The markets seem to be in long cycles and today with the investment frenzy with Artificial Intelligence everything is reminiscent of the tulip mania in Holland (1636–1637) when it all started for financial capitalism.
The modern frenzy has the face of Elon Musk. SpaceX was listed on the US market on Friday, June 12 with a valuation of approximately 1.7 trillion dollars.
Elon Musk owns such a large percentage of the company’s shares that, combined with the rest of his assets, he becomes the first person in history to exceed the 1 trillion dollar mark in personal wealth.
The publicity surrounding the event is full of the familiar media exaggerations: unprecedented achievement, genius, what will be his next step, what does the future hold.
The colpo grosso of this financial-impacting move, as well as the point of mass deception, is Elon Musk’s overestimation that SpaceX can serve the “largest Total Addressable Market (TAM) in human history.”
His vision of $28.5 trillion in potential revenue, mostly from “business applications,” is rather vague and vague. He’s basically selling seaweed… for silk ribbons! TAMs are, by definition, grandiose.
What happened… to tech companies?
No investor is going to be thrilled with a startup that targets a tiny niche market, with the possible exception of drugs for rare diseases.
At the same time, TAMs say absolutely nothing about competitive market forces. A mattress company that caters to all who sleep could claim to have a potential market of over 8 billion customers.
However, financial history also offers examples of today’s giants that have underestimated their own prospects in the past – but the risk of mass fraud is still there.
The Positive Examples
Example 1: Amazon
Amazon, which today has a market value of $2.5 trillion, aspired to become simply the world’s largest bookstore when it went public in 1997. As a substitute for the concept of TAM (Total Addressable Market) — a term that had not yet become a popular business expression — it cited US book sales of $26 billion, adding the corresponding global size.
That may have seemed bold at the time, when Amazon sold just one book for every thousand shipped nationally and argued that online platforms were not suited to selling clothing and other personal items.
Two decades later, however, Amazon is expected to report revenue of $824 billion this year, according to LSEG data—more than 30 times that particular TAM estimate.
Example 2: Meta Platforms, the parent company of Facebook.
Before its founder, Mark Zuckerberg, devoted himself to building superintelligent networks, his business was limited to American universities—and initially to just one university.
In Facebook’s 2012 IPO prospectus, TAM was estimated at less than $600 billion, based on global advertising spend and sales of virtual goods, such as weapons purchased in video games.
Assuming Meta eventually ends up targeting the enterprise market, its current TAM should be comparable to that cited by SpaceX.
Jevons’ Paradox
Economic theory helps big tech companies present their earnings in a way that defies common sense, Microsoft CEO Satya Nadella says.
He brought up Jevons’ Paradox, named after a Victorian economist who argued that the cheaper carbon gets, the more demand for it grows — something that AI advocates believe is also true for AI.
SpaceX has reduced the cost of putting a kilogram of cargo into orbit by an order of magnitude, and, as if by magic, satellites are multiplying.
Stories of Investing Imagination
Given these developments, Musk might be able to let his imagination run even more freely. Why limit the markets of the future to space tourism and off-Earth industrial production when it could be… cultivating the elixir of life or ending all wars.
And why exclude Russia and China from TAM estimates when artificial intelligence may transform Homo sapiens into a single, homogeneous race that will consider Mars the new global superpower?
After all, wherever there are people — whether tourists, expats, or Martians — there will be a need for shops, restaurants, banks, and, of course, AI assistants.
The last of these categories alone, according to Alibaba Chairman Joe Tsai, could account for a TAM of $50 trillion, based on the global population of knowledge-economy workers. That’s double Musk’s estimate for SpaceX as a whole.
SpaceX at $1.7 trillion and government subsidies
Elon Musk, through this narrative, seems to have invented some amazing new ability that will shape the image of humanity, but,
- He did not accomplish something that fundamentally transformed the world.
- He did not first utilize electricity.
- He did not invent the transistor.
- He did not discover rocket technology.
