Arthur Hayes Bets on Crypto After Predicted AI Boom Bust

Arthur Hayes, former BitMEX CEO and current chief investment officer of Maelstrom, predicts that the artificial intelligence boom will follow a familiar pattern: massive investment, overcapacity, a crash, and eventual bailouts. Speaking at the Gamma Prime Investing Conference in Singapore, Hayes argued that trillions of dollars are being 'wasted' on building AI data centers, which will ultimately make computing power abundant and cheap. He believes this overcapacity will lead to a downturn, but sees an opportunity for crypto to benefit from the subsequent bailouts.

Hayes pointed to historical examples like the 2008 financial crisis, suggesting that investors positioning for bailouts could profit. He emphasized that Bitcoin and other cryptocurrencies will likely perform well when such bailouts occur, provided investors remain patient. He also noted that while some companies supplying the AI boom, such as memory chipmakers and Nvidia, are already profitable, investors should question whether they are paying the right price for these companies' future earnings.

Hayes' latest venture, Flop, aims to capitalize on the abundance of computing power expected from the AI buildout. Flop is an AI-agent payments project set to launch in early 2027, creating a spot market for computing power where participants are rewarded with Flop tokens for providing GPUs and performing AI inference. Hayes believes that AI agents will use this currency because it directly converts to compute, which they consume.

Looking ahead, Hayes sees two possible outcomes: either AI companies become profitable within the next year due to high demand, or the overcapacity leads to a downturn by late 2027 or 2028. He also cautioned against shorting AI companies, calling it a poor investment opportunity, but remains confident in the long-term benefits for crypto.