AI Bubble Debt Puts Washington on Collision Course with Money Printing

Arthur Hayes, co-founder of BitMEX, believes that the AI industry's pivot towards 'safety first' is actually a commercial retreat disguised as concern for humanity. He argues that the market does not want to pay US prices for AI, but rather wants it at the much lower 'China price'.

This shift has significant implications for global fiat markets, Hayes claims, because the compute demand of AI labs backs more than $1 trillion in investment-grade debt, plus hundreds of billions in weaker debt. If that demand falls, this debt will be impaired.

Hayes predicts that Washington will either become 'the compute buyer of last resort' or print money to cover insurers holding downgraded AI debt. In both scenarios, he believes, 'we as Bitcoin holders and crypto investors win'. Hayes points out that the US Federal Reserve's recent actions have actually been stimulative, despite raising interest rates.

In his new project, Flop Network, which depends on cheap compute, Hayes sees a 'glorious' setup. He also notes that other bulls, such as Tim Draper, predict Bitcoin will reach $250,000 at the next halving.