Former BitMEX CEO Arthur Hayes says the AI gold rush is headed straight for a cliff, followed by a government bailout that could push crypto prices higher. He claims the AI investment boom is
Former BitMEX CEO Arthur Hayes says the AI gold rush is headed straight for a cliff, followed by a government bailout that could push crypto prices higher. He claims the AI investment boom is unsustainable and will eventually collapse, adding that multi-trillion dollars are being wasted on AI data centers.
The Maelstrom co-founder further argued that increased investment in data centers will ultimately lead to excess computing power, causing a dramatic reduction in costs.
“If you study financial history and you study every single major technological rollout, it always is overbuilt. There always is a crash, and there always is a bailout,” he told reporters.
Right now, many firms and governments are investing billions to build AI infrastructure. As opposed to what Wall Street views as a tech bubble fueled by equity funding, Hayes sees the huge investment in data center and grid build-out similar to the commercial real estate bubble fueled by credit.
He believes lenders, governments, and other private entities are backing these massive projects based on the fallacy of perpetual demand for AI.
Thus, he anticipates the massive development glut to trigger a downturn. Predicting a premature end to the tech rally, he expects AI capital spending growth to lose steam in mid-to-late 2027, before a clear stagnation sets in 2028. The core danger, he notes, is that debt markets will continue to expand while actual development stalls, creating a textbook environment for a credit crunch.
The possibility of oversupply would not necessarily mean AI demand is going away. But Hayes’ argument is that infrastructure investment could grow much faster than the revenue from AI services. Companies may have more data center capacity than they can profitably use if computing costs fall as more facilities are brought online.
That dynamic could benefit AI developers and users in the longer term. Lower computing costs would make it cheaper to train and run increasingly capable models, potentially encouraging more companies to deploy AI agents and other automated services. However, it could also put pressure on companies that have invested heavily in expensive infrastructure while relying on continued growth in AI demand to justify those costs.
For crypto markets, Hayes sees oversupply as an ongoing cycle rather than an immediate danger. Governments could step in to help strategic AI companies and infrastructure projects if declining returns trigger defaults or stress in the credit market. Hayes thinks the resulting liquidity could eventually flow into risk assets like Bitcoin.
While anticipating a downturn in AI investment, Hayes asserts that government bailouts are inevitable because the technology has become a cornerstone of national defense and strategic dominance.
He argues that investors who brace for the inevitable bailouts will win big, much like those who capitalized on the post-2008 financial interventions. He further predicts that those state-sponsored interventions will dwarf the post-2008 liquidity injections and will potentially flood into digital assets.
“Thankfully, we have bitcoin and other crypto to soak up that excess liquidity, and so we know the asset that’s going to perform the best when the bailout comes,” he said.
Writing on Substack, he further explained that Bitcoin will begin a long-term rally just as AI infrastructure spending slows and credit continues to flow. The subsequent wave of panicked state intervention will then act as the ultimate catalyst to push the cryptocurrency past $1 million.
Hayes also argued that the very entities driving the AI infrastructure rush, including SpaceX, OpenAI, and Anthropic, have yet to turn a profit on their massive compute development. Thus, he believes that once current data center construction wraps up, these infrastructure builders will aggressively seek collection on those multi-billion-dollar computing contracts.
The optimistic counterargument hinges on AI becoming so indispensable over the next year that surging user demand will turn these cash-burning tech companies profitable, he stated. He further contended that the AI boom is already benefiting companies such as Nvidia and memory chipmakers.
Still, he argued that the key issue for investors is whether those companies are trading at reasonable valuations relative to their expected earnings.
Hayes is also launching Flop, a crypto venture focused on AI-agent payments, expected to debut in the first quarter of 2027. To which he argued there’s a market for it, since cheaper and more plentiful computing power will encourage the growth of AI agents.
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