Asteroid Mining: Trillionaires or Commodity Collapse?

Asteroid mining will happen in the coming decades but whether it creates trillionaires isn't so clear

This essay is not about AI. It’s about asteroid mining, and the claim, frequently bruited about, that its development will create trillionaires. Of course one could argue that asteroid mining is AI-adjacent: asteroid miners will make heavy use of advanced AI for the design and operation of their robot miners. ChatGPT assisted with the outline and structure of this essay.

Introduction

Asteroid mining often brings to mind staggering fortunes—the first people to tap into the wealth of space, we’re told, will become trillionaires. This claim relies on the fact that asteroids contain vast amounts of valuable resources: gold, platinum, and other precious and rare earth metals. Estimates bruited about claim that one asteroid alone, 16 Psyche, contains over 100,000 quadrillion dollars’ worth of metals. That’s 100 quintillion dollars. For comparison, world GDP in 2023 was roughly $100 trillion.¹ But the pathway from rocks in space to unfathomable riches is far from straightforward, especially when we consider the economic ramifications of dumping vast quantities of these resources onto global markets.

Supply and Demand Dynamics

At its core, the claim that mining asteroids will create trillionaires tends to overlook basic economic principles, particularly those of supply and demand. Gold, platinum, and other precious metals are valuable precisely because they are scarce. The current supply of above-ground gold stands at around 212,000 metric tons. In comparison, asteroid 16 Psyche, mentioned above, has a mass of around 220 billion billion kilograms. It is safe to say that the supply of metals available to be mined from asteroids vastly outstrips that which we have mined on Earth.

If asteroid mining led to an influex of billions of tons of gold and other precious metals on world markets, basic economics dictates that the price of these metals would collapse, unless there was a commensuate increase in demand. Gold’s demand is relatively inelastic: it’s used primarily in jewelry, investment, and some industrial processes, none of which would be able to absorb such a rapid influx. The consequence would be a dramatic fall in value, transforming what was once scarce into something far less precious.

Industrial Metals and Demand Growth

However, not all asteroid resources are like gold. Some metals mined from asteroids have critical industrial uses and could experience a different market dynamic. For instance, platinum and palladium are crucial for electronics and catalytic converters, and rare earth elements (REEs) are vital for renewable energy technologies, electronics, and military applications. If the supply of these resources were to grow, it could stimulate demand, especially if the reduced cost made new technologies economically viable.

For example, if platinum became vastly cheaper, it could be used in new ways, potentially opening up entire industries that are currently constrained by the metal’s cost. But even here, the shift in demand would need time to materialize, and the initial effect would still likely be a significant price drop until new applications could be developed.

Economic Scale and Deflationary Pressures

The current size of the global economy is about $100 trillion. Introducing quintillions of dollars’ worth of materials to this economy could cause massive deflationary pressures. A suddent and vast increase in the availability of commodities could reduce their price so dramatically that even selling these resources might not yield substantial returns. Liquidity constraints—the difficulty of selling vast amounts of material without tanking the price—would prevent the realization of the theoretical value of these resources.

Monopoly and Controlled Supply

Another factor in the trillionaire hypothesis is the assumption that the first companies to mine asteroids will enjoy a monopoly or oligopoly. This would, in theory, allow them to carefully control the rate of extraction and release of resources, preventing the kind of price collapse that unrestricted dumping would cause. Such a monopoly could emulate the behavior of OPEC or De Beers, restricting supply to stabilize and maintain prices.

In this scenario, asteroid mining companies would need to behave strategically, working in coordination to limit supply growth. Governments might also play a role, imposing quotas or tariffs on asteroid-mined metals to protect domestic industries. While this controlled approach could sustain higher prices and profitability, it’s unlikely to generate wealth on the scale of trillons, to say nothing of quadrillions or quintillions.

In-Space Markets and Secondary Value

The true value of asteroid mining may not come from simply dumping metals into the Earth economy. Instead, it could lie in using these resources in space itself. Mined materials could support the construction of space infrastructure—satellites, space stations, and other off-Earth projects. By keeping these resources in space, miners could avoid terrestrial market crashes altogether and instead fuel a burgeoning space economy.

Additionally, the cost of transporting materials back to Earth might be prohibitively high, especially in the early stages of asteroid mining. This could act as a natural brake, preventing an immediate and massive supply shock to Earth’s markets and preserving commodity prices.

Long-Term Demand and Technological Shifts

If asteroid mining becomes economically viable and significantly increases supply, new applications for these metals might arise. Imagine gold and platinum being used in ways we currently consider too expensive—perhaps in advanced manufacturing or in components for next-generation electronics. Similarly, the development of space colonies and orbital habitats could create entirely new markets for materials extracted from asteroids.

These developments, however, will likely take decades. During that time, the profitability of asteroid mining would hinge on the ability to create new demand, develop space-based industries, and efficiently manage the costs associated with mining, refining and transportation.

Modeling Asteroid Mining Outcomes

To illustrate potential scenarios:

• Scenario 1: Uncontrolled Resource Dumping. Asteroid miners flood the market with massive amounts of gold, causing prices to collapse and rendering the extracted value negligible. Miners struggle to sell their gold for meaningful returns.

• Scenario 2: Controlled Supply and Monopoly. Miners form a cartel, caefully managing how much material enters Earth’s economy to maintain prices. New industrial uses emerge, but the regulatory and market control challenges prevent miners from accruing trillions in wealth.

• Scenario 3: In-Space Market Development. Mined materials are primarily used for building space-based infrastructure, avoiding terrestrial markets. Asteroid miners profit by selling to space enterprises, achieving steady but modest profitability compared to Earth-based projections.

Conclusion

The notion that asteroid mining will produce trillionaires is largely speculative and depends on numerous economic, technological, and regulatory variables. While asteroid mining could indeed unlock vast quantities of metals, the simplistic idea of instant, unfathomable wealth ignores critical economic realities. Without mechanisms to control supply, the influx of resources would likely collapse commodity prices. Instead, the value of asteroid mining might lie in fostering a space economy, controlling resource flows, and developing entirely new applications for these materials.

Asteroid mining could make some companies extremely wealthy, but whether it will create trillionaires remains highly uncertain. It depends not just on extracting metals, but on crafting an entirely new paradigm for using and valuing those resources—both on Earth and beyond.

1. It’s worth noting some more information about the size of the world’s financial output. The global foreign exchange markets trade about $7.5 trillion USD per day. Annualized, this is approximately $1.89 quadrillion, assuming 252 trading days per year. (Currency markets are closed on the weekends.) Now, comparing annualized trading volume to other markers of financial output, like GDP, is comparing apples and oranges, but these numbers give you an idea of how much larger the theoretical value of asteroids’ metals is than the world’s extant financial output. If the claim that 16 Psyche contains 100 quintillion dollars’ worth of metal is correct, that is around 50,000 times larger than the annualized notional value of foreign exchange trading globally.