I suspect Musk has a workable plan of some sort, realistically. Clearly, the one thing that is available in space is an abundance of square meters. There is no need whatsoever to conserve space at sufficient orbit. It is a little counter intuitive as we are so used to needing to conserve all the things.

Power input and heat radiation both scale with area so maybe there is some way to achieve this at scale. For instance, maybe it will not look like a traditional data center or even traditional chips.