Arthur Hayes Warns AI is Fueling History’s Biggest Liquidity Bubble

Arthur Hayes, former BitMEX CEO and Maelstrom CIO, says the global AI arms race has triggered a historic surge in fiat credit. He argues Bitcoin is the main beneficiary. In his latest newsletter, Hayes argues that nation-states treat AI spending as a survival contest. Central banks and commercial lenders, he says, are now funding the build-out indefinitely. Arthur Hayes Says Credit Channel Replaces Cash Flow Most US AI capital expenditure has so far come from operating cash flow at the largest software firms. Hayes argues that the source is running out, and bank credit must now fund the next leg. “The scale of current and future CAPEX spending now requires a growth in funding via the credit channel,” read an excerpt in the newsletter. In China, President Xi Jinping has steered lenders away from real estate and toward technology. The Federal Reserve and the People’s Bank of China have also eased financial conditions to support the build-out. Hayes invokes Jevons Paradox to explain why computing demand keeps accelerating even as model efficiency improves. Researchers at Simple Mining echoed Hayes, describing AI capex as a national-security concern driving Bitcoin demand. "AI capex is now a national security concern."Hyperscalers will eventually exhaust the ability to finance from free cash flow and turn to commercial bank balance sheets. Bank lending has a multiplier roughly three times larger than central bank lending. The result is a… pic.twitter.com/sfcw351p0Z— Simple Mining (@simpleminingio) May 9, 2026 Follow us on X to get the latest news as it happens Pentagon Deals Reinforce the Narrative White House AI and Crypto Czar David Sacks has been amplifying the same message, estimating AI capex will deliver a 2% tailwind to US GDP growth this year. Sacks cited a Morgan Stanley note suggesting the contribution could climb above 3% next year. “Stopping progress in AI would be equivalent to halting the US economy,” he noted. Morgan Stanley AI Capex Targets. Source: H...