Encryption rich people’s space dream: spend $1 billion to build commercial space stations

Author: Kiel Porter, Loren Grush, Bloomberg Business Weekly

Compiled by: Luffy, Foresight News

Jed McCaleb makes a fortune in the cryptocurrency space, and now he is ready to devote a large portion of it to his dream of space.

The billionaire, who founded the infamous Bitcoin exchange Mt. Gox and cryptocurrency XRP, is alone in funding an ambitious plan to build the world's first commercial space station and send it into space.

If successful, his startup Vast Space LLC is expected to win a potentially multi-billion dollar contract from NASA next year to replace the International Space Station. McCaleb said he was ready to lose $1 billion if it failed. By the end of 2023, McCaleb controlled billions of dollars in assets through two foundations, with the foundation’s $3.3 billion in assets coming from his personal donations.

“This step is crucial to live outside the planet in the future,” McCaleb, 50, said at the company headquarters in Long Beach, California. “Not many people are willing to invest so much resources, time and risk as I do.”

He has since hired an industry veteran as CEO, and SpaceX is also providing some technical support to Vast. Meanwhile, Elon Musk urged the United States to speed up the retirement schedule of the International Space Station (currently scheduled to be retired by the end of 2030). Founded in 2021, Vast's spacecraft uses some components of its spacecraft developed by SpaceX, especially the docking adapter used to connect the SpaceX Dragon spacecraft to the Vast space station, and the space Internet system that provides Wi-Fi for the space station through Starlink. Vast has booked SpaceX's launch service to send its hardware into orbit and to take astronauts to the space station, and SpaceX also agrees to deliver astronauts for Vast as long as NASA is approved.

However, the task is still arduous, and it is hard to tell from McCaleb's experience that he is the one who can do it. The boy from Arkansas Farm, a UC Berkeley dropout, has no background in the aerospace industry. His career has been characterized by seizing the lead in emerging technology sectors and then transforming in time before government regulation and other disadvantages disrupt the industry, a short-term thinking seems to run counter to the long-term focus needed to win a high-stakes race to create technological miracles.

Vast is based in Long Beach, source: Bloomberg Business Weekly

Sam Yagan is a friend of McCaleb and co-founded an online file sharing company over 20 years ago. Yagan, now co-founder and managing director of Corazon Capital, said the entrepreneur is a thoughtful adventurer. "He's very rational about these things," Yagan said, "but he's willing to take the huge risks in your and my eyes, a little bit maverick."

Many of Vast’s employees have worked at SpaceX. In the parking lot of the company's headquarters, cars produced by Musk's Tesla company are parked. One of the Cybertrucks belongs to Max Haot, who joined Vast after McCaleb acquired its company in 2023. Since then, Haot became Vast CEO, having McCaleb (who was driving a more regular Model 3) fly from his home in San Francisco once a week to monitor the progress of the project.

Before being acquired, Haot did not focus on the space station field. Instead, he tried to follow Musk's example and found another rocket launcher startup, Launcher. The company received $30 million in investment and made progress in developing rocket engines and carriers, but both satellites built by Launcher suffered failures after entering space. In 2022, Haot met McCaleb while looking for investors.

McCaleb proposed the acquisition proposal and agreed that Haot would serve as Vast's president and eventually become CEO. Haot wasn't willing to accept the deal at first, but changed his mind when he realized that Launcher had difficulty getting the funds needed.

Vast Founder and Chairman Jed McCaleb and CEO Max Haot Testing Base in Mojave, California, Source: Bloomberg Business Weekly

Vast’s grand vision is more than just building the first private space station. The company also hopes to develop an artificial gravity system to simulate the Earth's environment for future astronauts. This project is very complex and requires the use of centrifugal force to set up huge rotating cabins in space. This proposal is attractive because human experience in living and working on the International Space Station has shown that long-term microgravity environments can damage various biological systems.

However, these are still far away. Currently, Vast needs to send its first space station into orbit. The company's employees have rapidly increased from less than 200 a year ago to 740, covering a variety of talents from technical engineers to spacesuit manufacturers. Vast's headquarters operates 24 hours a day, with engineers and construction workers working in shifts, either expanding the Long Beach facility or building Vast's first prototype space station, "Haven-1".

Space stations are common elements in popular culture, such as Death Star in Star Wars and Space Station of the same name in Star Trek: Deep Space Nine. Space stations have also been an important part of U.S. space exploration since astronauts first boarded the experimental Skylab in 1973. Decades later, with the end of the Cold War, NASA worked with countries such as Russia to build a larger international space station. Since November 2000, there has been at least one astronaut on the International Space Station who regularly study materials and the behavior of the human body in microgravity environments.

A technician at Vast headquarters, source: Bloomberg Business Weekly

Haven-1 is about 33 feet high and 14.5 feet wide, designed to fit tightly into the nose cone of the SpaceX Falcon 9 rocket. The station has a habitable space of about 1,600 cubic feet (45 cubic meters), about twice the size of a regular RV. It will be equipped with a private sleeping pod, a large window, wooden paneling and a table for four.

