Arthur Hayes Sees AI Bubble Ending in Trillion-Dollar Rescue

Arthur Hayes, Managing Partner of Maelstrom, believes the artificial intelligence (AI) boom is a bubble. He thinks the reckoning could arrive around 2027 or 2028, when AI companies face enormous commitments for data centers built on expectations of future demand.

According to Hayes, the current phase is one of 'capital wastage,' with enormous sums being committed to infrastructure while the companies expected to consume that capacity remain economically shaky. He expects major AI companies and their surrounding infrastructure to become sufficiently important that Washington would have powerful incentives to prevent a disorderly collapse.

Hayes argues that data-center debt, which he believes could reach far beyond Silicon Valley, would be a major concern. He thinks the government would step in and bail it out to the tune of multiple trillions of dollars, citing that 'if that debt goes bad, it hits average policyholders across the United States.'

Hayes sees the prospective rescue as a liquidity event for crypto, and believes that governments will choose money creation over allowing widespread losses to rip through heavily indebted economies. He's building a business, Flop Labs, which is developing FLOP, a blockchain network intended to connect AI agents with computing power.

Flop Labs plans a 90-day FLOP airdrop, distributing about 25% of its 10-year supply, and mainnet is scheduled for the first quarter of next year. Hayes likens the design to Bitcoin, with no venture-capital allocation or presale.