Arthur Hayes has argued that the “Safety First” pause on AI development being pushed by Anthropic, OpenAI, and SpaceX has less to do with concern for humanity and more to do with weak demand for AI products at current prices.
According to him, the resulting compute glut could make AI cheaper to run, a dynamic he called favorable for his own AI-crypto venture, the Flop Network, and for Bitcoin.
Hayes Ties the AI Showdown to a Trillion-Dollar Debt Problem
In a September 22 essay, Hayes pointed out that the three labs’ compute demand backs more than $1 trillion of investment-grade debt and hundreds of billions in lower-quality loans. This financing flows through partners like Nvidia, Broadcom, Google, and Microsoft.
He reasoned that if training spending falls under the safety banner, compute purchases will drop while the debt will stay on the books.
“Safety First is by definition compute demand destruction,” he wrote, citing Nick Nemeth of Mispriced Assets while describing how private equity firms have used captive insurers and affiliated reinsurers, often domiciled in Vermont, to hold policyholder premiums against AI-linked private credit with little real capital backing them.
He put the scale of what he called a fabricated reinsurance asset at $1.54 trillion, pointing to one Brookfield-linked case booked at a $1.48 billion valuation where the reinsurer told regulators it owed nothing.
A downgrade of AI data center debt, he argued, would force parent insurers to find capital the reinsurers cannot supply, pushing Washington toward another 2008-style rescue.
“Will the US government do one of the following: become the compute buyer of last resort in the name of national security, or print money to bail out underwater insurance companies?” the BitMEX co-founder asked.
But in his opinion, whatever the government does, Bitcoin and crypto investors will win.
Bitcoin’s Rally and Hayes Broader Liquidity Calls
Hayes wrote his essay with Bitcoin climbing to an eight-month high of $87,400 on Monday. SoSoValue data also showed about $999 million flowing into spot BTC ETFs that day, while CryptoQuant pointed to a short squeeze that liquidated more than $340 million in bearish positions.
He has made similar liquidity arguments before, including on September 3, when he pointed to funding stress at French banks such as BNP Paribas and Societe Generale as a trigger for renewed Fed money printing through its repo facilities.
“Safety First doesn’t herald a massive up swell in printed money immediately,” he wrote in today’s piece. “It gives Trump a choice, we as Bitcoin and crypto investors, don’t care what he decides because both roads lead to more money printing.”
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