At least that's its goal. In January, the company began construction of Haven-1, which is scheduled to be launched in May 2026, delaying from the original planned August this year. The company recently tested a prototype to confirm that its structure can withstand internal air pressure and is developing key components for powertrains, propulsion devices and other manned missions. Its shell must be able to withstand the harsh environment and temperature of space, while also maintaining the air pressure and gas that humans are accustomed to on Earth.

"We are not a real space station company at the moment," said Haot. "We are an aspiring space station company."

The main structure of Haven-1 awaits further testing at the Mojave base in Vast, Source: Bloomberg Business Weekly

Assuming everything goes well, after Haven-1 is launched, Vast will use the Falcon 9 rocket to send four astronauts into space to connect with the space station. If the first launch is successful, Vast plans to launch the first section of the next space station Haven-2 by 2028. It will be the starting point for a larger base, aiming to replace NASA’s International Space Station.

One of the biggest challenges will be to build an effective life support system. The International Space Station uses a regeneration system that recycles all wastewater into drinking water and converts carbon dioxide into respirable oxygen. Such a system is required if passengers are to stay in the space station for a long time, but Haven-1 will not be equipped because astronauts are expected to stay for only a short time. Vast plans to eventually equip Haven-2 with such a system, but the station is not expected to be stationed for a long time in the first few years.

Competitors including Axiom Space, Blue Origin and Voyager Space Holdings are also competing to build their own space stations, but one advantage of Vast is McCaleb's willingness to invest heavily in the project. “Vast is the only company that relies primarily on its own funds and is ready,” said Chad Anderson, founder and managing partner of Space Capital, an investment firm focused on the aerospace industry. “They are an interesting choice in this regard.” (Anderson has no financial link with Vast, but invests in SpaceX.)

Although these competitors have a space background and some launch contracts, they have not established such a close partnership with SpaceX.

Engineers research life support systems at Vast headquarters, source: Bloomberg Business Weekly

McCaleb, eager to downplay any personal relationship, said he had met Musk "a few times, he probably didn't remember me," even though both of them invested in OpenAI. Although they differ in their methods and manners, their respective interests and their unconventional path to wealth have many similarities: both dropped out of school (Musk dropped out late), started software businesses in emerging fields, and translated their love for fantasy and gaming into financial success.

McCaleb's first project, eDonkey, was one of the earliest file sharing services on the internet and was an early competitor to Napster. Founded in 2000, the company allows users to share music and movies for free, bringing millions of dollars in revenue to the company every year through advertising. In 2006, to avoid copyright infringement lawsuits, the company agreed to pay $30 million to the Recording Industry Association, which was subsequently closed.

McCaleb's next success is Mt. Gox, one of the world's earliest Bitcoin trading platforms. The site was founded by McCaleb in 2010 and a year later he sold most of his stake at an undisclosed price. In February 2014, the exchange went bankrupt and users lost more than $400 million worth of Bitcoin at the time, the biggest cryptocurrency disaster in history before the FTX collapse in 2023. Although McCaleb remains a minority shareholder, he has not been sanctioned and said he has also suffered losses in the disaster.

By then, McCaleb had already begun his next plan: XRP, the cryptocurrency on the Ripple protocol, and he was also the co-founder of the protocol. McCaleb initially owned 9% XRP. After disagreeing with the co-founder, he left the company in 2013 but retained his own XRP and sold it step by step in the following years. According to XRPScan analysis, during the cryptocurrency boom at the end of 2017, the value of XRP soared, and eventually expanded to $130 billion in January 2018. McCaleb netted approximately $3.2 billion from the sale of XRP and Ripple equity between 2014 and 2022.

“He is one of the ten most important founders in the cryptocurrency space, although few people really know him,” said Nic Carter, founding partner of Castle Island Ventures, an investment firm focused on public blockchain. “It’s interesting that the other important people are mostly those who are boastful, high-profile, and overspent.”

Despite its huge success, McCaleb's social circle is small, working primarily with Yagan and other long-term partners. He owns a house in Costa Rica, surfing resort, a residence in Berkeley and owns his own private jet.

McCaleb provides a stable source of investment for a space industry, a frequently volatile area. In this field, once-popular startups often go bankrupt due to lack of funds. Despite a lawsuit filed by a former employee accusing Vast of trying to cut corners, the company does not appear to have negative news like SpaceX. Its billionaire CEO spends most of the time staying home with his wife and three children rather than trying to fight the federal government.

Haven-1 Test Facilities in Vast, Source: Bloomberg Business Weekly

If McCaleb's plan is successful, Vast has booked multiple manned missions with SpaceX to send astronauts into orbit, both McCaleb and Haot said they themselves would like to take those flights. “As a kid, I spent a lot of time exploring outdoors, looking up at the sky and lamenting its magic,” McCaleb said. But it all depends first on whether the company can win the final contract for the NASA program, which aims to launch a commercial space station project that could replace the International Space Station. The program has a soft guarantee that NASA will purchase time and space for any space station that enters orbit. The contract is expected to be signed in mid-2026.

Without NASA's contract, the commercial viability of any space station is questionable. "Winning this competition is related to our survival."