The Economics of Asteroid Mining

The Economics of Asteroid Mining

I have always been fascinated with precious metals, pretty much since I was old enough to walk. My father used to bring me to the local coin shop where we would buy old collectible coins and sometimes stamps. As I grew older I became even more fascinated as I began to learn about their historical value in ancient civilizations, and then more recently with the technology revolution, which requires metals with special properties to enable our world today to run on advanced technology, which we've grown so familiar and used to in our everyday world.

I also appreciate that precious metals can be a hedge against uncertain times with the globalized economy, fiat currencies, etc.

So I wanted to discuss the topic of Asteroid Mining on ATS. I have some questions about this premise. What would happen to the value of an ounce of gold, silver, palladium, platinum, or whathaveyou, if some private organization (or government agency like NASA) were to bring a payload of these precious metals back to Spaceship Earth, flooding the market with a large supply all at once? Would the price plummet? Would someone who has been "stacking their silver eagles", investing in hard assets suddenly find themselves holding pounds and pounds of metals that are no longer as valuable?

I have a feeling they would still be in decent shape financially, since a lot of precious metals such as silver have many industrial applications, are in high demand, and generally tend to reserve their value over time. But the question remains - does asteroid and space mining pose a threat to precious metals as a generally safe investment? I can't help but wonder.

In November of 2015, the U.S. Congress passed a bill known as the US Commercial Space Launch Competitiveness Act, officially stating that US Citizens (and private organizations) have a legal right to “own” resources in outer space, such as precious metals that might be found on asteroids and interplanetary objects. I began reading about this on investopedia, a great resource I've used for many threads (notably the thread I authored about George Soros, how he came to be the billionaire he is today, and his God complex). Here's the article that had me begin my quest of questions and curiosity surrounding Asteroid Mining and the economics of this concept:

The Economics of Mining in Space (Investopedia)

Last month Congress passed the U.S. Commercial Space Launch Competitiveness Act, a bill that grants U.S. citizens the legal rights to own resources in outer space. According to asteroid mining company Planetary Resources, mining in space can potentially open up a trillion dollar market as it is the last remaining so-called "elephant field of unexplored, highly valuable natural resources.”

I'm going to add several other articles and excerpts from those articles, so we're not just looking at this idea from one financial perspective:

Asteroid Mining May Be a Reality by 2025 (Space.com)

Planetary Resources deployed its first spacecraft from the International Space Station last month, and the Washington-based asteroid-mining company aims to launch a series of increasingly ambitious and capable probes over the next few years. The goal is to begin transforming asteroid water into rocket fuel within a decade, and eventually to harvest valuable and useful platinum-group metals from space rocks.

I appreciate Space.com's articles and valuable knowledge, and was not disappointed with the above article discussing asteroid mining.

The next article mentions "unlimited economic expansion", which is absurd, but the article itself contains some great information:

Asteroid Mining Ushers in 'New era of Unlimited Economic Expansion'

Californian startup Deep Space Industries (DSI) aims to eventually harvest and supply resources for the burgeoning space economy.

“Deep Space Industries has worked diligently to get to this point, and now we can say with confidence that we have the right technology, the right team and the right plan to execute this historic mission,” said Rick Tumlinson, co-founder of DSI.

We are standing on the shoulders of giants. If the world can survive the current turbulent geopolitical environment and uncertain times all around the globe, perhaps we will see some pretty amazing advances in the next few decades. Time will tell. Moving on:

Precious Metals Peril: Can Asteroid Mining Save Us?

Have you ever wondered how much gold remains to be mined on Earth? How about the lesser-known element indium, essential to computer and smartphone displays? Known sources of some metals could be depleted in as little as 20 to 30 years, especially the rarest ones necessary to construct computers, smartphones, and other advanced technologies.

While some elements can be substituted for others, many metals are effectively irreplaceable because of their unique properties.

Many have claimed we have already surpassed "Peak Silver".

The next article discusses a NASA mission focusing on an asteroid that is supposedly worth $10,0000 quadrillion due to the rare materials it contains... that is ten thousand quadrillion, or 1,000,000,000,000,000 (yes, that's 15 zeros). Quite the headline, huh? To put that number in perspective, the World Bank says the Gross World Profit was worth approximately US$75.59 trillion in 2013 (source).

