AI Infrastructure Boom Could Fuel Credit Crisis, Bitcoin Rally Past $1M

BitMEX co-founder Arthur Hayes predicts a potential credit crisis in the AI infrastructure boom could lead to a Bitcoin 'crack-up boom' past $1 million. According to Hayes, investors have mislabeled spending on data centers and power infrastructure as high-growth technology investment instead of leveraged real estate. This could result in excessive construction before a slowdown in AI capital expenditure exposes weaker borrowers.

Hayes likens the situation to 2008's credit crisis rather than the 2000 earnings story. He expects lenders to finance this construction, leading to a potential government bailout and subsequent Bitcoin rally. The BitMEX co-founder predicts that Bitcoin could remain between $60,000 and $70,000 before the credit cycle drives a recovery.

Hayes also forecasts Ether (ETH) will reach $5,000 by year-end. He intends to build a significant position in Maelstrom while selling out-of-the-money ETH put options. The AI boom's scale is already visible, with Big Tech companies committing nearly $1.09 trillion to leases that have not yet commenced, primarily for data centers.

However, this financial strain is uneven, with Oracle's debt being about 4.3 times its earnings before interest, taxes, depreciation, and amortization. S&P Global analyst Andrew Chang notes that Oracle's customer contracts last no more than five years, posing a key risk to these long-term data-center leases.