Transcription
I woke up this morning and the first thing I saw was that Arthur Hazer dropped a brand new Substack. Right? I don't know if you ever read one of these Arthur Hay substacks, but let me tell you, they start off slow and as you get into them, you get into this rabbit hole which digs into altcoins, Bitcoin, political situation, AI, and everything else that's that's that that's got to do with it. So, I thought today what we'd do is actually get Arthur Hayes on the show. And before I actually start the show and get Arthur on, I actually just want to read you one little part of this uh of the substack because I think it'll put everything into perspective. And it reads something like this. It says, "Bitcoin cannot rally in the short term if the entire world takes serious losses from deflation of the AI bubble globally. Eventually, it will bottom then rise as Bitcoin forecasts an increase in liquidity to put Humpty Dumpty back together again. But right now, it's all about protecting one's crypto capital."
So, if that doesn't set the tone for what we're about to to talk about, then let me spell it out for you. We're going to talk about AI and whether AI can is about to deflate. Is AI going to crash? And that's because one of the things we have this week is we have the SpaceX IPO coming up. Is it going to drain liquidity from the markets? What is going to happen? What else could drain the AI bubble? What is going to happen? And when is the Fed actually going to print cap start printing capital? That's what we're going to talk about. And I've got Arthur with me all the way from Bangkok. How are you, my friend?
>> Great. How are you doing, >> man? I had this whole interview with you planned out and then I woke up this morning and there was another Substack and it was like, wow, we're going down a big big big big big rabbit hole today.
>> Great. Well, let's go.
>> All right, let's go. So, let's start. I mean, I guess we're going to talk about all the things that you mentioned. We're going to talk about how like the Fed I mean, I guess from from what you're saying what you're saying here, I guess what you're saying is the AI bubble is going to collapse at some point in time. Uh, we'll talk about whether that's pretty soon or not. And until the AI bubble collapses, you don't see a world where Bitcoin actually uh rises because only the collapse of the AI bubble is going to give us the liquidity that we need for Bitcoin to actually run. Is that pretty much the the outline for the for the Bitcoin thesis?
>> Yeah. That and I went back and I challenged my process that got me to this conclusion of thinking that there was abundant liquidity and Bitcoin should rise. And obviously I was wrong about that. From October of last year to the present, Bitcoin is down 50% yet bakeling the AI is up. There's been money creation especially in the United States. So why has Bitcoin not done so well? So I said, okay, let me figure out where did the money go? I think it went to AI. So I went up perplexity and I asked it can you give me an estimate of how much debt was issued in various forms to AI or AI adjacent companies from the start of chat GPT commercialization November 30th 2022 that's the president the headline number is about1 and a half trillion dollars is the estimate versus one and a half trillion dollars of global US dollar M2 increase again very rough numbers I'm not trying to 100% correct. It's more about the directionality and the getting the magnitudes right. So at a high level, all the money went to AI and therefore Bitcoin didn't get any love from all this printed money. Now obviously that's not the case because Bitcoin rallied from the FTX lows in November 2022 to the present like up 7x. But the reason why it was able to rally even though you know AI sucking all this capital is the intensity at which AI demanded capital and the dollar and other terms increased dramatically starting in 2025. So from 2025 to 2026 the present about $ 1.3 trillion of debt has been issued out of five. So this is why Bitcoin had the ability to rise as AI was just revving up in terms of its suction of all fiat capital around the world. And so if if that's the premise, then as long as the AI bubble's going, that's what you're investing in because you can look, you know, Korea, Taiwan, Japan, America, pick your, you know, pick your stock that's in the sort of the AI stable. Some of these things are up like 50x in 12 months. like you're not getting those sorts of returns in crypto right now. And so you have to be an AI. If you're saying, "Hey, I've got a unit of fiat. I'm worried about inflation. I know there's more fiat coming down the pipe. Well, I be I should be playing the AI game because that's the game that's generating the returns necessary to escape the trap." And that's where it's happening.
