The Future Space-Based Economy – Securities.io

Growing The Economy Upward

With more tests of SpaceX”s Starship ongoing, it seems that the old science fiction dream of space colonization is becoming more realistic by the day. Elon Musk is even envisioning a first mission to Mars at the end of this decade, with full-fledged colonies in the next 20-30 years.

This is also with the backdrop of both China and NASA having big plans for a permanent Moon base (The Artemis missions), as well as discussions of new space stations by the EU, India, and Russia, on top of the quickly growing Chinese one.

For now, space technology and exploration are mostly driven by scientific research, national prestige, and the ambition of billionaires like Elon Musk and Jeff Bezos.

However, in the long run, a sustainable space colonization effort must be economically viable. Historically, colonial ventures like the European expansion into the Americas were made possible by the high value of local products like coffee, cacao, or sugar.

Similarly, any building of space infrastructure and colonies at a large enough scale will require a solid return on investment for the nations, companies, and individuals backing it. This will also be necessary to convince enough people to risk the dangers of an airless, irradiated, and overall very hostile environment.

The Economic Constraints

Gravity & Launch Costs

The core economic fact of any space-based economy is that getting things into orbit is expensive… Very expensive.

Fighting Earth’s gravity well requires tons of energy and very advanced machinery. This is especially true for sending people or equipment into geostationary orbits (GEO) or as far as the Moon or deep space.

Such machinery currently exists only in the form of rockets, with reusable rockets only recently made possible thanks to SpaceX. Other launch systems than rockets might change this equation in the long run (more on that below), but this will be the central constraint for the coming decades.

Because of SpaceX’s reusable rockets, this constraint has become a little less heavy, allowing the US to single-handedly become the dominant force in orbital launches in the last few years.

Even with this recent success, this means that every kilogram of anything up in space comes with an additional price tag of several thousands of dollars, and still a projected minimum of +$100/kg with a hypothetical full fleet of SpaceX’s Starships.

This is not so impactful for bringing to space advanced computer chips or precious materials and technology. But it puts a very high price tag on simple and heavy materials like for example food or steel.

Another consequence of this core fact is that once anything is in orbit or deep space, you would prefer to keep it there.

So year(s)- long missions and omnipresent recycling will be a fact of life in the space-based economy.

Technology Costs & Environment

Another key factor in space equipment is that it has to operate in a very hostile environment. Extreme cold and hot temperatures, total vacuum, micrometeorites, solar wind, radiations, all of these conditions put extra requirements and stress on materials. Any small failure can cascade into a catastrophe very quickly in such conditions.

So, every piece of equipment and machinery needs to be sturdier than normal. And almost full proof. And with a lot of redundancy.

All of this will cost money.

So, anything done in space needs a good reason to be done there instead of on Earth. Otherwise, the economics just don’t add up.

Life Sustaining Systems

Lastly, while likely to rely heavily on automation, the need for precision, intelligence, and reactivity will mean that humans will need to operate and maintain a large part of the space economy.

But remember, bringing heavy things like food into orbit comes with an excessive price tag. A kilogram of flour suddenly costs +$1,000, the same for a liter of water. Even air is now precious.

Above a certain number of astronauts into orbit, the only way to make this sustainable is to produce 99% of the food supply on-site, with maybe just a supply of seeds, vitamins, and minerals pills coming from Earth.

Profitable Sectors

Overall, producing anything, maintaining it, and even simply surviving in space is expensive. And will be so in the foreseeable future.

A sustainable space-based economy must bring in a lot of money to pay for its costs. To pay people an attractive enough salary, to pay for launch costs, and to pay for hardened equipment, it will need to engage in highly profitable activities.

And because everything done in space is more expensive, it will not be competitive with most of Earth-based industries.

Still, quite a few activities in space might quickly become insanely profitable.

Tourism

Experiencing weightlessness or seeing the Earth from orbit are unique experiences that only a privileged few hundred humans have ever had. This makes them inherently attractive, both for science enthusiasts and the bored rich looking for new experiences.

Even more unique experiences could be unlocked later, from a stay on the Moon to climbing a 21.9 km (13.6 mi or 72,000 ft) Martian volcano with a 7km high cliff or seeing the rings of Saturn up close.

The global tourism industry is estimated at no less than $7.7T. Even the narrower and more relevant to space tourism segment of luxury tourism is estimated to represent $1.9T.

If even just 1% of this market is spent on space tourism, this represents $19B. With a cost per launch of $90M for the Falcon Heavy (and lower for the future Starship), tourism alone could finance hundreds of launches per year.

Most likely, this will be a very active sector in the early years of the space-based economy.

