It is super easy to overestimate the cooling problem, and to underestimate existing satellites. A Starlink v3 satellite that SpaceX already launches in large numbers has solar panels that produce 20kW of electricity, 20kW of compute and radios, >20kW of heat dissipation, and more internal volume than a standard 42u rack. The average rack in the average colocation facility uses less than 20kW of power, so in you could almost just package the whole system into a Starlink shell and launch it into space today. Cooling for the 20kW of heat generated by the computers, plus the extra heat absorbed from sunshine, earthshine, and moonshine, is provided purely by the surface area of the hull; no complicated cooling system needed. Simple passive heat pipes or direct contact with the hull is sufficient to cool the entire system. No bulky heat sinks are required either. Of course a less conventional system, such as a rack full of GPUs, may require more power than this. That’s merely a matter of engineering.
The Starlink deployment model works for a datacenter’s worth of racks too. Assembling them into a single structure in space is doable, but unnecessary and unproven. Latency and bandwidth between the satellites in a fleet may not be as good as that between the racks in a terrestrial data center, but the laser links that Starlink uses are excellent and will suffice for most users.
Launch and deployment failures are quite rare, and covered by insurance. Look at Starlink again for data.
Hardware failures can be a problem, but good system design mitigates it. If one system in your rack fails, do you throw out the whole rack? No, obviously not. The average engineer at a hyperscaler doesn't even notice that kind of failure because all of their jobs still get run in a timely fashion, distributed across all the working nodes. There might be a tech at the data center who unplugs broken nodes and plugs working ones in their place. Since only a small fraction of systems truly fail after installation, the inefficiency should be small enough for most operations to tolerate.
And deploying in a remote location on Earth may cost more than you realize. There will be no power company to purchase power from, so you have to build your own power plant. No water company, so you have to source your own water, clean and filter it, all at your own expense. You have to house the workers who are doing the construction. Worse, you'll probably have to build all the roads, power lines, and communication links yourself too. You could easily spend more on all of that than for a rocket launch to orbit, and that’s just to put a data center in the middle of a desert or a jungle. The ocean? Straight up impossible. Orbit is _easier_ than the ocean.