Trillions are being ‘wasted' on the AI boom, Arthur Hayes says. He's betting on what comes next

• Hayes predicts a critical test in late 2027-2028 when new data center capacity comes online and infrastructure providers demand payment from unprofitable AI companies like SpaceX, OpenAI, and Anthropic
• The eventual overcapacity would make computing power 'extremely cheap and plentiful,' following historical patterns where major technological rollouts are overbuilt, crash, and require bailouts
• Hayes is launching Flop, an AI-agent payments project in Q1 2027, betting that abundant computing power will enable AI agents to proliferate and require a new spot market for compute paid in cryptocurrency tokens

Summary: Arthur Hayes Predicts AI Boom Bust and Crypto Rebound

Key Thesis:

Arthur Hayes, former BitMEX CEO and CIO of crypto investment firm Maelstrom, argues that "multi-trillion dollars" are being wasted on AI data center construction, setting up a boom-bust cycle that will ultimately benefit Bitcoin and cryptocurrencies.

Main Arguments:

Hayes predicts the massive AI infrastructure buildout will create overcapacity, making computing power "extremely cheap and extremely plentiful." He draws parallels to historical technological rollouts, which he says consistently follow a pattern: overbuilding, crash, and government bailout. The excess liquidity from eventual bailouts would flow into crypto assets, with Bitcoin positioned to "perform the best."

Critical Timeline:

Hayes identifies late 2027 or early 2028 as a key inflection point when new data center capacity comes online and infrastructure providers demand payment from compute customers.

Market Concerns:

Major AI compute consumers including SpaceX, OpenAI, and Anthropic currently generate no profits, raising questions about their ability to meet future payment obligations. The bull case depends on AI becoming sufficiently useful within 12 months to drive profitability.

Companies Mentioned:

While memory chipmakers and Nvidia are currently profitable, Hayes questions whether their valuations reflect appropriate earnings multiples.

New Venture:

Hayes announced Flop, an AI-agent payments project launching Q1 2027, designed to create a spot market for computing power rewarded with Flop tokens.

Investment Strategy:

Hayes advises patience and positioning for the eventual bailout cycle rather than shorting AI companies, calling the latter "not really a great investment opportunity."