US AI Labs' 'Safety First' Ruse May Bring Government Intervention and Bitcoin Boost

Arthur Hayes believes that top US AI labs are slowing down their AGI development due to economic realities rather than genuine safety concerns. According to Hayes, the market doesn't want expensive AI at its current price and instead prefers cheaper alternatives from China. The AI bros, as Hayes calls them, cry foul when Chinese models close the quality gap, but ultimately want to sell their own AI products at a higher price.

The issue is significant because these labs' demand for compute backs over $1 trillion of investment-grade debt and hundreds of billions of lower credit-quality loans. The AI labs combined do not generate any profits and require support from profitable tech companies like Nvidia, Broadcom, Google, and Microsoft to provide an off-balance-sheet backstop.

Hayes argues that 'Safety First' is actually compute demand destruction, which will lead to a decline in the price of debt. He wonders who bought this debt and if they used leverage to do so. The real question, he says, is whether the US government will bail out the insurance industry or print money to fund unproductive economic goods.

In either case, Hayes believes that Bitcoin holders and crypto investors will win because the government's actions will lead to higher financial speculation and increased demand for cryptocurrencies.