Arthur Hayes, former CEO of the cryptocurrency derivatives exchange BitMEX, suggests that declining investment in artificial intelligence infrastructure could set the stage for a significant Bitcoin rally. Hayes, a prominent figure in the digital asset industry, argues that a slowdown in AI development spending may increase debt market stress, potentially prompting interventions that expand US dollar liquidity and benefit Bitcoin.
Hayes sees risk in debt-fueled AI expansion
In his essay “Safety First,” published on September 22, Hayes questioned recent calls from AI companies to slow the pace of advanced artificial intelligence progress. He argued that these appeals might reflect shrinking profitability in the sector, despite public messaging from organizations such as OpenAI and Anthropic that focuses on safety and ethical development.
Hayes pointed to the vast amount of debt currently financing AI infrastructure. Major investment managers, including Apollo Global Management, have estimated that AI-related infrastructure spending will reach approximately $5 trillion by 2030. Of this sum, more than $2 trillion could be underpinned by investment-grade financing, supporting data center construction, semiconductor purchases, and other high-cost capital projects.
AI infrastructure is being aggressively financed with debt, and any decline in demand or profitability could create significant strain in credit markets tied to AI.
According to Apollo, any weakening in the revenues of leading data center operators, commonly called “hyperscalers,” could widen credit spreads and curtail future capital spending, thereby increasing the risk of credit losses within the sector.
Mini dictionary: Apollo Global Management, a leading global investment manager, specializes in private equity, credit, and real assets, with extensive involvement in large-scale infrastructure and alternative investments.
Private lenders, insurers exposed to AI credit risks
Hayes highlighted that private credit providers—including insurance companies—could be vulnerable if AI-linked obligations suffer credit downgrades or losses. The National Association of Insurance Commissioners has acknowledged the challenges posed by private credit markets, noting reduced liquidity and limited transparency compared to traditional publicly traded debt.
Credit losses or ratings downgrades for AI-backed obligations may put pressure on financial institutions holding such assets, especially among insurers and leveraged private lenders.
However, US regulators have stated that these risk factors currently warrant close monitoring but do not indicate widespread portfolio distress among major insurers.
Potential for broader liquidity support
Hayes outlined two possible policy responses if the economics of AI infrastructure collapse: government efforts to stimulate demand for computing resources, or direct financial assistance to support private credit markets and insurance companies. He reasoned that either approach would likely inject more currency into the financial system, serving as a catalyst for Bitcoin and other finite digital assets.
At present, US authorities have not introduced policies in response to AI-related credit stress. Meanwhile, the Federal Reserve raised its policy rate by 25 basis points to a range of 3.75%–4% on September 16, citing persistent inflation. This move has increased the cost of capital, potentially affecting heavily leveraged sectors such as AI.
Investment into AI remains robust, with Nvidia recently unveiling new financing initiatives in partnership with leading financial institutions, and SoftBank marketing more than $11 billion in bonds to finance its OpenAI stake.
Hayes’s view of a Bitcoin rally driven by AI market collapse rests on a sequence of events that has yet to unfold. Bitcoin traded near $85,700 in early Tuesday trading, following a rise of more than 6% in the previous session.
