Arthur Hayes: The AI boom is 'wasting' trillions of dollars and could trigger a crash and bailouts, with Bitcoin potentially benefiting from excess liquidity.

October 7 — Arthur Hayes, co-founder of BitMEX, said at the Gamma Prime investment conference in Singapore that humanity is "wasting trillions of dollars" on AI data center construction. He is betting that this round of AI enthusiasm will ultimately go through overinvestment, a crash, and a bailout, and that the excess liquidity released by the bailout could drive up Bitcoin and other crypto assets.

Hayes believes that tech companies racing to build data centers and compete for computing power will ultimately lead to overcapacity, making computing power "extremely cheap and abundant." He said: "If you study financial history and every major technology rollout, you will find that they are always overbuilt, there is always a crash, and there is always a bailout." Citing the 2008 financial crisis and other events over the past two decades, he argued that investors who position early for bailout policies may benefit, but they need to be patient.

He pointed out that computing power demand-side players such as SpaceX, OpenAI, and Anthropic are not yet profitable. When the data centers currently under construction are completed, infrastructure providers will require these customers to pay for the computing power they previously committed to purchase. He expects this test may come in late 2027 or 2028, when a large amount of newly added data center capacity is delivered. Another bullish scenario is that AI becomes useful enough within the next 12 months to drive demand growth and enable AI companies to become profitable. Hayes also acknowledged that memory chip manufacturers and AI suppliers such as Nvidia are already profitable, and investors need to judge whether the valuation multiples corresponding to their forward earnings are reasonable. He said he does not like betting on price declines or shorting AI companies, believing this is "not a particularly good investment opportunity."

Computing power becoming cheap and abundant is also the basis for his new project Flop. The AI agent payment project is expected to launch in the first quarter of 2027 and plans to establish a spot market for computing power, rewarding participants who provide GPUs and perform AI inference with Flop tokens. Hayes believes that cheaper computing power will drive the adoption of agents: "If agents can directly convert a currency into the computing power they consume, they will use that currency. That is our bet."