Arthur Hayes: "Bitcoin (BTC) will surpass $1 million if the artificial intelligence bubble bursts"

▲ Bitcoin (BTC)

Arthur Hayes, co-founder of BitMEX, predicted that Bitcoin (BTC) could exceed $1 million if the artificial intelligence (AI) credit bubble bursts.

According to Cointelegraph, a cryptocurrency media outlet, on August 5 (local time), Hayes argued that borrowed funds poured into AI data centers and power infrastructure could trigger a credit crisis similar to the 2008 financial crisis. He stated, “The AI boom is not an earnings story like 2000, but a credit story like 2008.” The analysis suggests that if governments release liquidity to manage the crisis, Bitcoin could soar above $1 million.

Hayes pointed out that investors are misjudging spending on data centers and power facilities as high-growth technology investments. He explained that the actual business structure is closer to real estate development, involving massive borrowed funds. He predicted that if financial institutions fund the construction of facilities beyond demand, and then AI capital expenditure slows, borrowers with weak financial structures would be the first to falter.

He predicted that Bitcoin would remain between $60,000 and $70,000 and could drop to $50,000 before the credit crisis fully materializes. After that, a strong rebound is expected once governments begin supplying liquidity. Hayes projected that Ethereum (ETH) would reach $5,000 by year-end, and Maelstrom plans to increase its Ethereum holdings while selling out-of-the-money put options.

The commitment of approximately $1.09 trillion by Microsoft (MSFT), Meta (META), Oracle (ORCL), Amazon (AMZN), and Alphabet (GOOGL) for uncommenced lease agreements also raised concerns about credit expansion. This amount is nearly four times the approximately $285 billion in lease liabilities already recognized by these five companies. However, the contract amount is an undiscounted amount paid over several years, so it cannot be entirely viewed as debt.

There are differences in financial burdens among companies. Oracle's net debt was about 4.3 times its earnings before interest, taxes, depreciation, and amortization, while the other four companies were below 1x. S&P Global analyst Andrew Chang cited Oracle's data center lease terms of 15-19 years, compared to customer contracts of up to 5 years, as a key risk.

[Article Key Summary]

-Arthur Hayes warned that the AI infrastructure investment bubble could escalate into a credit crisis similar to 2008.

-Hayes predicted that Bitcoin could exceed $1 million if governments supply liquidity after the crisis.

-Uncommenced lease agreements for five US big tech companies amounted to approximately $1.09 trillion, nearly four times their existing lease liabilities.

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