Take an asteroid or a comet and excavate a large percentage of its interior while leaving its outer shell mostly intact. This interior excavation can take the form of interconnecting tunnels, concentric rings, a large central hollow sphere, or a large central hollow cylinder. The comet or asteroid is then spun up and rotated to produce artificial gravity along its inner hollowed surfaces, which are presurized and terraformed to make them more accomodating to human inhabitants.
The main advantage of a hollowed asteroid/comet compared to a more traditional space colony such as a Bernal Sphere or an OíNeill Colony is that the outer shell of the body can provide a great deal more protection from environmental hazards. Even with a large hollow tube kilometers wide in their centers, some of the bigger bodies would still have many kilometers of rock/ice to insulate the colony from potential harm. Many of the same techniques and issues associated with normal space colonies can also be applied to hollowed asteroids and comets.
Because of the way they are naturally distributed in the solar system, asteroid colonies would probably predominate in the inner system, and comet colonies would be more common in the realm beyond Saturnís orbit. Because of outgassing issues, comet colonies would be a dubious proposition at best in the inner system, but asteroid colonies can be placed anywhere.
The megatons of material left over in the shell of a hollowed asteroid or comet can also serve as a source of raw materials for a growing colony. An asteroid colony would have a readily-available supply of thousands of tons of minerals, and a comet colony would have a very long-term supply of consumables such as oxygen and hydrogen for life support and fuel needs.
Heart of the Comet by David Brin and Gregory Benford
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