Stott explained.

In orbit, data centers can cast off their heat directly into the freezing vacuum of space without relying on air-cooling technologies, while the sun provides a continuous supply of energy.

“Energy is so expensive,” he said. ” Now, once you build a space center, your biggest [operating expense] cost is gone.”

Multiple companies are trying to make the vision of data centers in space a reality. In its S-1 filing released Wednesday, SpaceX said its rockets and manufacturing expertise could power “massive AI compute satellite constellations — with potentially millions of satellites — for orbital data centers,” with the first launch as early as 2028.

The Wall Street Journal reported earlier this month that Alphabet’s Google (GOOG) and SpaceX are in advanced discussions over launching data centers in space.

Last year, Google announced Project Suncatcher, a moonshot initiative aimed at launching prototype satellites by 2027. The company is working with Planet Labs to build those satellites. A partnership with SpaceX would enhance those aspirations, with SpaceX being the preeminent private rocket launch company and space payload provider, the Journal said.

In the long term, “space-based AI is obviously the only way to scale,” Elon Musk wrote in February when his startup XAI merged with SpaceX.

“The only logical solution therefore is to transport these resource-intensive efforts to a location with vast power and space,” he added.

Execution may include some challenges. Two of the payloads launched by Lonestar tipped over when they landed on the surface of the moon. However, Stott said the company finished testing one of them in lunar orbit prior to landing. The other one kept running even after it tipped over.

“It was still running,” said Stott. “The servers didn’t need to be right-side-up to process data,” he said.

It’s unclear what the timeline is for putting data centers in space. Musk told Forbes in an interview earlier this month that “data centers in space is much easier than people may think.”

Blue Origin, founded by Amazon founder Jeff Bezos, recently announced TeraWave, a proposed network of thousands of laser-linked satellites designed to handle massive enterprise data traffic from orbit.

In an interview with CNBC on Wednesday, Bezos said the reality of running data centers in space “will happen,” though he doesn’t know how long it will take.

“Some of the timelines we hear are very short. They’re probably not right,” said Bezos.

Yahoo Finance’s Pras Subramanian contributed to this report.

Ines Ferre is a Senior Business Reporter for Yahoo Finance covering the US stock market, publicly traded companies, and commodities. She has reported live from the floor of the New York Stock Exchange and Nasdaq.

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