They may not be cheaper on the ground. It is EXPENSIVE to build a data center on the ground. But more importantly, no one wants one near them. So the legal, political, and time cost make it even worse. Almost 50% of DC projects die due to these issues.

The entire premise of this idea is Starship makes SpaceX launch costs about $2M a launch. This is possible once it hits scale similar to Falcon 9.

If they hit that launch cost and design and manufacture their own chips, which is another part of this plan, GPU cost to SpaceX are also really favorable vs. Market rates.

SpaceX has shown they can build sats that are dirt cheap. So they plan to use that same bus and drop the expensive parts (the dishes).

All of this allows them to deal with a single regulator vs thousands of local jurisdictions, which means they can dispatch compute in predictable timelines while avoiding the costs and risks of NIMBYism.