>> I mean, I've thought about this uh cryp AI killed crypto discussion, and there's there's there's multiple ways to look at it. One is of course the the linear thing of of AI sucking capital out of crypto and I think you've just mentioned that. I think the other one is AI sucking megawatts out of crypto which is all the data centers um you know where all the data centers are basically pivoted because they're getting a much bigger ROI on AI. The third reason why I think that AI actually killed crypto is because crypto is a bunch of open-source code which is sitting for everyone to see and to try and exploit. And if you do exploit it within a matter of milliseconds, you actually have the honeypot or the reward for actually exploiting it, which is different to every other industry. So I think for crypto, it's been a triple whammy. One of my one of my theories on top of what you said, one of my theories about why crypto isn't running at the moment, is because I think it's too vulnerable to attacks from AI. You saw Zcash uh last week, which could have got exploited by Claude Opus 4.8, and that's before Mythos actually comes out and they say that Mythos is going to be a lot more powerful. Now, you kind of got to extrapolate that discussion to every protocol and say basically every protocol is could at any point in time be attacked by some vulnerability that we thought wasn't even possible. And I think that that's one of the reasons why people aren't giving crypto a bit at the moment because it's just too scary.
>> Maybe could be. I mean, I guess focus on liquidity. So, I mean, that's, you know, perfectly valid thought process.
>> So, let's talk about like the the collab in your in your thesis. You talk about, you know, eventually the AI bubble bursting. And I think if if I remember how you worded it, you said, uh, let's quickly get it up here. It said there are three dots that will pierce the AI bubble. There are high energy costs, the inability of the market to absorb the three mega IPOs, and Trump's anti- AI rhetoric. I want to start with the last one first, which is Trump's a anti-AI rhetoric, because everyone knows that Trump doesn't have an anti- AI rhetoric. But you think because of the war, Trump is going to temporarily develop an an anti- AAI rhetoric, right?
>> Correct.
>> Just walk me through the thinking. So if there's there are two issues that animate American public both in Republicans and Democrats. Number one is affordability. People are worried that things are getting more expensive. And of course they they rightfully blame the Republicans even more so after the Republicans started this war that nobody voted on. And so there's not really much Trump can do about that. Even if the war ended, you know, yesterday, this oil and commodity inflation has been building through the supply chain for months. You can't just stop it. And so inflation is baked in. There's not really much you can do about that situation. Gas prices are going to be elevated. food prices are elevated due to the war and other you know other things that have been happening through the you know first was it year and a bit of the reign of Trump too. So I almost think you got a kitchen sink the affordability issue. So if you can't really do anything about that issue what's the next thing that people care about and I think that they probably care about this more because yes if a price of good goes up 10% but you have a job okay it's bad but you still have a job. If AI takes your job, you have no income and shit's going up in price. So, what are you afraid of more? The AI taking your job or the inflation. And so both, you know, rich and poor, red and blue Americans are scared shitless about AI, especially because every day the media is running these, not ads, but sound bites from Elon, from Sam Alman, from pick your AI techpro, who has to come out and say AI is going to be the most transformational technology that ever was because they want you to buy their overpriced company or they want the government to give them more um subsidies or they want the government to say this is a you know national security so we must support you against China so they have to paint this doom and gloom picture that AI is coming for everybody but that works against them politically because now everyone's like oh [ __ ] AI is coming for me it's coming from my job I'm not going to make any more income and it could happen as quickly as next week you know and I was making 250 now I'm on unemployment and so what's happening around America people are saying hey I don't want that data that are built there that that's causing inflation. They're becoming receptive to these messages from Democrats like Elizabeth Warren and Bernie Sanders and AOC talking about fairness or redistribution. Why is it that there's only 15 people who make all the money in AI plus their stockholders yet they took all of our data to make these things? Where's yours, American person, red or blue? You know, where's your stuff? And I think that's a very seductive message. And I think this is the only issue that Trump could lean into and reverse what is surely to be a absolute shellacking in the House by you know the Republicans and the Democrats. There's a path to victory if he goes anti- AI and I think that is Trump as someone who has no ideology. He's all about winning. If all he has to do is say a few words and change the direction of people's attention towards I am all about responsible AI. I am all about redistributing this productivity miracle to all Americans. Just like he gave the biggest handout since the New Deal during co. No, this is not something a Republican uh president usually does is hand poor people money. He handed everybody money. Rich, poor, doesn't matter. No means testing. biggest handout since the New Deal was a Republican president. So don't tell me that Trump can't say, "Okay, if I need to go anti-I for six months to get reelected so that my team stays on top." It's just words. Post a member, he doesn't have to do anything he said. He's a politician. People expect it anyways. But at least you have to come out and at least try to meet the people where they're at. And so I think this is the only way he can win.
