Why I like asteroid mining

Launch, mine, profit.

Nov 04, 2021

I’ll preface this by saying this doesn’t currently exist. Beyond us simply taking samples of asteroids, we haven’t actually mined them, per se. So take this with a grain of salt—there’s no baseline to compare it too. This is both scary and exciting. This concept is generally accepted as possible but not currently worth the money. Similar to going to space as a normal person or buying multiple supercars. You only really do it because you can. Asteroid mining is, of course, the concept of sending machines to asteroids that call our solar system home and stripping them of their natural resources. This is, first and foremost, much better than mining our own planet because it doesn’t really effect us if those asteroids stay in space or not. Additionally, some have some pretty impressive amounts of rare metals that, if done properly, could make this idea pretty darn profitable.

I personally think the first trillionaire will have done this in some form—or made a new season of Tiger King. The wealth that this produces, however, cannot be realized until massive amounts of wealth are first put in to the idea. Like any great innovation, it must have demonstrable value before we can expect investors to take a risk on it. As such, today we’ll talk about how big of an opportunity asteroid mining really is, and the technical advancements needed to get it done.

The first important question is: where are asteroids? Thankfully the answer is “virtually everywhere”. In some cases, with larger asteroids, it’s easier to identify them than it is to find a good place on Earth to mine. Don’t believe me? Look at this rendering that NASA Jet Propulsion Lab made for the near earth objects that they track. [1]

Twenty Years of Tracking Near-Earth Objects

While not all of these are big enough for us to land equipment on, it still shows the sheer magnitude of things in space that aren’t human made.

Alright, so there’s a bunch of rocks out there, but isn’t that all they are? Just rocks. I mean, technically yes, but rocks can be expensive. Diamond is technically a rock. And some of these asteroids have more than just diamonds. Minerals like silicon, which is the base on which most modern electronics are built, cobalt, magnesium, and many more reside on these asteroids and, when you sum them up, they command quite the price tag. As of 2016, there were 711 known asteroids with a material value of greater than $100 trillion. The most valuable asteroid in our solar system is estimated to be worth $27 quintillion. These numbers make becoming a trillionaire look easy. But, before we jump in our rocket ships and fly to the nearest asteroid, there are two main inhibitors—technology and economics.

Ideally, supply equals demand. If there’s more demand than there is supply, prices go up. If there’s more supply than people that want it, prices go down. Right now, these asteroids are valued at these insane numbers because there is high demand and low supply here on Earth. The second you bring back $100 trillion worth of, say, Silicon, its value drops immensely, because we now have much more than we need. I personally see this argument as not relevant for the near term. We don’t have rockets that can carry $100 trillion of Silicon, let alone slow it down enough to not leave a massive crater when our mining mission comes home. Because of the relatively small amounts of payload that our rockets are currently capable of, the amount of material you bring back at any given time won’t be enough to significantly disturb the market. A new oil rig in the Gulf of Mexico doesn’t affect oil prices all that much. As operations scale up, however, this will become a concern. Companies will need to do their due diligence in selecting the materials, and subsequently asteroid, that will be received with the right amount of demand. There’s also the option of controlling the supply, and not selling enough to let prices drop. Say what you want about this approach, but we’ve seen it before with Diamonds here on Earth.

While we’ve clearly seen a lot of value orbiting around our Sun, not all asteroids are in the same place. Some of these valuable rocks are at the outer reaches of our solar system, making them extremely hard to access. Most of these operations will need to take place close to home, and that reduces the number of options that we have. Even so, we currently have the technology to get to them. In fact, there have been multiple successful missions to asteroids in the inner solar system and some that even landed and took soil samples. But these soil samples are far from the production levels we’ll need to take advantage of this opportunity. Sadly, economies of scale don’t quite work in space. Every pound matters. Current cheap rates to get to space will run you in the range of $10-20 million for just a few thousand pounds of payload. Not nearly enough for a big mining rig. Therefore, these operations will likely need to be modular, where individual parts are sent up one-by-one. This was how the space station was built, and how Elon Musk plans to make a base on Mars.

Assuming we’ve solved the mining rig development cost thanks to some extremely generous and risk tolerant investors, we can isolate the production, per mining operation cost. Some of these asteroids will cost upwards of $50 million per flight to get to. As a result, breaking your rig apart into just 10 pieces means a shipping cost of $500 million. Many would say stick to FedEx, but we’ll keep on pushing. Also keep in mind that this trip isn’t one way. Getting there and extracting the materials is literally only half the battle. The good news is it’s a lot easier to get off an asteroid than it is to get off Earth. These friendly neighborhood rocks typically max out around the size of Maine. As a result, their gravity is a very small fraction of that of Earth. This means that we don’t need a whole lot of fuel to get home compared to getting there. This reduces cost and increases the amount of material we can carry back. Plus, once you’ve got your rig there, the only things you need to continue to send up are for repairs and refills.

To offer a quick value proposition: Gold today costs $22,000 per pound. The capsules that we currently use have maximum payload capacities of about 20,000 pounds. So, if you were to use one of these to carry your Gold spoils home, it would result in $440 million in revenue. Subtracting the per flight cost of about $50 million, you’d take in $390 million in profit. So, you could break even on your initial rig investment of $500 million with just two flights. All in all, if your rig manages to extract just 1% of one of the previously discussed $100 trillion asteroids, you’d still see a 2,000x return on your initial investment.

In conclusion, the production level numbers make sense. But the massive thing we willfully overlooked in this discussion is the cost, time, and risk associated with getting the technology there. Reducing the price to get to space, advancing mining techniques in zero gravity, high radiation environments, and managing access to this newfound supply are all hurdles that must be overcome. But there’s no denying that it can be insanely lucrative for whomever manages to pull it off. Right now, most big space companies write it off, but as technologies and prices continue to move in the right direction, the better a bet asteroid mining will become.

It's Not Rocket Science

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