NASA Planning Mission to an Asteroid Worth $10,000 Quadrillion

Here is another article from Forbes on another "trillion dollar baby" asteroid prospect - an asteroid supposedly worth more than the economy of Japan:

'Trillion Dollar Baby' Asteroid Has Wannabe Space Miners Salivating



Another interesting article discussing Luxembourg’s ambitious plans for asteroid mining can be found here:

Asteroid Mining: The Next Grand Venture of Tiny Luxembourg

Lastly, here is a more critical article on the financial feasibility of mining precious metals from asteroids:

The Crazy Economics of Mining Asteroids for Gold and Platinum

What do you think ATS? Is this something precious metals investors should be concerned about? Will asteroid mining revolutionize industry and technology? So many questions... it's subjects like this that make me so grateful to be a part of the ATS community. So many brilliant minds here.

Thanks for stopping by and let's hear what you think!

-FC

a reply to: FamCore

I will be boon-docking and claiming adverse possession on this space land as soon as SpaceX hooks me up...

What would happen to the value of an ounce of gold, silver, palladium, platinum, or whathaveyou, if some private organization (or government agency like NASA) were to bring a payload of these precious metals back to Spaceship Earth, flooding the market with a large supply all at once? Would the price plummet? Would someone who has been "stacking their silver eagles", investing in hard assets suddenly find themselves holding pounds and pounds of metals that are no longer as valuable?

Supply versus demand,

High supply would create less demand therefore lowering the price of precious metals.

They wouldn't do that.

The biggest reason is a higher cost for pm's would have to pay for mining costs.

If anything.

They would slow the supply, and create more demand increasing the cost of pm to turn a profit.

Probably gonna take another 100 years before we are able to mine asteroids.

But according to the 'rules' of supply and demand the prices could very well drop yes.

According to Hamid S. Hosseini, the power of supply and demand was understood to some extent by several early Muslim scholars, such as fourteenth-century Syrian scholar Ibn Taymiyyah, who wrote: "If desire for goods increases while its availability decreases, its price rises. On the other hand, if availability of the good increases and the desire for it decreases, the price comes down."

Supply and Demand.

en.wikipedia.org...

Far from a expert in economics, enough logic and common sense though

Mining the asteroid belt will be like banking in this country. We will socialize the cost but privatize the profit!

originally posted by: TheGreazel
Supply and Demand.

Yes that's what it boils down to though in asteroid mining I'd have to add what could change the economics is a breakthrough technology. For example, if a space elevator could be built and drastically lower the costs of sending mining equipment into space, then suddenly the costs of asteroid mining which are too high now might become competitive.

In the absence of breakthrough technology like that, it's almost all supply and demand. Right now the cost of mining an ounce of gold from an asteroid is far higher than mining it from Earth. If the cost of mining it from Earth becomes high enough to where asteroid mining is competitive, then asteroid mining will commence. It's not even close now and as the OP source says mining an asteroid today may bring back $108,000 worth of metals at a mission cost of $1 billion. That's not a good investment, right? I don't think the author put much research into those numbers which may not be accurate but I think their conveyance of the idea that it's not currently cost effective is an accurate concept whatever the real numbers are.

The op is a place to start.

Our 13 trillion dollar economy wasn't created over night.

Taking risk and getting rewarded for it was the driving force.

Greater the risk. Greater the reward.

Space mining is a pretty damn big risk.

a reply to: neo96

Any organization that puts up the resources to mine materials from an asteroid and bring it back to earth would without a doubt also be invested in preserving the value of what they've mined.

But with the way of the world today, any "news" can have a big impact on the markets virtually in a heartbeat. Unless they could keep the news "under wraps", I have a feeling the precious metals market would respond by devaluing those metals simply because of the news alone.

This is all just speculation though. We won't really know until the first "payload" safely lands and we get to see how the markets react. Thanks for your contribution Neo

A lot of people kind of have the wrong impression about mining asteroids. They tend to think of all these huge rocks full of precious metals laying around in space, ripe for the pickings.

Truth is: it's much easier (and there is still a HUGE abundance of) to mine precious metals and industrial materials from the Earth's crust, than it is to go out and mine the asteroids.

Space is HUGE. It's big. And asteroids are not all clumped together well within reach of each other. Most of the bodies lay very far away from the Earth too. Getting to them, mining them and getting back with your payload is very, very costly, and just not worth the cost.

The main advantage of mining the asteroids is not to provide the Earth with raw materials, including precious minerals, but instead to provide those things for those that are already out in space.

Space based colonies will need those raw materials and precious metals, the price of which would be HUGE if you have to spend a large amount of fuel or technology to left it out of a heavy gravity well (Earth).

Where as if you can simply bring that material to a orbiting colony from a rock floating in space, that cost goes way down.

Mining the asteroids really isn't a smart way to get materials here on Earth (unless it's some very rare, can only form in space material). The Earth itself has more for us and easier to access.