>> So the votes the votes that he needs, you're basically saying, "Look, I think you said it here. He said, uh, uh, sell your AI tech brothers down the river just for a very short period of time. At the same time, appeal to the broader American base that is now petrified about their jobs and saying, "Look, I'm going to look after your jobs. I'm going to do responsible AI. Elon and Sam aren't going to get all your money." Uh, that would get him over the line to not lose a landslide uh in in in the elections. And after the elections, he can just I mean, who cares about what happens after the elections as long as long as you win the elections? And I think you say that because there's no way that prices are going to come down before the before the the the midterms. I guess I guess it's too late now, right?
>> If the war I mean, if he's if he stop the war right now, it's just too late.
>> Do you think that that the that that this was a miscalculation? Like do you think that this is like one of the biggest miscalculations that Trump actually made in terms of how long the war would last and how how long the price of oil will persist or do you think that this was a calculated like calculated risk? I think it was a miscalculation, but again, it almost doesn't really matter at this point. Who cares? It's not as if he can turn back the clock. He did what he did. Like it or not like it. Now we're here. What are you going to do about it? And so now there's there's high prices. The high prices will definitely although will be reflected in the inflation numbers up until the elections. The only way to fix the elections is to go hey pro responsible AI. Uh that will swing the vote and then win the election and then and then go make good with your tech brothers uh your tech brothers down the line. Right? Because at the end of the day, having a job is more important than whether or not inflation happens. Because if you don't if you don't have a job, I mean, you're way more impacted than if inflation is 5, 10, 15%, whatever it is, right? So, I think people are more afraid of AI and it doesn't help that every day the tech bro has to sell you that AI is going to transform everything because they need to sell you something that's ridiculous multiples.
>> So, let's talk about the tech bro and the AI bubble, etc. Now the reason is I think I was in markets in in 2001 when the when the internet bubble collapsed but I remember at the time we weren't really using we were using the internet but we weren't really using applications or the internet wasn't making money other than bandwidth right like there were no apps there were no consumer apps there was no social media to me when I look at AI like we use it and we have an insatiable demand to continue to use it um and the companies can't fulfill the demand at a reasonable price that's pretty much the way that I say I So when people ask me is this an is AI in a bubble I kind of like no and if it is then it's in a very very very very very early stage of the bubble because right now there's so much demand that it's not you know usually in a bubble what you get is you get supply and you hope that one day there will be demand to match that supply but with AI there's demand and there's supply and actually the supply can't keep up with the demand the way the way that I see it so I'm loathed to call it a bubble I'm kind of keen to understand how you see it do you think that we are in a bubble and if we are in a bubble What stage of the bubble are we actually in?
>> I I think we're in a bubble. Are we in the early stages, late stages? I don't know. I do know that we, you know, we have a company coming to market. SpaceX at 100 times sales, right? We have open AI is not a profitable company. Um, Robert obviously is a profitable company and we're basing all these assumptions on the fact that token usage to the price per token will come down and the usage will go up, right? That's that's literally the story. So the only problem with that is if we're in the middle of this war which is taking 20 to 30% of supply of hydrocarbons energy you know which is used to run the turbines to create the electricity to create the intelligence. So theoretically you could have the price per token going up and so what happens the usage goes down. And so if your model is predicated on some ridiculous expan expansion of usage but the price goes up because energy goes up that doesn't work. Even if the earnings are good and we're not saying that people are making these companies are making actual money, right? Nvidia has an amazing business, amazing earnings. Like Google, all they have amazing earnings, but we're seeing, well, I want to pay even more for those earnings and I think the token price is going to decline and usage is going to go up like Joe's paradox says in such a exponential way that I just have to be long all these stocks. But tell me if that you still believe that $200 oil. Can you still believe that story of $200 oil? I don't know. Can you still believe that story? If the, you know, commander-in-chief of the country that's most responsible for the explosion of these AI companies says, "I want to tax you 50 60% because it's not fair." Great. You have great earners. It's going to the government. Do you want to buy that stock?
