Arthur Hayes Predicts AI Overbuild Will Trigger Bailout Boosting Crypto

Former BitMEX CEO Arthur Hayes is placing a significant wager that the current artificial intelligence gold rush will follow a historical pattern: massive overinvestment, a subsequent market crash, and finally, a government bailout that drives cryptocurrency prices higher.

Speaking to CNBC at the Gamma Prime Investing Conference in Singapore, Hayes, who serves as chief investment officer for Maelstrom, argued that humanity is “wasting multi-trillion dollars” on the construction of AI data centers. He predicted this infrastructure expansion will ultimately render computing power both extremely abundant and inexpensive.

This perspective stands in direct opposition to the current surge of capital flowing into AI infrastructure, as tech giants race to secure the processing power necessary for advanced models. However, Hayes foresees this buildout leading to overcapacity, creating a downturn that he believes will disproportionately benefit the crypto sector.

“If you study financial history and you study every single major technological rollout, it always is overbuilt. There always is a crash, and there always is a bailout,” Hayes stated. He noted that investors who position themselves ahead of these bailouts have historically seen substantial gains, citing the post-2008 financial crisis era as a prime example.

Hayes expressed confidence that Bitcoin and other digital assets will effectively absorb the excess liquidity generated by such future bailouts. “Thankfully, we have bitcoin and other crypto to soak up that excess liquidity, and so we know the asset that’s going to perform the best when the bailout comes,” he said, emphasizing that patience is key.

The former executive pointed out that major consumers of computing power, including SpaceX, OpenAI, and Anthropic, are currently not profitable. He anticipates that once the ongoing data center constructions are completed—likely in late 2027 or 2028—infrastructure providers will begin demanding payment for the compute capacity these companies have committed to.

While Hayes acknowledged the bullish case that AI could become sufficiently useful within the next year to drive profitability, he cautioned investors to scrutinize the valuations of companies already profiting from the boom, such as Nvidia and memory chipmakers.

Despite his prediction of an inevitable crash due to overbuilding, Hayes advised against shorting AI companies, describing it as a poor investment strategy. Instead, he is channeling his conviction about cheaper, plentiful compute into a new crypto venture called Flop.

Set to launch in the first quarter of 2027, Flop aims to establish a spot market for computing power. The project will reward participants with Flop tokens for providing GPUs and performing AI inference. Hayes explained that the absence of a dedicated payments network for AI agents creates an opportunity; if agents can directly convert currency into compute, they will inevitably adopt the platform’s token.