Former BitMEX CEO Arthur Hayes predicts the massive AI infrastructure buildout will result in a crash and government bailout that sends cryptocurrencies higher. He argues investors should prepare for the downturn and position for the government spending that follows.

Speaking to CNBC in Singapore, Hayes said the industry is wasting multi-trillion dollars on data centers. Companies like SpaceX, OpenAI, and Anthropic are driving demand for computing power, but none are profitable yet. When construction finishes, infrastructure providers will demand payment for the capacity.

New capacity is expected to arrive in late 2027 or 2028. Hayes acknowledged a scenario where AI becomes useful within 12 months, allowing firms to turn a profit. He questioned whether the market is paying the right valuation for current earnings at companies like Nvidia. He also advised against shorting AI stocks, calling it a poor investment strategy.

Hayes cited the 2008 financial crisis as a precedent for the cycle he anticipates. "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," he said. He believes capital will flow into cryptocurrencies as a result of the government response.

Hayes is launching Flop, a payments project for autonomous AI programs, in the first quarter of 2027. He wants to capitalize on cheaper computing power expected from the buildout. The platform will establish a market for computing power, rewarding users with Flop tokens for providing graphics cards and processing AI tasks.

There is currently no payment network for autonomous AI programs, Hayes said. The Flop project relies on the premise that these programs will adopt a specific currency if it allows direct conversion into resources. "If agents can convert a currency directly into compute, which is what they eat and consume, then they will use this currency," he said.