>> Yeah. But I mean,
>> no.
>> I mean, all probability
>> and you could and we could be in a short pause and you know, but it could be a very painful correction or not. But I'm I'm worried about what's my positioning. What's my positioning between now and November, knowing what I know about what could happen with the oil price and the politics of AI? Do I want to be long this at this price or is this a situation where I should take some shares off the table, wait for these things to resolve? If I'm wrong, fine. AI is still going. I'm still I'll I'll buy back in at a higher price. Who cares? We to your point, right? These are companies making great earnings. Toasting usage is exponentially increasing. So what if I miss a few X's? If I'm in the middle of the bull the bull market, I'll just buy back in and I'll be fine. But the last thing you want to do is invest and you know get owned 50 60% in your portfolio, people's forward outlook fundamentally changes because they're afraid of taxes or higher energy costs not withstanding what their belief on token usage. That to me is worse. So I can't obviously have I don't have a crystal ball. I have to solve for one of these things. and now I'm going to solve for capital preservation. Live to find another day. Let some of this stuff pass. If the November comes around and nothing that I said happens, okay, cool. I'll be back on the bus.
>> Catch the next bus. But your whole your whole argument is is predicated on the fact that, you know, one Trump actually cares as to whether he loses the House and the, you know, loses the double uh in the midterms.
>> Why the Senate? people. I mean the I don't think any people are saying that the Republicans are going to lo the Senate. I think the reason why he cares about losing the House is more personal than anything else. If the Democrats have the House, what are they going to do? They're going to subpoena him, his family, his lieutenants until the death. If they learn anything that was unourred and they come into power 28, guess what the DOJ is going to be very busy doing? Going after Trump and his lieutenants using information gleaned by public testimony in front of Congress. So, I think that if he wants to relive 2020 to 2024, you know, don't lose the House of Representatives or, you know, get the people where they're at, be the populace that you are, and go and tell, you know, call Elon and Jensen and Sam into the room and look guys, don't cry. I'm coming at you guys for four months. Don't worry. I got your back. Now, go out there and don't be a little [ __ ] and just take it like a man. take this ass [ __ ] like a man because the Republicans got to win and then I'll come back or we can get back to partying after November. That's what I would do if I was Trump.
>> Just let me just let me win the elections and and and I'll and I and I'll make it all up to you. Um SpaceX, it's this week. I mean, it's on on Thursday is is the the SpaceX IPO.
>> Um it is 100 times sales, but they did some kind of Google deal recently and I think that that maybe did the brought down the multiple to 50 or 60 times sales. Um, you were quite vocal about about the valuation and and the Muppets. Elon selling SpaceX to the Muppets, right?
>> Yeah. Because, okay, I I put it into crypto terms. I have to tell my, you know, tell a lot of our founders, I'm like, "Guys, you need to paint the chart green. If you launch it at this ridiculously high valuation, it's the law of large numbers makes it very difficult to outperform that." So irrespective of whether or not SpaceX section is a good business or not offering it at the seventh largest company in human in human history is does that make it very easy for you to make money for the secondary investor if he launched it at 100 billion right and said okay cool and did the same thing much easier to make that chart green versus at 1.8 trillion or whatever it is if he goes up 50%. He's now the fifth largest company or whatever the number is larger than Amazon, one of the best run companies in human history. And this is a space company with an unproven thing saying, "Okay, we're going to build these data centers in space and overcome all these, you know, issues with physics and orbital mechanics, all these things. We're going to overcome all that and we we should already be given the benefit of the doubt and the seventh largest company in human history." I don't know. I think that's a bit ridiculous. Are you worried about if SpaceX was a hundred billion in offering? I'd say, "Oh, this is going to [ __ ] rip. It's going to go up 2x on the first day. People are going to be really good about AI." Like, look, this thing went up 200% on the day one. I need to continue buying SKHX and Samsung and whatever the [ __ ] I was buying. But like, Facebook comes out and does 10% or 20% over the IPO price, people like, "Ah, me. I'm not in this for 10 to 20% based on what I believe the future is going to be. I need some [ __ ] explosions. And it's hard to create a generate explosions at $1.8 trillion. That's the point. It's irregardless of the, you know, the multiples. It's like, it's hard to move a number that big. And everyone's looking at this IPO as a bellweather on whether or not the animal spirits are still in AI or not.
