by Morgan D. Bazilian, Alex Gilbert and Lt. Col. Jahara “Franky” Matisek (PhD)
For decades, computing infrastructure was fixed to land, but that assumption is breaking down. Artificial intelligence (AI) is driving such intense demand for power, cooling, critical minerals, and physical infrastructure that firms have begun to look offshore – and even off-planet – for the next generation of compute capacity. At the same time, power grids are congested, connecting to the grid takes an exorbitant amount of time, and political resistance to hyperscale data center infrastructure is rising. An estimated $64 billion in U.S. data center projects has already been blocked or delayed due to local opposition over land use, electricity demand, water consumption, and environmental concerns.
As land-based data center constraints intensify, firms are searching for new physical environments capable of supporting the next generation of compute infrastructure. In early May, Peter Thiel led a $140 million financing round for Panthalassa, a company seeking to build floating data centers on the high seas. Around the same time, Anthropic announced a partnership with SpaceX tied to orbital compute ambitions. While this partnership is nascent, it provides some evidence of commercial appetite for orbital compute is getting closer. These developments suggest that some computational infrastructure may soon be heading off-land.
Off-land compute is creating a new geography of strategic competition where commercial cloud architecture, military support systems, intelligence infrastructure, energy networks, and geopolitical rivalry increasingly overlap. Subsea and orbital data centers promise resilience, geographic flexibility, and access to new energy and cooling environments. But they also move computational capacity into domains that are harder to govern, more difficult to defend, and potentially exposed to coercion, espionage, and disruption.
China appears to have recognized this shift faster than many Western governments. Beijing is already positioning subsea compute infrastructure tied to offshore energy projects while seeking to invest $8.4 billion into orbital computing constellations capable of distributed processing in space. This massive funding is still far from fully inked, but the direction of travel, and the pace China can move in infrastructure makes this a significant signal. The United States still leads in private-sector innovation in this realm, particularly in advanced chips, launch capacity, and cloud architecture. Yet American efforts remain fragmented across regulatory authorities, agencies, and commercial actors that were not designed to treat off-land compute as a national security issue. Existing institutions governing satellites, export controls, maritime infrastructure, and telecommunications were built for separate domains. Off-land compute blurs them.
Risks also differ substantially between subsea and orbital systems. Subsea compute expands digital infrastructure into contested maritime environments already vulnerable to cable sabotage, gray zone activities, and intelligence collection. Orbital compute, by contrast, raises new questions surrounding military AI support, anti-satellite targeting, dual-use escalation, and wartime communications resilience. Treating these as parallel examples of the same phenomenon obscures the fact that they create distinct operational and geopolitical challenges.
Washington still has time to shape how these systems develop, but working with allies in these two realms will be necessary. The problem is not legal authority, but strategic coordination and prioritization. As is typical, the technology developments tend to be ahead of the ability of governments to regulate them. Off-land compute sits awkwardly between maritime governance, space policy, telecommunications regulation, export controls, critical infrastructure protection, and national security planning. The countries that dominate the geography of computation may shape the future balance of economic and military power as profoundly as those that once controlled oil, shipping lanes, and undersea cables.
Subsea Compute: Efficiency and Physical Denial
Subsea data centers attempt to solve several of AI’s emerging infrastructure constraints simultaneously. The ocean provides a stable and effectively unlimited heat sink, reduces cooling costs, and allows compute infrastructure to sit closer to coastal population centers and network nodes. Offshore deployment may be able to partially bypass some of the social license and land permitting increasingly slowing terrestrial hyperscale expansion.
The most prominent early experiment came from Microsoft, whose Project Natick began in 2013 when a former U.S. Navy submariner proposed the concept. Phase 2 of the Project demonstrated significant ambitions: a 40-foot sealed cylindrical vessel containing 12 racks, 864 servers, and up to 27.6 petabytes of storage capacity. In June 2018, it was deployed 117 feet below the surface near the Orkney Islands, Scotland. Yet in June 2024, Microsoft confirmed that Project Natick was no longer active. The primary reason was inflexibility: underwater pods remain sealed for years, making it impossible to upgrade GPUs or expand to meet the exploding demands of AI workloads.
China, meanwhile, has moved from experimentation to deployment. The Hainan underwater data center operates with a Power Usage Effectiveness (essentially measuring energy efficiency of a data center) of 1.1, with efficiency gains of 40 to 60 percent relative to traditional facilities. More importantly, Beijing appears to view subsea compute as part of a broader effort to integrate offshore energy, digital infrastructure, and maritime industrial capacity. China’s subsea ambitions also extend beyond Hainan. In October 2025, Highlander was completing a second facility off the coast of Shanghai’s Lin-gang Special Area at a cost of approximately ¥1.6 billion ($226 million), with the facility designed to draw nearly all of its power from nearby offshore wind farms.
