AI Bubble Bursting Could Pump Bitcoin with Liquidity
Arthur Hayes, co-founder of BitMEX, recently published an essay called 'Safety First' where he argues that a potential AI investment bubble bursting could lead to increased liquidity in Bitcoin.
Hayes believes that demand for high-end AI services may not grow quickly enough to justify significant investments in data centers, semiconductors, and computing power. He also points out that new calls from top AI developers to throttle frontier-model development reflect concerns about cybersecurity and safety rather than a lack of demand.
The AI infrastructure is largely financed through debt, including corporate bonds and private financing tied to AI infrastructure, which exposes it to future cash flow risk. Apollo estimates that around $5 trillion could be spent on AI infrastructure by 2030.
If the demand for A.I. slows, owners of data centers and companies that lend to them could lose money through the private credit and insurance markets. The federal government might step in to support demand for infrastructure or backstop insurers exposed to asset price declines.