>> And do you think that the triple whammy of uh Open AI, SpaceX, and Anthropic is the deadly cocktail that is going to suck all the liquidity out the markets? Like I I'm worried because I read somewhere and I'm not sure how confirmed this is. That's why I don't want to quote anyone but that the rules have changed that in order to be included in an index you don't have to be listed for 3 months which previously had to be listed for 3 months. Apparently now you can automatically be included in indices. Now I just imagine a world where SpaceX launches and then makes all the indices and then all the index managers have to start rebalancing uh their positions and they have to start selling off Nvidia, Microsoft and and Amazon because they need allocation to put into the SpaceX allocation. I mean what does that do to the market? What what does that liquidity draw do to markets?
>> I mean this would be very interesting to see the perversive impact of passive investing. I really don't think that's the biggest issue with it. It's the fact that if you take a look at the unlock schedule for SpaceX a massive amount of shares come unlocked at the same time anthropic and open are scheduled to do their IPO in September. And you have Google and Facebook has just announced stock sales. So they're saying, "Okay, I can't issue the amount of debt that I want to issue." Or maybe I'm still going to do that as well, but I'm also going to tap the equity markets. So I'm no longer buying back my stock. Now I'm issuing stock. And if Facebook and Google are going to do it, then why shouldn't every other hyperscaler start issuing stock as well if they get favorable terms? So everybody's just like, I need to I need this capital. I'm borrowing it. I'm issuing that stock. You know, all these different ways. And I just think it's a lot of supply to digest. Now if the market digested and in a way that we look at the future like oh great this is amazing we got this opportunity to buy these things at this price. Okay but financial history doesn't really point to that being the outcome.
>> Okay. So that brings us to the to the the conclusion of your thesis which is eventually this AI lead balloon pops uh it destroys markets and then the Fed has one one outcome here and that is fix this thing by printing. Yeah, and I still don't think it's really going to happen until post the election. I I really don't see the Fed having the political cover to to do that until after the election, especially if you take a look at the two-year rate is trading what 50 60 basis points over effective Fed funds telling the Fed you should be hiking rates. Whether or not worse does it or not, we'll see. But that's what they should be doing.
>> So Kevin Walsh probably speaks for the first time in on a on a FOMC meeting next week. It's the 16th and 17th. Um he's caught between a rock and a hard place because he was Trump's guy and he's been bought in with one job and that one job is to reduce interest rates. At the same time Trump dumped him with a war like so he's walking into like infl high 6% PPI 3.8% uh uh uh uh uh CPI uh oil prices at $95 to $100 a barrel. What what's his next move? like does he raise does he come in
>> maybe maybe Trump is like hey I'm going to try to win some ground back on this affordability thing you know hike maybe could could be right like it's one way to you know attempt to solve the problem I don't know I think all things are on the table here there's an election to win politicians are very flexible with what they will do to win an election and I think people think that Trump has all these ideological constraints which are not not really constraints you just got to win right And so,
>> but why would raising rates?
>> What are you gonna do?
>> Why would raising rates help Trump uh win? I mean, like what what would how would that
>> I mean, it goes for the narrative. I am doing something about inflation. If if his guy who's going to cover rates cuts rates, inflation starts accelerating, bond yields spike, you know, that's front page news. You know, certain type of of um voter cares about those sorts of things. How is that Trump addressing this problem? That is the number one issue of Americans. That is the reason why people think his party is going to get their asses kicked.
>> Is there any world where you see Kevin Walsh reducing rates now? Is there any narrative justification that he can make to actually reducing rates? Now
>> I mean I don't what was his so he had this whole I don't know when he said this. I'm paraphrasing here. You know the war inflation is we can look through the war inflation because it'll be over at some point. We have this AI productivity miracle. It's going to generate inflation. less growth, therefore we can lower rates. I mean, I think that's the argument that the people who believe war should cut rates will use. Whether or not he believes it, I don't know.
>> So, but you think he's coming on next week and he's doing nothing and he's going to paint a picture.