- He did not invent satellites.
- Nor did he even drastically improve these technologies.
- What he did do was learn how to use the system to his advantage.
He took what the United States had built through generations of investment and hard work and turned it into a wealth-generating machine for himself.
He used American loans, American intellectual property, American infrastructure, and American spectrum to create a mechanism for accumulating wealth for a single person.
Tesla exists thanks to a half-billion-dollar loan from the US government, which was granted in 2010, when banks were unwilling to finance it.
The agreement provided that the State would have the right to acquire three million shares of Tesla at a predetermined low price. This would be the taxpayers’ participation in the company’s success, if it were realized.
The company did indeed skyrocket in growth. However, Musk rushed to repay the loan nine years ahead of its maturity, because early repayment would cancel the State’s right to the shares.
The week the redemption took place, the value of those shares was about $270 million, and Tesla stock has since multiplied its value many times over.
The (Corrupt) Press presented the redemption as a triumph. The Treasury got its money back with a small additional benefit in interest, while Musk kept the shares that, under the terms of the deal, could have gone to American taxpayers.
The SpaceX story is similar, just on a much larger scale.
How could the company not exist without NASA?
In a purely capitalist system, the market system that Elon Musk advocates, SpaceX probably wouldn’t exist today. It would have collapsed in 2008.
The company had run out of cash, three rocket launches had failed, and Musk was spending the last of his money.
At that time, NASA signed a $1.6 billion contract to transport cargo to the International Space Station. This money essentially financed the development of the Falcon 9.
Those who systematically study the space industry make it clear: NASA was the one who saved SpaceX when it was on the verge of bankruptcy.
And NASA, by then, was already an organization whose resources had been gradually being reduced since the 1980s. As a country, the United States had chosen not to develop many of its critical space activities itself.
Rather than retain for the public the bulk of the value created through six decades of investment in rocket technology, satellites, and spaceflight, it decided to transfer much of that activity to private billionaires and let them compete for government contracts.
Today, SpaceX holds contracts with the American public worth about $22 billion. Across Musk’s entire business empire, public funding and support is approaching $38 billion.
Launch pads, communications frequencies, satellites in orbit, early customers, and the technology that the American space program had been developing for two generations were the foundations on which success was built.
Musk leveraged all of these assets, while the government did not retain a meaningful share of the value generated—as it should. It is not argued that SpaceX does not build effective rockets.
Its rockets work and have achieved impressive results. However, out-competing companies like Boeing and Lockheed Martin—two of the most traditional and cumbersome U.S. defense contractors—is not an insurmountable feat.
And he did it by leveraging technologies developed by the American space program and through contracts funded by American taxpayers.
Meanwhile, China is now proving that none of this was the result of a single human miracle. The country still lags behind in reusable rocket technologies and the number of launches. However, it is rapidly closing the gap through a national plan that combines state-owned enterprises, state-backed start-ups, and satellite constellations of tens of thousands of units.
Access to space is something that only a state – especially one the size of the United States – can decide to develop and own. The United States, by contrast, has chosen to cede this advantage to a private individual.
The United States has already transferred a significant part of its production base to China. Now, it is gradually transferring functions of the state itself to a small group of extremely powerful individuals, who then re-contract these activities back to society on private terms.
The answer, according to this logic, is not to impose a wealth tax. Even if higher taxes are imposed on the likes of Elon Musk, Jeff Bezos, and Mark Zuckerberg, the revenue will end up in the government without fundamentally changing the structure of the system.
If wealth is taken away from Musk and channeled into a health system that already absorbs enormous financial resources before they reach the patient, the result will not necessarily be better health care or longer life expectancy.
Instead, it may simply increase the value of the health companies themselves. The solutions are not as easy as the slogans…
The Ponzi Scheme and the… Mandatory Investment
- Imagine a ride on the Hyperloop supersonic train, which moved through a tunnel built by the Boring Company.
- Use your neural implant to call a fully autonomous Tesla robotaxi.