Mining asteroids if for space based people.

a reply to: FamCore

A major side effect of space mining is space futures, and stocks of mining companies.

One could prolly add 10,20,000 to the dow, and add trillions in wealth creation.

Also I read another article that was on the front page of Drudge called big oil in space. Some reason I can't find it now.

Talked about low earth economies, and a percentage of space goods would be used there instead of here.

Then were talkin about trade deals, and new exchanges, and new services being created.

Space mining/exploration will be a trillion dollar industry creating derivative industries.

Wish I could find that article.

I think it said like Water was going to be the new oil.

Without it. mining would be impossible.

www.bloomberg.com...

“Water is the new oil of space,” James said in Singapore. “Middle East investment in space is growing as it works to shift from an oil-based to a knowledge-based economy.”

In the long term, most of the commodities mined in space will stay in space to power a low-orbit space economy built around satellites and space stations, James said. In that scenario, water accumulated in space would become valuable as it could be used for rocket fuel for interstellar voyages. The substance is too heavy and costly to transport from Earth.

Water can be used as a propellant in space or split into hydrogen and oxygen, and then recombined and combusted. Deep Space Industries Inc., an asteroid mining company, has developed a thruster that heats water into a steam propellant, according to Goldman.

This is the article.

theres been some great breakdowns of the energy costs involved in mining asteroids. at this point we would need more energy then we produce in a year worldwide just to go get and bring back a tiny lump of anything useful. we need a breakthrough in our tech to make it feasible imo. besides we should just pay attention to our moon for now. giant lump of rock full of stuff thats right next door.

It will be needed during the next few years due to limits to growth:

www.theguardian.com...

The problem is that it will require much more than a few years to implement.

a reply to: FamCore
First let me say I couldn't give a flying **** what bills or laws America makes if I'm first there it's mine. America does NOT OWN space or anything out there, Except for its own equipment.
Supply and demand??? What are you people waffling on about? Supply and demand is governed by the supplier.
In accordance to your post I'll tell you how it will work by using a known commodity.
Laugh if you want. DIAMONDS. If all the diamonds that are in the world today were released onto the market they would be two a penny.
Just because the supplier (guess who) who controls the worlds supply of diamonds keeps the supply artificially short they make sure the price is high. It is not the demand but the supply that controls the price.
It will be the same with asteroid minerals, if they found a billion tons of gold a billion tons wont hit any markets.

a reply to: crayzeed

Diamonds were a great comparison for the question I posed in the OP. Thanks for your thoughtful contribution

Wanna know more about asteroid mining ? Ask the EU, especially Luxembourg! They will do that for a few dollars. They are ready and set to blast off into space with their IPhones at a moment notice.

Maybe when the engines cool then, they can also start being serious ...

Here's how Luxembourg is going to space to mine asteroids:

trampolineland.nl...

You will need to refine your discovery. It would not make sense to bring it back to earth so I would think that what is found in space will go towards further space efforts.

Looking at their website, DSI, seems to imply the same: "end-to-end technologies to accomplish these steps" (prospecting, harvesting, processing, manufacturing) (same source).

I wonder what kind of new materials can be made in space? Zero G would make some interesting things! One guy imagines graphene production from a molten vat in roll-to-roll manner. Bi (or more) layer metamaterials. Specifically controlled beads.

Did you see them specifically call out water? For pushing out deeper into space! Manufacturing ships in space just like in Star Trek!

If they ever make plasma jet engines then getting to low earth orbit will be simple and quick. Mining would make manufacturing in space a worthwhile effort.

Is this our first step down the path as a space faring people (instead of just a select few)??

a reply to: FamCore

If this goes on endlessly..
Then EVENTUALLY the mass of imported extra terrestrial resources would add to the mass of the Earth, causing unintended effects... Gravity etc...

From the very start, there should be a "weight exchange"
Where we bring non-valuable materials INTO space as a mass-exchange.

...But THAT runs into the aspect of potentially contaminating extra terrestrial samples with earthly microbes....

Guess we'd have to destroy the mass instead of exchange it.
....how would we do THAT..... Hmmmmm?

lol mass exchange lol
earth gains more mass then it loses now .
curious.astro.cornell.edu... ermediate
38 to 70 tons extra a year .
and loses 50000 tons of atmosphere a year
scitechdaily.com...
teh total mass of earth en.wikipedia.org...
A few 100 tons one way or the other make little difference .
A few 100000 tons would make little difference
it would take billions of tons for a 100 years to see even a slight incress in gravity .