Arthur Hayes: AI Is Overbuilt, and Bitcoin Could Benefit From It

The AI Overbuilding Cycle ##

Arthur Hayes, former BitMEX CEO, believes that the current AI data center buildout is overbuilt and will lead to a crash and a bailout. He predicts that the overbuilding will result in extremely cheap and plentiful computing power, which will benefit Bitcoin and other cryptos.

The Debt Behind the Argument ##

Hayes points to the $1 trillion of investment-grade debt backing AI companies as a potential trigger for a downgrade. This, he argues, will leave insurers short of capital and prompt Washington to buy compute or print money to rescue them.

The Role of Bitcoin ##

Hayes believes that Bitcoin and other cryptos will absorb the excess liquidity that follows the bailout. He is patient and advises investors to wait for the bailout to unfold before making any moves. He notes that some AI companies, such as Nvidia, already earn money, but he expects the majority to become profitable only if demand expands significantly over the next 12 months.

The Uncertain Future ##

Hayes leaves room for a different outcome, where AI could become so useful that demand expands, making AI companies profitable. However, he is confident that the current trajectory will lead to a crash and a bailout, benefiting Bitcoin and other cryptos.