>> Nothing. Then that comes down to the press conference. What does he say? I think he does nothing. He holds and it's either a hawkish hole. Either, hey, we've see inflationary pressures building in the economy or he talks some a mumble jumbo about productivity blah blah blah. And people say, "Oh, okay. That means that eventually we'll get rate cuts. So it's a hold plus what does what does he say? I don't know. So, but I don't want to hope, but I don't want to be in the the situation where I'm hoping he says something, you know, doubbish because that's going to continue this, you know, AI thing given we have all these issues coming to market, all the supply and very high valuations like whenever I think about that like there's a lot of hope in my invest and I don't want to be hoping for things in my investment thesis. That is usually a recipe for disaster.
>> Hope is not a strategy. Hope is not a strategy. Um, so that means that you're risk off until November. You're basically you're you're you're skiing and chilling risk off until November and waiting to take stock again in November. Is that is that the conclusion here? basically or let's see what rhetoric that Trump was going to put for to try to win this election and if my thesis is correct and what is the price of oil you know if oil goes up to $150 $160 because this war thing is continues to grind on and you know stocks of hydrocarbons have been drawn down below levels and there's restocking and all these with the Jim and groom that you listen to the commodity experts if that comes to pass this is an interesting take we have this AI thing the most transformative technology in the world is it immune to higher interest rates and higher energy prices.
>> I say no, but maybe not.
>> I I I mean, I'm going to challenge you because I think right now demand is a little bit inelastic. And so, I think if you're paying a dollar a credit, you'll pay $150 a credit. You'll pay $2 a credit because right now there's a race to get ahead of everyone else. And in order to get ahead of everyone else, you need to use AI, right? Um, but I do see the other side.
>> I'll place your back on that. There already is companies complaining that they're spending too much on. There's Uber. There's a there's a few, you know, news clippings basically saying
>> Microsoft cancelled their the clawed subscriptions of their of their
>> I mean
>> it's really expensive at the frontier model at the top end is very expensive. And so now you're seeing people say okay well did I get enough utility out of whatever the work is I was giving the best model at that price. If no then I'm going to use the cheaper model or I'm just going to reduce my spend. So there definitely is price consciousness amongst consumers and if you want to grow your ARR like Anthropic did, you must you best be selling them expensive [ __ ] right? So I think this does affect earnings big time because you can't have a situation where now you've got to try to compete with Deepseek at the lower end and you're spending however many hundreds of billions on capex. That's a recipe for disaster. If you've got to go try to compete with the Chinese, then why are we investing in these companies? Okay. I mean, I get it. I get it. I think I mean, look, my view is I think the I mean, I hope the war ends, the oil price goes down. Uh, Trump somehow wins one part of the elections and and then the music carries on going, but I may be completely wrong.
>> Yeah. And again, there's just too many ifs and I think the probability of
>> not being a strategy is very very high in this particular juncture. And so, yeah, it's riskoff for me and how I think about the world. So I have to ask you this. About two weeks ago you were risk on like or or three weeks ago you were a little bit you were more risk on. You were in Zcash positions. You were in hyperlquid positions. You were in world coin positions. Those were all made public which to me I mean that's risk on Arthur, right? Or risk onish Arthur as opposed to to um to risk off Arthur. Uh you cut those positions in the last 10 days like and for and for different reasons and we'll talk about the reasons but what changed your mind? Like what did you have you been thinking about this for a while and then just put it put your thoughts down in writing and then kind of said well hold on a second now that I've written like I'm trying to work your thought process when did you decide to go risk off I've always been in the back of my mind of okay this is a great ride I need to get off when am I going to get off what is the intellectual framework that tells me it's time to get off the train as I want to you know I see this great number on the screen and I want to realize that in actual profit not just like roundtrip this [ __ ] so I'm always thinking about what am I getting wrong right now? What am I not appreciating? And so, you know, I listen to a lot of different macro people um around around the horn and some consistent themes start coming up. Number one, this war continues to go on and the unfortunate thing is that the lower if the price of oil stay these levels, there's no incentive for Trump and the IRGC to come to a deal because the deal means actual concessions and both domestic populations, Americans and