They are a great idea and they are technically possible. But the cost is currently unknown and the maybe impossible from a business case perspective. Its not going to happen tomorrow, there is still years of r&d ahead.

The upside is it avoids the power, cooling, connectivity, location, environmental, staffing and physical security complexities of terrestrial data centers.

As someone working in aerospace, orbital data centres are almost certainly impossible or very impractical, at least at the scale being sold by the AI salesmen.

What would they be cheaper on? Solar panels are a little bit more effective and they will have a 24/7 coverage if placed in the correct orbit.

However, they would be much harder to cool (space is cold, yes, but heat transfer in vacuum does not work easily and most large structures, such as ISS, require dedicated cooling radiators that take up a large amount of space.) The launch costs would be still very high, maintenance impractical and the large, large surface area of solar panels and radiators would just be primed for being struck by debris.

What orbital data centres are though, is a good dream to sell, a fine way to dismiss environmental concerns of data centres on the ground - “We’re soon going to start putting them in space, but just for now we have to build them on earth. Please approve our requests.”