The Space Space: Part 1
The markets may be wobbly. A recession may be on the way. But, new sectors in the economy are coming into being all the time. They’ll provide new jobs, new innovations, and new sources of returns for investors. One sector that is set to blast off and boom for years to come is the Space Space. There are three new areas of space investment that are especially worth paying attention to space geopolitics, directed energy, and life in space.
Just to remind, this sector owes its birth to the death of Christa McAuliffe. When NASA killed a school teacher in space, that was the end of consistent Congressional appropriations for NASA’s space program and the start of the outsourcing that led to Virgin Galactic, SpaceX, Blue Origin, and hundreds of other private space companies.
Let’s look at the size of this fast-growing sector. Research and Markets says that “The global space economy market in 2021 is valued at US$388 billion, and is likely to reach US$540.75 billion by 2026” with a “CAGR of 6.84% during the forecasted period of 2022-2026”. Space Capital’s recent quarterly report says that “$7.2B invested in the quarter (2022), VCs invested $17.1B into 328 space companies in 2021, accounting for 3% of total global venture capital flows. This beats the previous annual record year of $9.1B, set in 2020.” The report goes on to say that, “over the last 10 years, there has been $258.4B of equity investment across 1,688 unique companies in the space economy, led by investment in the U.S. and China.”
To what end is all this capital being applied? First and foremost, space is a contested domain from a military perspective. Whoever controls the highest altitudes in space, controls the battle domains on earth. We can see this from the role that private satellite firms like Maxar Technologies are playing in providing the imagery needed for the war effort in Ukraine alone. Firms that offer real-time SAR satellite capability (using radar that can see through clouds) are raising record sums. DARPA just announced that it is actively looking to fund better “automated object recognition; distributed radar image formation; and digital signal processing.”
Several years ago I argued that defense spending was the new Quantitative Easing. As long as it’s for defense, nobody asks any questions. Where is this new wave of money going? It’s going into every aspect of space from asteroid mining to space manufacturing, space medicine, to the building of bases on the Moon and Mars and to the exploration for signs of life beyond our galaxy.
Lunar tourism formally kicked off recently when SpaceX sent tourists into space on the Ax-1. Each paid $55m Private moon tourism may end up as a big business! NASA said, “The agency’s ultimate goal in low-Earth orbit is to partner with industry to achieve a strong ecosystem in which NASA is one of many customers purchasing services and capabilities at lower cost.” In other words, Congress is appropriating to NASA again thanks to SpaceX’s work. But, the real focus of interplanetary and interspatial efforts is about strategic advantage. It’s about establishing national domains in space. So, it has to be military as well as private. Space is controlled by governments who permit privateers to be involved, not the other way around.
It’s not all romantic. It turns out that space is not green. In fact, what goes on in space is pretty dark. It seems that satellite launches and operations often rely on a process that involves “ionizing vaporized mercury”. A second-year law student at Vanderbilt, Raymon Ryan is challenging Starlink’s FCC permission to launch its megaconstellations of satellites in space. He argues that the launch and operation methods don’t meet environmental requirements because this process of releasing mercury in the atmosphere is fundamentally harmful to the planet. See: The Fault in Our Stars: Challenging the FCC's Treatment of Commercial Satellites as Categorically Excluded from Review under the National Environmental Policy Act. Meanwhile, the US, the UK, and now the UN are banning the use of mercury in space because “Mercury is a potent bio-accumulative neurotoxin”. See: UN Bans Mercury Satellite Propellants Under New Minamata Treaty Provisions.
Space is principally about warfare these days. The nice stories about astronauts hugging in space (think, the Russians and the rest of the International Space Station crew) cloak the true situation which is that all the superpowers are racing to establish footholds and predominance in space. I’ve written before on substack about the Russian efforts to create debris and Kessler Syndrome effects and the Chinese efforts to “clean up” debris by calling American satellites “debris”. This is all about controlling particular Low Earth Orbits (LEOs) and denying others access to the LEO’s they want.
But more is happening. All sides want to “own” and control GPS or its equivalent such as the Chinese BeiDou system, which is the only GPS that allows two-way communications and not just one-way messaging to those on earth. That will be handy if one wanted to wage a war from space. The American version of GPS is based out of the Schriever Air Force Base in Colorado Springs, and (apparently) “piloted by U.S. Space Force “Guardians.”” CPR News reports that the U.S. government and its partners will launch up to 32 of these new “GPS III” satellites, eventually providing far more accurate location data for the service’s worldwide civilian user base who rely on GPS (ie everybody). The Russians have their own version too, GLONASS.
