Each of the spacecraft have to be built without any government help to win.
The cash bounty, called the X-Prize, was created to try and get private companies to invest money in space travel.
On Monday it was announced that Sir Richard Branson's company Virgin intends to use the SpaceShipOne technology to offer tickets into space to ordinary people.
Special guest
A teddy bear from Cumbria called Terence sat in on Wednesday's space flight on a mission to raise money for charity.
Terence has also been to Iraq as well and hopes to raise lots of money for North Air Ambulance Appeal.
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