- On the way, you read the latest news from the Mars colony.
Of course, none of this actually happened, because none of these products exist.
- There is no Hyperloop in operation.
- The Boring Company has not built any commercially viable tunnel network.
- Tesla has a few taxis with autonomous driving capabilities — but not fully autonomous — in Austin and nowhere else. (By contrast, self-driving taxis from Google subsidiary Waymo are already operating in several major metropolitan areas.)
- Neuralink, which aspires to be a pioneer in brain implants, has tested its technologies on a handful of patients and nothing more.
- And of course, there is no colony on Mars: not a single manned mission to the Red Planet has been carried out, nor is there one in sight for the foreseeable future.
Yet, over the past decade, Elon Musk has repeatedly promised that all of these services would be available by 2025, if not sooner. Musk has some real successes to show for it.
- Tesla was ahead of the curve on electric vehicles,
- while Starlink is both a critical communications infrastructure and a viable business.
However, these achievements alone are not enough to explain how Musk became the richest man in the world.
His fortune was built largely on a self-perpetuating belief system: investors, convinced of his genius, piled up shares in companies he controlled, while their rising stock prices further cemented his reputation as a visionary entrepreneur.
There’s even a term for businesses that appear successful because they keep attracting new investors, and keep attracting new investors because they appear successful. They’re called “Ponzi schemes.”
And Elon Musk is, in essence, the embodiment of a Ponzi scheme
SpaceX’s IPO, currently underway, makes it clearer than ever that Musk’s greatest talent is not developing the technologies of the future.
It is his ability to manipulate complex financial structures and leverage his influence in centers of power, especially within the Trump administration.
To understand the argument, one need only recall the acquisition of Twitter in 2022, which he renamed X. To finance the acquisition, investment banks provided Musk with $13 billion in loans, with the intention of quickly reselling the debt to investors.
However, Musk dismantled the platform’s business model, turning it — according to his critics — into a space for extreme political speech, resulting in advertisers leaving en masse.
By the summer of 2024, X’s value had fallen to less than half of its acquisition price. If banks had then attempted to sell the debt, they would have recorded losses of around 40 cents on the dollar.
They were therefore forced to hold on to it for much longer than they had anticipated, leading the Wall Street Journal to describe Musk’s acquisition of Twitter as “the worst acquisition for banks since the financial crisis.”
The Platform X Rescue
Then, however, two developments saved both the banks and Musk’s future creditworthiness: the election of
- Donald Trump in 2024 and
- the explosive rise of artificial intelligence.
After Trump returned to the White House, several advertisers returned to Platform X, citing the need to maintain good relations with both Musk and the new administration.
At the same time, in March 2025, Musk merged his newly formed artificial intelligence company xAI with X, using the excitement surrounding AI to prop up both the platform’s valuation and his own financial position.
The problem is that Grok, xAI’s AI model, is considered by many analysts to be significantly inferior to similar systems from Anthropic and OpenAI.
It has also been heavily criticized for its reliability and security. In one notable case, it produced racist and anti-Semitic content, going so far as to call itself “MechaHitler.”
Despite efforts by Trump administration officials to promote Grok’s use in federal agencies, including the Pentagon, the results have been limited.
So Musk first saved X by integrating it into xAI, and now he’s trying to save xAI by integrating it into SpaceX — a company that does have a successful and profitable business model through Starlink.
In this day and age, SpaceX is going public and its IPO on the Nasdaq is being done at a valuation of nearly $1.77 trillion, even though its revenue last year was just $18.7 billion and the company remained unprofitable.
How can such a literally astronomical valuation be justified?
The IPO is based in part on the assumption that private investors will buy shares not because they rationally evaluate SpaceX as a business, but because they believe they are acquiring a stake in Elon Musk’s “genius.”
However, his loyal following may not be enough to sustain this financial edifice indefinitely. That’s why Musk’s allies on Wall Street are trying to change the rules of the game.
