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If V8 can't handle it, there is no way Atom will handle it. Some would assess this as major software design issue (yeah I mean me).

VS Code (which is also built on top of Electron) can handle large files just fine.

Why can't V8 handle it? Too many pointers on the heap?

V8 has some limits on memory allocation. I don't know why. I guess the engine allocators are not optimized to handle very large allocations.