AI boom could waste trillions on data centres, trigger crash and crypto rally, says Arthur Hayes

Arthur Hayes, former BitMEX CEO, says the AI boom is wasting trillions of dollars on data-centre capacity. He expects the overbuild to trigger an AI infrastructure crash and government bailout around late 2027 or 2028, with excess liquidity potentially boosting Bitcoin and cryptocurrencies.

Arthur Hayes, co-founder of the cryptocurrency exchange BitMEX and its former CEO, warned that the AI boom could lead to a multi-trillion-dollar overinvestment in data centres, followed by a sharp downturn and a government-led bailout. Hayes told CNBC that the AI infrastructure boom could generate an enormous amount of computing power for its users that may not be necessary.

Hayes, the Chief Investment Officer (CIO) of the crypto investment fund/family office Maelstrom, thinks the overcapacity might drive computing costs down to incredibly low levels. The big challenge will be in late 2027 or 2028, once new data centres are finished, and AI firms have to shell out for the computing power they pledged. His overall wager is that this bailout may inject new liquidity into financial markets and push Bitcoin and other cryptocurrencies even further up.

AI data centre boom could be overbuilt

Humans are “wasting multi-trillion dollars”, said Hayes, in building AI data centres. He said that the key cycles of big tech investment in the past have seen overbuilding, followed by a crash and then a bailout.

Companies are trying to purchase the computing power they need to run increasingly advanced AI models, thereby driving the current AI boom. Companies including SpaceX, OpenAI and Anthropic are fuelling demand, Hayes said. However, he doubted whether these businesses would be able to return the huge investment in infrastructure to the investors.

The industry may be under pressure once the data centres under construction are up and running, Hayes said. The customer will then be charged for the compute capacity they have agreed to.

Pragya Singha Roy