And it might take a back seat when other sectors develop, and the novelty wears off. Becoming the first person to climb Mount Olympus is priceless. Being the 3,489^th is less interesting, even if this does not seem to stop the many people who pay from $30,000 to $200,000 for a dangerous Mount Everest expedition.

As discussed in our previous article “The Future Martian Economy“, tourism might start in Earth’s vicinity, but turn out to be the main “export” industry for the early Martian colonies.

Suborbital Rapid Flights

Traveling through the atmosphere is limited by the friction of air slowing and heating airplanes. This is a key reason why commercial supersonic passenger transportation never really took off.

But traveling at Mach 10-20 is not an issue if you can go above the atmosphere. In this context, traveling from London to Sidney could take less than 1-2 hours.

The same speed is of great interest to the military, with SpaceX apparently commissioned by the Pentagon to develop a way to move ultra-quickly military equipment or personnel.

“Think about moving the equivalent of a C-17 payload anywhere on the globe in less than an hour. Think about that speed associated with the movement of transportation of cargo and people,”

General Stephen Lyons – former commander of USTRANSCOM

Space Telecom

Hardly in the realm of speculation, this is already a reality with SpaceX’s Starlink satellite-based Internet network with high speed and low latency.

Starlink already has 3 million subscribers and is estimated to bring in $6.6B.

Other companies and nation-states are looking to make their own low-Earth orbit Internet constellations as well, including Russia, China, Amazon, OneWeb, etc.

This is the first successful project requiring large-scale space infrastructure, as Starlink represents 60% of all satellites in orbit.

Government Projects

As mentioned before, this can not form the base of a self-sustaining space economy. Nevertheless, questions of national prestige, national security, as well as budget for fundamental research will be a big source of income for early space companies.

For example, an international effort to build a radiotelescope on the far side of the Moon would alone essentially subsidize the Moon economy for years.

Another similar sector will be the defense industry. For example, SpaceX is rumored to be building a military version of Starlink, named Starshield.

Space energy

After telecom and tourism, another absolutely massive segment of the global economy is energy generation.

Our civilization’s energy needs might be covered in a carbon-free way through a mix of renewables and nuclear, something we discussed in “Our Future Energy Mix”.

However, an alternative or complementary option could be to harvest sunlight either in orbit or on the Moon and beam it back to Earth. This is unlikely to happen at scale before 2035 or later.

However, if it proves to be a competitive solution for energy production, it will likely form the backbone of the space-based economy, with the money from building power generation, selling that power, as well as maintenance and recycling services the core industry of the nascent space colonies.

We discussed in further detail how this works and what might make or break the idea in “Space-Based Energy Solutions For Endless Clean Energy“.

Asteroid mining

Overall, doing things in space, especially with no or low gravity, might be rather complicated.

In a weightless environment, liquids do not stay in place, dust and powders are especially problematic, and fire is even more dangerous than usual. Manufacturing in these conditions can be difficult.

However, there is one industrial activity where no weight would be highly beneficial: moving thousands of tons of rocks to extract precious minerals.

A massive part of the costs of mining on Earth is linked to how difficult it is to dig, move, and crush tons of rock for a few kilos or even grams of useful metal. In addition, most metals on Earth have sunk deep into the planet, with only a fraction coming back to the surface through geological activity, forming veins of ore into the rock.

This is not the case with asteroids. Many of them are very metal-rich; in fact, the asteroid belt in our solar system contains ~8% metal-rich (M-type) asteroids. With the whole asteroid belt weighing 2.4 quintillion tons, that’s a lot of metal.

On Earth, we are digging as deep as 2-4 km for gold or platinum. But just one asteroid, 16 Psyche, might be a 200km chunk of metal waiting to be mined for a value (at current prices) of $10-700 quintillion.

So it is easy to see how this activity could out-compete all the rest of the space-based economy combined.

Local Utilization

Another source of profit for asteroid mining will be to provide more basic resources to space operations.

Bringing water, iron, silicon, lithium, or nickel to the orbit is as expensive as they are very heavy. Instead, exploiting small comets or asteroids to provide these resources to space factories and colonists will be highly competitive versus imports from Earth.

Space manufacturing (Jeff Bezos’ vision)

While Elon Musk is laser-focused on Martian colonies, the other billionaire in the space race, Jeff Bezos is instead dreaming of a trillion people living in gigantic space stations also known as O’Neil cylinders.

In this scenario, a space-based economy progressively builds more artificial mini-planets able to house billions of people. And move into orbit and away from Earth’s biosphere all polluting heavy industries.

While it might be the endpoint, it is unlikely to happen in our lifetime. This is due to a few reasons.

As long as asteroid mining is not a massive industry, the technology and raw materials for O’Neil cylinders are out of reach.

And as long as O’Neil cylinders are not a reality, mass manufacturing in orbit for anything other than spaceships, satellites, and support infrastructures is likely to be uncompetitive.

