Arthur Hayes, co-founder of BitMEX, said excessive AI investment could eventually trigger a crash and a government bailout that sends Bitcoin (CRYPTO: BTC) and other cryptocurrencies higher.

Hayes, also the co-founder of crypto investment firm Maelstrom, said humanity is "wasting multi-trillion dollars" building AI data centers. Speaking to CNBC at the Gamma Prime Investing Conference in Singapore on Tuesday, Hayes stated that he expects the construction surge to create “extremely” plentiful, inexpensive computing power before producing overcapacity, a downturn and, eventually, government-backed support for the industry.

"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 said.

Pointing to Nvidia Corp. (NASDAQ:NVDA) and other memory-chip manufacturers that are already profitable, Hayes urged investors to assess whether current valuations adequately reflect companies’ expected future earnings.

On the other hand, he said that Space Exploration Technologies Corp. (NASDAQ:SPCX), OpenAI and Anthropic rank among major computing-power users despite not making money

He said pressure could surface in late 2027 or 2028, when new capacity comes online, and infrastructure providers seek payment from AI companies.

Hayes told CNBC that Bitcoin and other cryptocurrencies could “soak up” excess liquidity after such a bailout, potentially making them the strongest-performing assets. "You just have to be patient,” he said.

Hayes Doubles Down on Bitcoin

Hayes’ latest warning builds on an August prediction that Bitcoin could reach $250,000 as governments increase liquidity to address credit-market stress, rising bond yields and artificial intelligence’s (AI) enormous funding requirements. He said policymakers in the U.S., China, Japan and Europe are likely to intervene early as fiscal spending, high bond yields and AI-related capital needs strain financial markets.

In September, Hayes described Bitcoin as the "fastest horse" during renewed central-bank money printing, arguing in a podcast that cryptocurrency remains especially sensitive to expanding global liquidity.

Price Action: On a year-to-date basis, Bitcoin declined 4.35%, as per Benzinga Pro. It is currently trading around $83,430.

AI Spending Faces Bubble Risks

‘Big Short’ investor Michael Burry said Big Tech’s aggressive data-center spending reflects expectations that leading AI companies will become an oligopoly too large to fail, as AI capital spending could reach $1 trillion next year.

Meanwhile, Panmure Liberum analysts warned that an AI downturn could drive the S&P 500 to 5,000 by the end of 2027, with hyperscaler spending triggering the AI bubble burst in 2027 or 2028.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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