Then there is the land grab….or should I say space grab. The Chinese had been set to build a moon base but have now brought the goal forward by eight years to by 2027. The Artemis Plan spells out America’s plan to do the same by 2025. The US Space Operations Command, The Space Force, already tweets about Deltas and Garrisons in Space:
Given the territory grab, it is not surprising that each is now trying to pre-empt the actions of the others by making certain activities in space “criminal”. The Artemis Accords, which launched in 2020, specifically aim to create a governing framework for space exploration and space mining on the Moon, Mars, and all of space. “The Artemis Accords will describe a shared vision for principles, grounded in the Outer Space Treaty of 1967, to create a safe and transparent environment which facilitates explorations, science and commercial activities for all humans to enjoy.” Enjoy? Hmnnn. See: Canadian lawmakers were set to vote Thursday on amending the nation's Criminal Code to allow for the prosecution of crimes committed on the Moon.
The Chinese are less interested in the legal infrastructure of space and more focused on deflecting “asteroids”. This may be true but it might also help in detecting and deflecting man-made objects coming from space, like, say missiles. In the past, we had ICBM’s (Intercontinental Ballistic Missiles). With the advent of space bases on the Moon or say Mars, we are probably going to be talking about Interplanetary Hypersonic Missiles (IHMs).
The Chinese Space Agency says they have "plans for building a near-earth object defense system, and [to] increase the capacity of near-Earth object monitoring, cataloging, early warning, and response over the 2021-2025 period." It makes sense that the Chinese are worried about space-based weapons systems given that they are perfecting them themselves. The hypersonic glide weapons they now possess are fundamentally space-based systems. The Pentagon confirmed China’s first test of this new DF-ZF weapons system back in October 2021. General Milley, the Head of the US Armed Forces, called it “a Sputnick moment” meaning a moment that forces you to adjust your understanding of who has superior capabilities. China does now.
All this is leading to the creation of geopolitical “blocs” in space. See: Space blocs: The future of international cooperation in space is splitting along lines of power on Earth. In the past five years, several new space blocs have emerged with varying levels of space capabilities. These include the African Space Agency, with 55 member states; the Latin American and Caribbean Space Agency, with seven member states; and the Arab Space Coordination Group, with 12 Middle Eastern member states. The Scandi countries seem to be aligning with the West in space, just as they are aligning with the West on the ground. The first major orbital launch site for small satellites in Europe is going to be at Sweden’s Esrange Space Center in Kiruna in the Arctic. The first launches are set to take place this year.
It happens that Arctic launch facilities will give the West a much better view of the many Russian military bases and activities in the Arctic as well. Geointelligence is invaluable. This is why the US Defence Intelligence Agency increasingly speaks of the militarization of space, saying the “intent is to make space part of that combined arms effort in any conflict.” The US has already announced A Commercial Space Council which includes “five “standing members” — the NRO, the NSA, the National Geospatial-Intelligence Agency (NGA), the DIA and the CIA — plus “plenty of observers.” Meanwhile, it had been assumed that China would be collaborating with Russia in space, but that Dragonbear view may not be right. China seems to be too far ahead to wait for the Russians to catch up in space. Plus, the war in Ukraine is compelling the Chinese to take a little distance from their Russian friends.
One thing is clear from all this. We can be sure of extensive fiscal spending in space by all the superpowers for decades to come, no matter how bad things get here on earth. In fact, the worse they get here, the better the spending may be there. Space investment may hedge the fast-unfolding earthly economic turbulence.
Then there is space-based energy. More and more we can see that governments have been trying to figure out how to power their ambitious space bases. This has encouraged the idea that space might power earth as well. Directed-energy and space-based solar power are increasingly attracting attention. Power Engineering International put it this way, “The concept for space-based solar power is simple and involves a large kilometer-scale satellite with lightweight gigawatt capacity solar panels that collect the solar energy, then converts it to high-frequency radio waves for beaming to the Earth.” In a world where energy commodities markets are so deeply troubled by rising prices, by disrupted supplies and by terrible environmental side-effects, it seems obvious that space-based energy is bound to become a priority.
It's time to re-read Reason, written by Issac Asimov in 1941. It is a short story in which he predicted this ability to transmit energy by microwave. This has just been proven by the US military in a project called SCOPE-M: Safe and COntinuous Power bEaming – Microwave.
