Former BitMEX CEO Arthur Hayes believes the AI investment mania will be a major positive catalyst for Bitcoin if it ends up crashing down.
In an interview with CNBC at the Gamma Prime Investing Conference in Singapore, Hayes said that the excessive investments pouring into AI data centers are ripe for an oversupply.
The current investment mania in AI is a multitrillion-dollar case of capital misallocation, said Hayes. At the end of the day, all this means is that we will have cheap and accessible massive compute power.
This might be a painful journey for financial markets in the process.
Why AI crash could be bullish for Bitcoin
If the AI infrastructure boom leads to a major credit crisis, governments and central banks will eventually intervene, according to Hayes.
They will inject additional liquidity into the financial system. In his opinion, Bitcoin and other cryptos are the likely winners of all this excess cash.
The immediate catalyst for a Bitcoin boost is not necessarily an AI crash. Initially, a major deleveraging move could be negative for risk assets. But afterwards, the monetary response could be bullish for stocks.
This could play out around 2027–2028, when the companies that promised all this massive compute power need to actually generate enough money to justify the costs.
It could also be that over the next year, the demand for AI becomes strong enough to justify this large infrastructure investment. Hayes admits that this could be a potential scenario. Basically, the usefulness of AI may allow companies to grow into these massive compute costs.
This is not the first time Hayes has envisioned such a scenario.
In August, the co-founder of BitMEX compared the AI infrastructure boom to the credit excesses before the financial crisis of 2008. But rather than viewing this current cycle as another dot-com tech bubble, Hayes said people should pay attention to the debt financing for the data centers and expensive compute hardware.
Currently, Hayes himself is not shorting the AI boom. Still, he is pretty confident that there is a lot of overbuilding.