Some major stock indexes, such as the Nasdaq 100 and the FTSE Russell, recently changed their rules to allow SpaceX to be listed almost immediately. The significance of such a move is enormous.
A large portion of global investment is channeled through passive investment funds (index funds), which are required to buy stocks of companies that are included in the major indexes.
In other words, inclusion in a major index automatically creates new demand for a company’s stock. Traditionally, major indexes have waited at least a year after a company’s listing before considering its inclusion, so that the stock can gain sufficient trading history and “mature.”
The fact that the rules were changed for SpaceX is yet another indication of Musk’s ability to influence and adapt critical institutions to his advantage.
The exception is the S&P 500 index, which refused to succumb to pressure and maintained the minimum one-year waiting period.
The Ponzi Scheme
The vast “human Ponzi scheme” that Elon Musk represents will eventually collapse.
But there is a crucial difference from traditional Ponzi schemes. Usually, only those who voluntarily choose to participate are harmed.
This time, much of the capital supporting Musk’s edifice comes from millions of Americans who, in essence, have no choice.
About 52% of mutual fund assets in the United States are invested in index funds, while more than half of American households own shares in such investment products.
The partnership between Musk and Wall Street, combined with the perception that the Trump administration supports the billionaire entrepreneur, is leading millions of small investors to participate, willingly or unwillingly, in financing his ever-expanding empire.
The Space Data Centers Fraud
Elon may have enough money to secure a seat on every space launch, but it seems he skipped some basic high school physics classes.
- Space is not “cold” in the way a freezer is cold.
- Space is an empty, inhospitable vacuum.
- And a vacuum doesn’t allow heat to escape easily.
So let’s remember how heat is actually transferred. There are three basic mechanisms:
- Conduction, like when you touch a hot stove.
- Convection, like when a cool breeze cools sweaty skin.
- Radiation, where heat is transmitted via electromagnetic waves.
On Earth, data centers are kept at safe temperatures thanks to massive air conditioning systems. This is a convection process: heat is transferred from the electronic circuits to the air, and then the air is removed mechanically. This system works efficiently.
In the vacuum of space, however, there is no air. There is no water. Therefore, both convection and conduction become essentially impossible as cooling methods.
The only available mechanism for heat removal is radiation, which is considered the slowest and least efficient way of thermal discharge compared to the other two.
If a data center were to be installed in space, its electronic systems would produce enormous amounts of heat that would be extremely difficult to remove.
To achieve adequate cooling through radiation alone, gigantic radiator surfaces, perhaps the size of football fields, would be required to provide enough surface area to radiate the heat into space.
This creates an additional problem: such structures would be bulky, heavy, and extremely expensive to transport and install in orbit. And the situation becomes even more complex when you consider the Sun.
The huge nuclear fusion reactor at the center of the solar system constantly emits huge amounts of energy in the form of solar radiation.
Whenever a space data center is exposed directly to sunlight, it receives a strong thermal load from an external source. In other words, the problem is not only the removal of heat generated by the computers themselves.
It is also the need to manage the additional heat absorbed from the environment. The idea that transporting computing infrastructure to space is a self-evident solution to the energy needs of artificial intelligence is based more on science fiction motifs than practical engineering.
Elon Musk is simply rehashing unfinished science fiction ideas he read as a young man, repackaging them in the language of the modern tech industry, and hoping that the public will overlook a fundamental reality: The laws of thermodynamics don’t care about a company’s market cap or share price.
Yet media outlets like Axios are selling the fable in order to pump more American money into the controversial venture:
“(…) Other factors make it extremely difficult to build and operate data centers outside Earth’s atmosphere, including the cost of launching the equipment and the challenge of maintaining and upgrading the systems. Even cooling is much more difficult in space than many assume.
Because there is no air in space, electronic systems that generate heat cannot dissipate it through convection, as they do on Earth.
In contrast, orbiting data centers require large radiators to remove heat through radiation” (…).
Perhaps people’s savings will be lost, while Musk will count the trillions of dollars.
