* Starcloud plans 88,000-satellite constellation for AI

workloads

* Partners with Amazon ( AMZN ), Google and Nvidia ( NVDA ) for satellite

AI projects

* SpaceX's xAI acquisition boosts interest in orbital

data infrastructure

By Akash Sriram

March 30 (Reuters) - Orbital compute infrastructure

startup Starcloud has raised $170 million at a $1.1 billion

valuation, as companies including Elon Musk's SpaceX and Jeff

Bezos' Blue Origin race to move power-hungry AI data centers

off-planet.

Led by Benchmark and EQT Ventures, the fundraise underscores

surging investor appetite for space infrastructure bets as

massive AI computing requirements strain terrestrial energy

grids and data center capacity, even as space-based systems

offer access to near-continuous solar power.

Starcloud, which has long-term plans for an 88,000-satellite

data center constellation, will use the new capital to fund

next-generation satellites, manufacturing expansion and future

launch contracts as it moves toward commercial operations, it

said on Monday.

"The main customer contracts that are committed are

for other spacecraft, particularly Earth Observation and DOW

satellites. We are also working on some binding energy offtake

agreements with the hyperscalers to be announced in the coming

months," co-founder and CEO Philip Johnston told Reuters.

In February, Elon Musk's SpaceX acquired his AI startup xAI

and for a million-satellite orbital data center network. Blue

Origin, the space venture of Amazon's ( AMZN ) Jeff Bezos, has

ambitions.

Meanwhile, Starcloud is already working with partners

including Nvidia ( NVDA ) and the cloud units of Amazon ( AMZN )

and Google.

In November, it launched a satellite carrying Nvidia's ( NVDA ) H100

chip, demonstrating AI training and inference in orbitin an

industry-first move.

It now

plans a second launch in October featuring Amazon Web

Services' AWS Outposts offering.

While space infrastructure would ease power and land

constraints, high launch costs remain a challenge. But Starcloud

expects them to fall enough by 2028 or 2029 to make space-based

data centers cost-competitive with Earth facilities, Johnston

said.

The latest round brings Starcloud's total funding to $200

million, with the Redmond, Washington-based company having

raised $34 million earlier from investors including Andreessen

Horowitz and In-Q-Tel, the Central Intelligence Agency's venture

capital firm.