Short Seller Jim Chanos Calls Elon Musk’s Orbital Datacenter Goals ‘AI Snake Oil’ — Says Need To See ‘Actual’ Savings

Badar Shaikh

Sat, February 21, 2026 at 10:31 AM GMT+9 3 min read

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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.

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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.

This is more AI Snake Oil from the Silicon Valley promoter class. Currently annual electricity costs for AI data centers are about $600K per MW, which is only about 5-7% of revenues on recently announced deals. Launch, radiation, insurance and redundancy costs would be greater.

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.

(2) And while grid power permitting is a current problem, it is rapidly being addressed in business-friendly jurisdictions. Actual power is in abundance in the US, particularly when energy companies partner w/private power producers, as we have seen in many recent deals.

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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.

(3) So before you fall for the “Data Centers in Space” hype, ask your favorite Silicon Valley promoter to show some actual cost figures/savings, first.

Michael Burry’s Nuclear Solution

Investor Michael Burry**,** of “The Big Short” fame, has said that nuclear energy could help bridge the gap between supply and demand for AI data centers, urging President** Donald Trump** and Vice President JD Vance to fast-track a $1 trillion nuclear power and grid expansion plan.

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Independent power producers like Constellation Energy Corp. (NASDAQ:CEG), Vistra Corp. (NYSE:VST), and NRG Energy Inc. (NYSE:NRG) could stand to benefit as AI data centers’ demand for power increases.

FCC 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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This article Short Seller Jim Chanos Calls Elon Musk’s Orbital Datacenter Goals ‘AI Snake Oil’ — Says Need To See ‘Actual’ Savings originally appeared on Benzinga.com

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