Of course, this could change if, for example, more stringent environmental regulations are put in place. However, considering how carbon taxing is not managed to be applied globally, even more constraints on industrial activity are unlikely to happen soon.

Some manufacturing might benefit from being done in space; notably, the production of better optic fibers, or some pharmaceuticals & chemicals might benefit from microgravity conditions. However, heavy industry is likely to stay off Earth for the moment.

Computation & Knowledge-Economy

Sending physical products up and down gravity well is a sure way to increase their price. So, it is unlikely we will ever see the kind of intense globalization of supply chains as is the case with sea trade happening with space travel this century.

However, such limitations are not a problem for transferring data, especially between nearby positions like Earth’s orbit or even the Moon. Space can also offer an extremely cold environment, making cooling easier.

This could make it a perfect place to perform energy-intensive computation tasks. With AI, quantum computing, and virtual reality becoming increasingly a dominant part of the economy, we could easily imagine that space-based computing could become a new profit center for space colonies.

Similarly, scientists, writers, and other data-driven professionals could export their services easily without the constraints trading physical products suffers.

Megaprojects

A lot of the space-based industry is expected to rely on quick profits from selling energy, precious metals, and maybe high-tech products and computation to Earth.

But it is also possible that the perspective of entirely new planets worth of real estate becomes an objective in itself. Especially if the effort becomes the topic of intense competition between countries or cultural blocks. We could see a repeat of the colonization of the Americas or the “scramble for Africa,” driven more by nationalism than mere economic rational calculations.

If this is the case, then we should expect a few megaprojects to make reaching orbit much cheaper and become the main focus of the space-based economy.

One of these could be the building of a space elevator. The concept would make the cost of reaching the orbit almost trivial, and would probably be required for creating the “trillion people in space” vision of Jeff Bezos.

Overview Of A Mature Space-Based Economy

Earth’s Orbit

In low-Earth orbit, an ultra-dense network of hundreds of thousands of satellites provides high-speed Internet everywhere, as well as instantaneous satellite imagery.

Space tourism is now a common leisure for those wealthy enough to afford it. And so is intercontinental travel in less than an hour. We could even see ultra-rich individuals or large corporations starting to buy their own private rockets, as the <$100M price tag for a Starship is in the price range of superyachts and large private jets.

Further out into geostationary orbits, a network of power satellites beam back power down to Earth. A series of facilities for the maintenance and recycling of these systems operate nearby.

Moon

The first Eurasian and Western Moon bases have sprawled out into a full industrial complex.

Production of solar power satellites is now mostly done here, as launch costs are much lower thanks to 1/6th of Earth’s gravity and no atmosphere. Or alternatively, most of the space-based power generation is done on the Moon’s surface itself and just relayed down to Earth.

A few luxury ultra-private resorts complement the much less fancy industrial facilities.

Mars & Asteroid Belt

Mars

The massive distance and associated costs force much rougher conditions than in the Earth’s vicinity.

Nevertheless, this does not deter ambitious colonists from making the planet their new home. The local economy still relies on imports, and local manufacturers constantly try to set up local supply chains.

The planet is also a central hub for refueling, repairing, and resupplying food to the asteroid mining stations and ships working in the nearby asteroid belt.

Local residents dream of terraforming the planet, with the project of “greening the Universe” becoming the central value of the nascent Martian culture. This progressively makes Mars a hub of biotechnology, with a growing discussion over the ethics of genetic engineering applied to humans to help speed up the colonization process.

Belt

The asteroid belt has turned into a giant resource-extraction site similar to the Australian outback, Russian Arctic, or offshore oil rigs.

It keeps feeding the unlimited demand from Earth for raw materials, especially metals of the platinum group, gold, silver, and copper, which have all collapsed in price due to their relative new abundance.

Providing raw materials to the orbital industries is the other main activity.

This in turn has allowed for mass electrification of Earth economies, as well as a focus on decarbonization and replacing plastics with 3D printed metal parts instead.

Other Locations

Further colonies are developing or being planned, but their economic viability is hindered by the even harsher conditions and greater distances.

This could include:

• Floating Venusian cities.
• Colonization of the dozens of Jupiter’s and Saturn’s moons.
• Beginning of mining effort on Mercury.
• Colonization of the outer rim of the solar system.

Space-Based Economy Superchargers

This overview of the space-based economy is mostly based on known technologies and concepts, with no significant scientific breakthrough required. This is mostly a question of access to capital, developing the engineering solutions, and implementing them.

However, a few key technologies currently in development could revolutionize the prospect of making humankind a space-faring species.

