SpaceX's Starship Mk1 prototype encountered an explosive error during early tests in Texas on Wednesday – you can see exactly what happened in the video below, but basically it blew the lid during cryogen testing – a standard test used to see if the vehicle can withstand extreme cold temperatures, such as those it would encounter in actual use. The good news is that this is exactly why SpaceX (and everyone who builds rockets) does this type of early stage testing on the ground, under controlled, relatively safe conditions. The bad news is that this can delay the company's optimistic timelines.
As for the next step, the plan seems to be to take what Starship Mk1
SpaceX CEO Elon Musk was quick to answer a question on Twitter from YouTuber Everyday Astronaut about the next steps for Starship testing, saying it will move on to Mk3 design, and that Mk1's value was primarily "like a manufacturing path finder", noting that "aircraft design is quite different."
This is still a different version of events and Starship development than previously discussed: Starship Mk1 and Mk2 were originally characterized as high altitude test aircraft to follow the success of the "Starhopper" triple nose demonstrator, used to test a single Raptor engine for a couple of low altitude jumps at SpaceX's Texas location.
However, timelines are always fluid in the space industry, and in particular in the launch industry. SpaceX also sets incredibly optimistic timelines for most of its ambitious goals, through the open entry of both Musk and SpaceX president and COO Gwynne Shotwell. Still, the company has said it will look to achieve orbital flight with a Starship prototype vehicle as early as next year, so we have to wait and see if this unmatched test result affects that schedule.