Elsewhere, underwater compute concepts are attracting growing interest. A proposed facility off Ulsan, South Korea, with plans for 100,000 seabed servers, secured government funding in early 2026. In the United States, startups such as Subsea Cloud and DeepGreen Western Passage are pursuing modular and tidal-energy-powered concepts aimed at commercial deployment. Yet even offshore, permitting remains difficult. NetworkOcean, a U.S. startup that sought to deploy underwater units in San Francisco Bay, ran into regulatory obstacles, and pivoted toward floating facilities instead.
For military planners and strategists, subsea compute infrastructure is a resilience opportunity paired with new vulnerabilities. These systems rely on undersea cables, offshore energy infrastructure, and maritime logistics networks that adversaries may target.
Subsea compute nodes will likely simultaneously support civilian cloud processing, AI model training, intelligence functions, and military software, blurring distinctions between commercial and strategic infrastructure. In a crisis or conflict, these systems could be attractive targets for sabotage, espionage, destruction, or gray zone activities. Iran’s willingness to target Gulf data centers during the 39-day war demonstrated that digital infrastructure is open to coercion.
Orbital Compute: Persistent Power, Persistent Exposure
Orbital compute systems pursue different objectives than subsea infrastructure. In low Earth orbit, solar power can be nearly continuous, communications do not depend on seabed cables, and cooling occurs through radiation into space. In theory, orbital systems could provide geographically distributed compute capacity less dependent on vulnerable terrestrial infrastructure and increasingly strained electrical grids. A 2025 study in Nature Electronics found that space-based computing could potentially operate with minimal carbon impact if energy generation and thermal management systems are effectively integrated. Significant engineering hurdles remain, including mass-efficient thermal radiation, space debris mitigation, on-orbit assembly, and radiation-hardened electronics. Yet the pace of investment suggests major firms increasingly view orbital compute as plausible.
Starcloud, founded in 2024 by a team including former SpaceX, Airbus, and McKinsey personnel, has emerged as one of the most visible American entrants. In September 2024, the company published a white paper arguing that orbital data centers are, “feasible, economically viable, and necessary to realize the potential of AI.” In November 2025, Starcloud launched Starcloud-1 aboard a SpaceX rocket into low Earth orbit carrying an NVIDIA H100 GPU, reportedly the most powerful AI-focused processor yet deployed in space. By December 2025, the company claimed to have trained a large language model in orbit using Google DeepMind’s Gemma model.
Google has also entered the field through Project Suncatcher, announced in November 2025. The initiative proposes fleets of satellites, functioning as a distributed orbital compute architecture capable of processing and transmitting large volumes of data without relying entirely on terrestrial cloud infrastructure.
China has again moved faster in this realm than many Western counterparts toward operational deployment. In May 2025, a Long March-2D rocket launched the first 12 satellites of the “Three-Body Computing Constellation,” a joint effort between ADA Space and Zhejiang Lab. Each satellite carries a large AI model with 8 billion parameters capable of 744 TOPS (tera operations per second), with 100-gigabit inter-satellite laser links, enabling the 12 satellites to jointly attack computing tasks as a distributed system. More importantly, the project suggests Beijing increasingly views orbital compute not merely as commercial infrastructure, but as part of a broader strategy integrating AI, satellite communications, and space-industrial capabilities.
Europe has taken a more research-oriented approach. The European Space Agency has funded studies with IBM and KP Labs examining orbital data centers capable of processing satellite-generated data directly in space, without requiring constant downlinking to Earth. The ESA’s Φsat-2 satellite, launched in 2024, already carries an onboard AI accelerator capable of autonomous cloud detection, vessel identification, and marine anomaly monitoring, providing an early model for orbital edge computing at smaller scale.
The speed of development is already becoming apparent to regulators. Since January 2026, the Federal Communications Commission has received multiple applications from U.S. companies seeking approval for satellite constellations intended to function as orbital data centers.
For the Pentagon, orbital compute represents both opportunities and vulnerabilities. Unlike subsea systems, which remain physically tethered to maritime infrastructure, orbital compute could provide resilient and geographically distributed processing capacity even when land-based data center infrastructure is attacked. In a major conflict, distributed orbital compute architectures could reduce dependence on vulnerable land-based cloud systems and undersea cable networks while accelerating data processing closer to the point of collection.
At the same time, orbital compute could further expand the amount of dual-use infrastructure operating in space. These systems would exist within a domain that is observable and congested. Worse, it can now be contested by various anti-satellite weapons, cyber operations, electronic warfare, and counterspace capabilities. Orbital data centers may become attractive targets during a conflict or crisis because they might support both civilian and military functions simultaneously. Even purely civilian orbital compute infrastructure could become a target during crises as a form of economic coercion.
