The Rush Towards Outer Space

space

An analysis of the factors that have led to the growth in space tech investments

On 11 July, 2021, British business magnate Sir Richard Branson reached the edge of space onboard the Virgin Galactic rocket plane. On July 20th , American businessman Jeff Bezos followed in Branson’s footsteps with a voyage to space in the rocket ship, New Shepard. These events mark an increased interest in outer space exploration.

Both Virgin Galactic and New Shepard have been developed by private companies owned by the two businessmen respectively. A push towards space exploration naturally results in more investments in developing space technology. Space tech investments began gaining momentum in 2012. Between 2012 and 2015, investments in the sector rose by 400%. In 2020, they reached a record high of US$8.9 billion.

With the astronomical rise in figures of investment into space tech, one may wonder what spiked this increasing interest into space exploration and the like. Let’s take a look at the recent changes and developments in space exploration that have led to this phenomenon.

Falling launch costs

Advanced rocket technology is leading to the production of smaller, lighter and more powerful rockets. The cost to produce these rockets is dropping as a result of manufacturing supply chain consolidation.

The cost to launch a low earth orbit (LEO) rocket has lowered more in the last decade than in the entire history of space exploration. These LEOs can carry payloads of under half a ton and are viable for small satellite launches. Before the year 2000, launch costs surpassed US$ 20,000/ kg. However, today, Space X’s Falcon 9 only costs US$ 2,684 per kg.

Growing opportunities in broadband satellites access

The falling costs are lowering barriers to entry into the space technology market. Morgan Stanley estimates that the global space economy could generate revenues of up to $1 trillion or more by 2040.

Most key opportunities are in the realm of satellite broadband internet access. By 2040, satellite broadband internet access is expected to represent 50% of the space sector’s projected growth. The rising demand for internet access is a result of increased interest in artificial intelligence, the Internet of Things and virtual reality. These paired with a fall in costs of space technology are the key factors contributing to Morgan Stanley’s estimates.

Reusable Rockets

One of the most prominent results of private experimentation in space technology is the reusable rocket. The first reusable rocket was the aforementioned Falcon 9. Space X achieved a breakthrough when they reused Falcon 9 in a NASA launch in 2017. Reusing rockets costed Space X less than half the money it would otherwise have needed to build new ones.

The company has also developed autonomous drone barges, which are floating landing spots for spacecrafts in the ocean. These retrieve the parts of the rocket that are discarded in the various stages of its flight. These drone barges save money on expensive rocket fuel by making it feasible for the rocket to land at sea and have its parts to be shipped back, instead of having it land on the launchpad.

Since the early days of space research, reusable rocket technology has been regarded as the way forward for achieving economic and sustainable access to low orbit space. Most of the spent in constructing rockets goes into their hardware. A rocket experiences temperature and pressure changes during its flight, this results in intense wear and tear which a rocket must be able to sustain. After sustaining wear and tear, the rocket hardware becomes far too expensive to repair and is therefore often discarded.

Space X has solved this problem by using the multi-stage rocket where parts of the rocket gradually break away during its flight. This allows the company to use collect parts of the rocket’s hardware on the launch site itself. While the rest of the rocket is softly landed on the aforementioned drone barges.

Space Tourism

Reducing the cost of hardware construction could, in turn, open doors for commercial space travel. Today, Space X, Virgin Galactic and the New Shephard developer, Blue Origin, have all been working towards space tourism.

The first space tourist ever was the American billionaire Dennis Tito. Tito paid US$20 million in 2001 to make his dream of space travel a reality. Since then, the cost of space travel has significantly fallen. Today, the prepaid cost of a ticket to sub-orbital space with Virgin Galactic is US$250,000. While significantly lower than what Tito paid, space travel still remains unattainable for most.

Virgin Galactic is set to begin commercial space flights in 2022, after a series of final tests in 2021. The company aims to offer 400 spaceflights each year. Space X and Blue Origin are yet to announce their plans and ticket prices.

Asteroid Mining

Another important factor that could lead to additional investments in space technology is asteroid mining. Estimates by the investment bank Goldman Sachs suggest that a single asteroid the size of a football field could contain US$50 billion worth of platinum.

This means that mining asteroids could eliminate the scarcity of resources on Earth. Increased access to asteroids could also provide new locations for the disposal of Earth’s waste products. Around two trillion tons of water is available on near-Earth asteroids which could help address water shortages resulting from climate change.

Researchers from the California Institute of Technology believe that an asteroid-grabbing spacecraft could cost $2.6bn. While this figure might seem like a heavy investment, the US$50 billion worth of platinum and the environmental benefits of sourcing water from asteroids prove otherwise.

The future of space tech investment

The main hindrance to the tantalizing opportunities that outer space offers has been the financial costs associated with them. Greg Autry of the National Space Society posits, “If access to space weren’t so expensive, we’d have an astounding amount of entrepreneurial activity in Low Earth Orbit (LEO) and beyond.”

As the costs of spacecraft construction reduce, these opportunities will become easier to access. This, however, is an interconnected loop, because more private investments would lead to lower costs, which in turn would again increase investment viability.

With the three big names in the field of private space technology: Space X, Blue Origin and Virgin Galatic all competing in the space race, more doors are opening up for investors to gain returns. Whether these space-based initiatives will reach their maximum potential is yet to be seen.

Header image courtesy of Unsplash

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Kamya Pandey
Kamya is a writer at Jumpstart. She is obsessed with podcasts, films, everything horror-related, and art.

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