Compute Glut Could Lower AI Costs, Boost Crypto Prices

Arthur Hayes, co-founder of BitMEX, believes that the current 'Safety First' pause on AI development is more about weak demand for AI products at current prices than concern for humanity. This pause has led to a compute glut, which could make AI cheaper to run and boost crypto prices.

Hayes argues that if training spending falls under the safety banner, compute purchases will drop while the debt stays on the books. He points out that the three labs' compute demand backs more than $1 trillion of investment-grade debt and hundreds of billions in lower-quality loans.

Hayes ties this AI showdown to a trillion-dollar debt problem, where private equity firms have used captive insurers and affiliated reinsurers to hold policyholder premiums against AI-linked private credit. He puts the scale of this fabricated reinsurance asset at $1.54 trillion.