While orbital compute is, today, eye wateringly expensive, traditional economic metrics do not always apply to domains where military dominance is prioritized. Additionally, the launch costs, which will make up a decent part of the overall budgets, are rapidly falling and tied to innovations with low-earth orbit satellites.
The Governance Gap and Operational Risk
Subsea and orbital compute systems reflect a new dimension of strategic competition in which computational capacity, energy infrastructure, and communications networks increasingly overlap. China is already deploying subsea systems at scale while simultaneously investing in orbital computing architectures. Meanwhile, the United States but faces greater regulatory friction and institutional fragmentation in translating its substantial technological advantages into operational infrastructure.
American institutions still govern compute as if it were geographically fixed to terrestrial infrastructure, but moving compute off-land changes how systems are protected, and how they fail. Washington needs a new governance strategy with three priorities.
The first priority is improving strategic coordination across existing regulatory and national security institutions. Those authorities are scattered across institutions built for separate worlds: satellites, submarine cables, export controls, cloud services, maritime infrastructure, energy systems, and foreign investment screening. Off-land compute fuses those worlds together, and that could be better brought together in a more coordinated process. The United States does not need to create a new bureaucracy for every new platform, but it does need a lead interagency process that treats off-land compute as strategic infrastructure rather than bouncing it between licensing offices.
While more coordination would be welcome, specific domain differences will need to be accommodated between sea and space. The second priority is to build domain-specific rules: Subsea compute should be viewed through the lens of seabed infrastructure competition. It intersects with submarine cables, offshore energy, coastal permitting, environmental review, fisheries, port access, repair vessels, and maritime security. The 2025 effort by the Federal Communications Commission to modernize submarine cable rules shows that Washington already recognizes how communications infrastructure carries national security, law enforcement, foreign policy, and trade risks. Orbital compute is a different problem set. It raises questions about satellite licensing, spectrum, optical links, export controls, cyber resilience, space traffic management, counterspace vulnerability, and dual-use escalation.
Finally, the Pentagon must treat off-land compute as future operational infrastructure, not as another tech trend. The U.S. military (and its allies) already depends heavily on commercial cloud providers, and its own cloud security guidance recognizes that cloud providers are responsible for both physical and cyber protection of the systems they operate. That assumption becomes more complicated once compute moves into contested seas and orbit. Subsea systems will become part of the same vulnerable seabed ecosystem as cables, offshore energy, and maritime logistics. Orbital compute may strengthen wartime resilience, but it also creates new dual-use targets in a domain exposed to anti-satellite weapons, cyber operations, electronic warfare, and counterspace operations. The Pentagon must wargame how these systems are defended, degraded, repaired, and reconstituted before they become indispensable. It also means figuring out how joint warfighting would look if AI and compute were no longer available.
In both space and the seas, working with allies will be essential. Both domains have varying and decades-long levels of international collaboration, from the Artemis Accords for space to the UN Convention on Law of the Sea. Still, neither of those frameworks is universally accepted. Compute adds another layer to this complex legal and geopolitical landscape.
Compute is moving off the land domain because everyone is looking for power, cooling, scale, and geographic flexibility. Subsea, floating, and orbital systems will likely become important components of digital infrastructure. But they will also move strategically important computational capacity into domains that are harder to govern, more difficult to defend, and increasingly exposed to geopolitical competition. The ability to prioritize these areas and invest in them will be challenging in the short term. Limited government investment is shaped by politics. As an example, there is competition from topics as far ranging as quantum systems or nuclear fusion.
The emerging geography of AI infrastructure is potentially vast, stretching from space to the sea floor. If massive spending continues in this sector, these developments can lead the way in developing these formerly inhospitable realms.
Morgan D. Bazilian is the director of the Payne Institute and professor at the Colorado School of Mines, with over 20 years of experience in global energy policy and investment. A former World Bank lead energy specialist and senior diplomat at the UN, he has held roles at NREL and in the Irish government, and advisory positions with the World Economic Forum and Oxford. A Fulbright fellow, he has published widely on energy security and international affairs.
Alex Gilbert is a Fellow at the Payne Institute for Public Policy, where his work spans energy security, seabed and space resource governance, and long-range technology policy. Previously, he was project manager at the Nuclear Innovation Alliance, advancing regulatory modernization and federal policy frameworks on next-generation nuclear reactors. Alex is also adjunct faculty at Johns Hopkins University, and a PhD candidate in Space Resources at the Colorado School of Mines, researching astronaut nuclear safety, lunar commercialization, and off-world resource strategy.
Lt. Col. Jahara “Franky” Matisek (PhD) is a senior fellow at the Payne Institute for Public Policy and a visiting scholar at Northwestern University. He has published over 200 articles on industrial base issues, strategy, and warfare. The views expressed are those of the author and do not reflect the official position of the U.S. Air Force, Department of the Air Force, Department of War, or the U.S. Government.
