Cost the major barrier in AI’s race to space

How do SBDCs work?

SBDCs operate as a constellation of satellites in “dawn-dusk sun synchronous orbit” – capturing solar energy at all times by flying over places at sunset and sunrise, as waste heat is dissipated through “passive radiative cooling”.

The satellites would process AI workloads and relay data through inter-satellite links to communication satellites, which would then transmit data via radio frequency or laser downlinks to ground stations, then to users.

Current satellites, typically operating at 20-39kW, are small compared with the next generation of satellites needed for SBDCs, which are targeted at 100-150kW per satellite and would weigh approximately two tonnes.

“At ~$1,500/kg, launching 1GW of compute costs roughly $30bn, the largest barrier to commercial viability,” said BCG, while government-imposed power tariffs would add to the equation.

Costs are currently up to three times more than terrestrial AI infrastructures, although this is predicted to narrow to approximately 1.5x in the next five to 10 years.

SBDCs are expected to be used in scenarios where “structural advantages of orbit outweigh a persistent cost premium”. This could include processes such as “non-latency-sensitive inferencing, sovereign workloads and the processing of space-generated data”.

BCG added that any workloads that are sensitive to latency, such as training large language models (LLMs), are currently not fit for SBDCs, meaning organisations will only be able to opt for use cases where response time is not critical.

The workloads that are likely to remain on Earth are therefore real-time applications that require sub-50 millisecond (ms) response times.

“[SBDCs are] a credible new layer of AI infrastructure that will most likely serve a meaningful but bounded share of the market by 2040, anchored in workloads where orbit’s structural advantages, namely geographic distribution and sovereignty, outweigh a narrowing cost premium,” said BCG.

Challenges of technical feasibility

SBDCs at scale would mean mass production and deployment of “satellite buses, space-grade solar arrays, radiators and other subsystems at volumes the industry has not yet reached”.

A majority of constraints assessed in deploying SBDCs at scale were predicted to be solved in 10 years – including launch cost, cooling systems, battery life, radiation, connectivity and in-orbit maintenance.

The biggest challenge identified was in-orbit maintenance. A majority of the cost of running SBDCs would come down to graphics processing unit (GPU) compute, which needs replacing every five years – this could cost up to 55% of SBDC expenditure, compared with launch costs at around 22%.

A 100kW satellite also requires a radiator of 400 square metres, an “unprecedented” size, with cooling and in-orbit maintenance years away from readiness.

The report calculated a failure rate of 30% per constellation deployment. A failed GPU or component can mean the whole satellite is lost as there are no current means of in-orbit servicing.

Space pollution

Such a high failure rate adds to growing concerns around space debris. Business management consultancy Gartner flagged the emerging issue in December 2025, saying that space debris created from “retired satellites and discarded rocket components threatens critical infrastructure, including communications networks”.

Space.com reported there are nearly 1.3 million pieces of human-made orbital debris circulating the planet, which leads to an increased risk of collisions that generate more debris and debris strike incidents on Earth.

A separate article from May 2026 raised the issue of satellites reporting data loss and errors due to incoming space debris, which will only escalate as space debris increases.

BCG recommends that governments prepare for SBDCs as a reality by building regulatory frameworks before satellites are deployed, especially surrounding “data sovereignty, international liability and orbital debris”.