See: Successful Terrestrial Microwave Power Beaming Demonstration which says “A team of researchers from the US Naval Research Laboratory recently demonstrated the feasibility of terrestrial microwave power beaming by transmitting 1.6 kilowatts of power over 1 kilometer (using a 10 gigahertz (GHz) microwave beam) at the US Army Research Field in Blossom Point, Maryland USA, the most significant power beaming demonstration in nearly 50 years.” “The project was funded by the Office of the Undersecretary of Defense for Research and Engineering's Operational Energy Capability Improvement Fund”.
Once we know the military can do this “terrestrial microwave power beaming”, it’s only a matter of time before this technology becomes available to the public. This is like the discovery of the internet. The government creates it and the technology benefits the public.
Other similarly disruptive possibilities are now underway as well. See: A Different Kind of Solar Power Attracts Attention by the Wall Street Journal. They write, “When you think of solar energy, you probably picture the photovoltaic panels that capture sunlight to be converted to electricity. But there are other ways to harness the sun’s power. One method attracting growing interest is called concentrated solar-thermal power, or CSP, which uses mirrors to reflect and concentrate the sun’s energy.” The WSJ says, “Rather than convert sunlight directly into electricity, as photovoltaic panels do, CSP uses mirrors called heliostats to focus sunlight on receivers filled with one of several possible liquid or solid materials. The sunlight heats the material (salts it seems) to extremely high temperatures, creating thermal energy.”
Yes, mirrors in space, technically known as heliostats, may replace fossil fuels. For those that may have missed it, the $10b James Webb Telescope launched in January this year and successfully deployed its mirror, which is extends a little over 21 feet. The sun shield on it is the size of a tennis court. It is already sending back some extraordinary imagery as it heads towards its intended orbit, some 1 million miles from earth. But, could mirrors in space send back energy? It sounds like a real possibility now. How long will this take is the question. It may be quite soon. One test project, Vast Solar in Port Augusta Australia, has just raised capital and seems to be on its way. Another is in Oman near Duqm. Estimates are that the cost of this new energy may be as little as 5 US cents per kWh. In a world where the Russians are threatening oil prices at $300, this alternative will make a lot of sense. Green and cheap. It sounds to me like the end of fossil fuels. Watch this space…in space.
Finally, something is going on in space that the US Department of Defence is trying to tell us about. The DOD is releasing a huge amount of previously classified material all of a sudden and confirming claims of those who worked inside the intelligence and defense community. There seem to be three broad content strands being pursued here. One is that being in space affects human DNA. The second is the idea that life emanated in or from space. The third is, yes, the third is that there is life in space and this life may be very sophisticated. All three strands are appearing ever more frequently lately in mainstream media.
To be clear: I am not saying there are aliens. I am saying that the DOD and the US Congress and other governments are saying they are now preparing to seriously investigate the possibility. My job as an economist is to detect trends early. There is something happening in this arena. What would justify virtually unlimited fiscal spending better than dealing with sentient forces that don’t respect the boundaries and claims we have made in space? Notice that the DOD has started to reveal that this is their main concern about countless sightings of UFOs. It is OUR space they say. One fears this may not be entirely obvious to interplanetary visitors in their Tic Tacs and flying saucers.
But, first, NASA has been studying the way space damages DNA for some time. It could be the lack of gravity or the radiation from “galactic cosmic rays (GCR) and protons released from large solar particle events (SPEs)” according to the highly regarded publication, Nature. But, either way, they seem to cause “lesions, namely double-strand breaks, chromosome aberrations, micronucleus formation, or mutations”. Microgravity also brings an array of troubles for humans. Luckily plants seem to be ok in space. NASA has been successfully experimenting on lettuce. Why? Well if we are going to do space mining (expected to reach $4.2b by 2030) and space manufacturing, which are both hot subjects for investors, we’ll need to feed the astronauts. They just figured out how to deliver medicals to astronauts via “Star Trek-style” holographic doctors. These holo docs sign off “Live long and prosper”. Space medicine and space humor are each set to be a “thing”. Note that Ricky Gervais declined the opportunity to do the first stand-up gig in space (which would be difficult without gravity) because it was “too dangerous”. The spot for humor in space is wide open!
Part Two of this article will address the dramatically shifting narrative around the origins of life on earth and the possibilities of life beyond earth. It will address why these subjects were addressed at Bitcoin Miami by two scientific legends, Dr. Avi Loeb of Harvard University and Dr. Eric Weinstein who works with Peter Thiel. What does all this have to do with Bitcoin? Exactly.
In the meantime, check out the various ways of investing or working in the space space. It may be a nice way to hedge your earthly bets. Have a far-out weekend!!
PS: apologies for sending out my last piece when it suffered from a severe attack of typos. That’s what I get for flying around the planet in near space too much. I fixed it in the version on the substack site.
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