Arthur Hayes, the former CEO of BitMEX, believes that the surge in artificial intelligence (AI) investment will follow a well-known pattern: an influx of capital leading to an eventual downturn, followed by a bailout that will boost cryptocurrency values.
Speaking at the Gamma Prime Investing Conference in Singapore, Hayes, who is also the co-founder and chief investment officer of Maelstrom, expressed concerns that humanity is “squandering trillions of dollars” on constructing AI data centers.
He explained that this extensive growth in data centers would eventually lead to an abundant supply of computing power, making it “very inexpensive and widely accessible.”
Despite the current flood of investment in AI infrastructure, with tech companies racing to obtain the necessary computing resources for advanced AI developments, Hayes predicts that this over-expansion will create excess capacity, paving the way for a market correction that could ultimately favor cryptocurrencies.
“A study of financial history shows that every major technological advancement tends to be overbuilt, resulting in a crash, followed by a recovery phase,” Hayes noted.
Investors who strategically position themselves for these recoveries could see substantial gains, according to Hayes, who pointed to the lessons learned from the 2008 financial crisis and similar events over the past 20 years.
“Fortunately, we have Bitcoin and other cryptocurrencies ready to absorb that surplus liquidity, which positions them to excel when the recovery occurs,” he stated, emphasizing the importance of patience.
Demand for computing power is largely driven by companies like SpaceX, OpenAI, and Anthropic, which are not currently generating profits, according to Hayes. He noted that once the ongoing data center projects are completed, the infrastructure providers will expect payment for the computing resources these firms have committed to using.
This influx of new capacity may arrive around late 2027 or 2028, as significant new data center capacity comes online, as per Hayes’ calculations.
On the optimistic side, Hayes sees the possibility that AI could become “incredibly valuable” in the next year, leading to increased demand that allows AI firms to turn a profit.
Some companies benefiting from the AI surge, like memory chip manufacturers and Nvidia, are already profitable, Hayes indicated. However, he cautioned investors to consider whether they are paying the appropriate price for the future earnings of these businesses.
Hayes expressed his reluctance to invest in declining prices or short-selling AI stocks, describing it as “not an ideal investment strategy,” while reiterating that major technological innovations have historically led to overproduction.
The surplus computing power resulting from AI development is also integral to Hayes’ latest cryptocurrency initiative, Flop, an AI agent payment platform set to launch in the first quarter of 2027. He believes that greater availability of affordable computing resources will facilitate the rise of AI agents.
Flop aims to establish a spot market for computing resources, rewarding participants with Flop tokens for providing GPUs and handling AI tasks.
Currently, there is a lack of payment infrastructure for AI agents, Hayes explained. Flop seeks to fill that gap by creating a market for computing resources.
“If these agents can directly convert a currency into computing power—their primary resource—they will adopt this currency,” Hayes concluded. “That’s our strategy.”