Space Economics: How Asteroid mining, Diamond planets and competing with aliens are the future of a space economy. (Thomas Lam – Eco 4)

What is a Space-Based Economy?

A space-based economy is composed of spectacular economic activities of the far future. A future space-based economy will be based on such out-of-this-world economic activities (sorry), including constructions performed in space, space trade, space manufacturing, space burials, (yes that is a thing, in fact there are services that provide that right now), and high earning potential activities like space advertising and asteroid mining. In this blog, we will look through two of the most possible space economic activities: Trading and mining.

Interplanetary Space Trade:

With space companies such as SpaceX, releasing plans of reducing space transportation costs to enable the colonization of Mars, we may see economic trade between Earth and Mars in the future. Mars has the potential of being very rich, mainly due to the fact that it is much closer to the asteroid belt than Earth. This allows Mars to become a key staging post for the future of asteroid mining. (Don’t worry we touch on this topic very soon) Hence, we will see trade between Earth and Mars, where Mars exports mineral ores from asteroids to Earth, and Earth exports hi-tech production to Mars. The introduction of an interplanetary space trade, could be the beginning of a space mining industry.

The Space Mining Industry:

More acceptable outer-space economic activities would be the space mining industry. According to famous astrophysicist Neil deGrasse Tyson, “The first trillionaire will ever be is the person who mines asteroids for their natural resources.” Why is this the case though? Take one of the millions, if not billions of asteroids from the asteroid belt, which is located between the orbits of Jupiter and Mars. Depending on the size and the natural resources they contain, one could be valued over 700 Quintilian Dollars! ($700,000,000,000,000,000,000) These asteroids contain very rare raw materials, such as gold, silver, palladium and even platinum, which means future humans don’t have to embrace the damaging environmental impacts to Earth when mining these materials on the Earth’s surface.

One platinum rich asteroid can contain more than platinum than humanity has ever mined in history. In 2012, a company called ‘Planetary Resources’ estimated that the value of all the platinum mined from a small 30 meter wide asteroid could be worth anywhere between 25 to almost 50 billion dollars at current market value.

The economic impact on Earth from Asteroid Mining:

So how will the economy be effected? Well one thing for sure, prices of electronics such as iPhones, will see such a great drop that the main target audience of these huge corporations in this oligopoly will shift to target even more people, especially those with lower incomes. As a consequence, living standards will significantly improve globally as people will have the financial capacity to access these electronic goods.

However, commodity traders, such as platinum owners, will not reap any benefits, and will instead be in serious financial danger. By introducing almost 50 billion dollars worth of platinum to the economy, the economic value of platinum will inevitably plummet and crash. The value of a commodity is determined mostly by its investors confidence, and the law of supply and demand. Investors will follow the herd behaviour, selling their positions immediately, supply of platinum will increase, which leads to a high supply and a low demand, causing a downfall in the value of platinum. Platinum-mining companies will also cease operations, as they will not profit as much from the now worthless and minuscule amount of diamonds they find on Earth, which could lead to a downfall in the economy, and an increase in unemployment rate.

There has also been some speculation that asteroid mining takes too much money and risk, as after all, we may not be certain that these spaceships and cargo carrying minerals and ores will return safely. Fortunately, the cost of sending stuff into space has greatly decreased overtime:

What else can we mine?

We might never be able to mine planet 55 Cancri e due to its vast and far location in space. (40 light years from Earth, yeah that’s gonna take some serious science fiction technology we can never imagine) However, it may be tempting to as this planet has lots of carbon, in the form of diamonds. Diamonds could be a universal desired mineral, meaning any extraterrestrial civilizations (if you believe them of course!) out there could be already exploiting this planet’s resources. Let’s hope when we show up, they’re generous enough to give us their share of diamonds, and not blast us with ray guns.

The detrimental ripple effect on the Earth’s economy from mining a diamond planet:

Before you grab your diamond pickaxe and travel down to layer 13, keep in mind that just like platinum in asteroids, bringing home even a tiny fraction of diamonds from this far planet will crash the value of diamonds. Once one jewelry business owner hears about news of the mining of the diamond planet, he/she may dramatically give huge discounts on any of their diamond-related inventory, knowing they will lose even more money if they don’t sell it. If customers know the consequences of introducing several billions or trillions of dollars back to Earth, they may not purchase diamond-related products regardless of large discounts. Jewelry business owners will follow the herd behaviour, by also giving discounts, however the lack of sales could lead them to close down. This would hurt the global economy, with unemployment rate increasing and businesses closing.

Problems don’t stop there. How do we express our true love to our future spouse without giving her/him a worthless diamond ring? Toilet paper? On the contrary, the thought of people driving in flying, hovering diamond-plated cars and motorbikes playing on their diamond-plated smartphones is pretty fascinating.

Final Thoughts:

Interplanetary-trade is already seeming likely with companies planning to colonize Mars, which is a great way to open the door for more high potential opportunities, such as asteroid mining. Asteroid mining may see some major downsides such as mining companies being shutdown, with jobs being demolished, but the invention of this new industry should overcompensate for the jobs loss in the Earth-mining industry, as well as improving standards of living for the poor. Mining on Earth also leads to some environmental impacts, which is why asteroid mining is a great alternative. How about mining the diamond planet? Yeah, lets leave that for the aliens.

Article by Thomas Lam, 11H