Mass Drivers & Other Launch Systems

Rockets rely on expelling very hot gases to propel themselves quickly enough against Earth’s gravity. This is a process that is inherently not very efficient and which also puts a lot of stress on the materials involved. This is why rockets are so expensive and why reusability has only recently been achieved.

Another constraint is that rockets need to be very light to manage to lift themselves.

Alternatively, fixed infrastructures catapulting spaceships into orbit could be a lot sturdier and more powerful, at least in theory. It is cheaper, as they do not have to be ultralight and get their power from a nearby electric grid instead of having to transport it in the spaceship itself in the form of fuel.

This is the concept of a mass driver/railgun/space catapult, essentially a maglev train going so fast it can hurl a spaceship in orbit at escape velocity.

China is already looking at developing such technology, so it might be closer than we expect. If successful, it could reduce by another 10x the orbital launch price already much lowered by SpaceX.

Other possible launch infrastructures, like space hooks, space elevators, or orbital rings could equally be game changers in making reaching the orbit no more expensive than traveling between continents on Earth.

Nuclear Fusion

Abundant energy would make everything cheaper, especially high-resistance materials and fuel. So, a technology like nuclear fusion would indirectly and radically reduce the cost of reaching orbit.

This would also provide unlimited energy to asteroid mining operations and space colonies.

In addition, a functional nuclear fusion reactor could propel ships and reduce travel time between Earth and Mars from months to mere days. It would also bring even the farthest parts of the solar system within reach.

AI

Advanced AI could replace most of the human interventions currently required to operate spaceships. The further a space mission goes, the longer the transmission lag becomes, making on-site decision-making a must. Especially when meeting unexpected situations.

Humans require air, water, food, radiation protection, living space, and even entertainment. Advanced AI might allow for superior automation and drastically reduce the costs of asteroid mining and deep space missions while removing or strongly reducing the crew requirements.

Of course, solid safeguards to keep the AI under control might be required…

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Companies Conquering Space

1. Rocket Lab

Rocket Lab is one of the most serious contenders in the reusable rocket market. The company has initially focused on small rockets, with the Electron launch system (320 kg of payload), which is progressively being turned into a partially reusable rocket. So far, Electron has deployed 177 satellites in 44 launches.

Later on, Rocket Lab is looking at creating a medium-size reusable rocket, the Neutron, comparable to Flacon 9 (8,000 kg to LEO in fully reusable mode, 1,500 kg to Mars or Venus). The Neutron will be powered by a methane-burning rocket engine (like Starship), which seems to become the trend for the next generation of rockets.

The company is remarkable for its fully vertically integrated satellite manufacturing process, allowing it to optimize costs and design speed.

This resulted in multiple contracts with NASA & the US government, including a $515M military satellite contract. and a civilian $143m contract for Globalstar.

Rocket Lab is also a major manufacturer of solar panels for satellites after its 2022 acquisitions of SolAero Technologies, with 1000+ satellites powered by these panels, and 4MW solar cells manufactured in total.

For now, its launch system is reliant on outside suppliers, but a series of strategic acquisitions should change that, replicating in the launch system the vertical integration already achieved in satellite design and manufacturing.

The company is also looking at the possibility of a telecom LEO constellation to generate recurring revenues. It is also contributing to research for in-space manufacturing with Varda Space Industries and orbital debris inspection.

While SpaceX had Elon Musk’s business talent to develop its technology from scratch, Rocket Lab used a mix of R&D and acquisitions to vertically integrate the technology required. This has proven very successful in satellite manufacturing, and they are now looking to replicate this strategy for reusable rockets.

Considering the existing cash flow from satellite production & the Electron successes, Rocket Lab is a good candidate to catch up with SpaceX’s headstart.

For those interested in investing in this company, make sure to give a look at the top stock brokers in your region (e.g. for USA, UK, Canada, and Australia) or our article on the 10 Best Investing Apps.

2. Solar Foods

This company is looking to “produce food out of thin air”. It raised €8 Million at the end of 2023 to pursue this goal. Currently it is a private company that might not be available to most investors.

The concept is to use electricity to break water into oxygen and hydrogen and use the hydrogen, as well as atmospheric CO2 and mineral nutrients, to feed microorganisms that will produce a dry powder made of 70% protein.

Commercialized under the brand Solein, this protein source containing all 9 essential amino acids can be incorporated into other ingredients to make a very dense nutrition source.

The company is explicitly targeting the space exploration market. Still, it also envisions that in the long term, it could revolutionize food production on Earth as well, as it offers a protein source that converts energy into protein very efficiently.

“We feed the microbe like you would feed a plant, but instead of watering and fertilizing it, we use mere air and electricity. With our current process, this is 20x more efficient than photosynthesis (and 200 times more than meat).”

Solar Foods received the first novel food regulatory approval for Solein from the Singapore Food Agency (SFA) in September 2022.