Iranians will be upset with whatever their leader comes back with. If Trump comes back with handing money to the Iranians and the straight is still closed or there's a toll or whatever, like what the [ __ ] did you get start this war for? It's worse than what it was before. If the IRGC comes back and did a deal with the great Satan, they're like, "Why are you disrespecting, you know, the Republic? He just assassinated the leader and his whole family. What the [ __ ] are you guys doing?" So, both of these sides and the only thing that gets them to come together is a high price of oil. But every time they look like they're about to sign a deal, the price of oil plummets. And so, you have this reflexive back and forth. And at the end of the day, we're four months in and you know, the street's still pretty much closed. And this inventory issue is slowly ticking away. And so day after day after day gets more acute, more acute, more acute. We get closer and closer to that that X date, whatever that is. And so this problem becomes, you know, more top of mind of can I can my portfolio rally at $200 oil? Now, I don't think the oil is going to get to $200, but that's how I have to think about it at a high level. Okay, if if I believe that there's a situation where oil could get to 200 because this reflective back and forth between Trump and the IRDC continues in this [ __ ] up way where nothing actually gets solved. I'm getting closer and closer to this situation where I believe my portfolio cannot do well. And then on the AI situation, you know, I've been listening to a few folks and they're like, it's the nominal amount of data center buildup is not important. It's the second derivative of it. It's the acceleration or deceleration. So AI capex accelerated, AI credit accelerated massively from 2024 to 2025 into 2026. But again, law of large numbers. Is AI cap going to go from one trillion to two trillion next year? No. It's going to go up from maybe a few hundred billion. That's the the estimate. So that's a deceleration. Yes, it's still growing. Yes, the earnings are great and all that sort of stuff, but I'm I'm paying for accelerating earnings. That's what's generating 50x on SanDisk and SK Hanx at 1 trillion acceleration of earnings expectation that continues into the future. But the law of large numbers tells me that this will decelerate even if the earnings are strong then we get multiple compression. I'm not saying that AI is not profitable. All I'm saying is that we weren't paying you 50 times earnings and maybe we'd pay 40 times earnings
>> and that means that you're losing money
>> and so that means that
>> you got to get off the train.
>> Got to get off the train. All right, let's talk about getting off trains because you got off three trains last week. Uh you got off the Zcash train, you got off the near train, and you got off the world coin train which were and and the hyperlquid train, right? So you
>> So you got off four trains last week. I want to talk a little bit about Zcash. So, I must say I was also a little bit caught off guard uh with the fact that there, you know, I always knew that the the downfall of Zcash was that you could never verify what's in the shielded pool and therefore you could never verify that there are 21 million coins in circulation. But even in all my calculations, I never imagined that you could actually mint more coins. Like it was like I understand that you can't verify there's 21 billion coins, but you can't mint more coins, so it doesn't matter, right? That was like always my calculation. Last week was scary. Uh, now the price is back. Zcash is nearly at $500. And I'm kind of like I'm kind of torn whether to say they missed this early enough and they fixed the patch or this vulnerability now can exist and if it can exist at one point in time it will exist and therefore the the thesis is completely blown up. I'm really keen to hear your view here because you were quite vocal about it when it actually happened.
>> Yeah. So initially my one of my analysts put it in the chat saying you should take a look at this and I didn't. I took a look at I was like, "Oh, I took a look at it, saw the price, there wasn't really much movement." I was like, "Oh, they fixed it. The, you know, we're all good here." Next morning, wake up, it's down 30%. Okay, obviously I got something wrong here in my mental thinking. I read it again. I'm like, "Okay, well," and then I reached out to some very, you know, much people smarter than me and I asked him a very simple question. Is there any way to formally prove that no one minted coins cryptographically, mathematically, da da da? And everyone I asked said no. You know, some people gave me a bunch of reasons why it didn't matter and da da da da. And I was like, okay, well, the reason why I'm in Zcash is if fundamental I believe in privacy. I believe that a certain percentage of my Bitcoin holding should be in this private money. It's very, very good. And yes, I'll make a lot of money going on, you know, on paper going up, but that's not the point. The point is to have this privacy. And so if you're telling me that an AI agent in the hands of, you know, a very smart human was able to find and fix this bug and you cannot prove to me that there was no minting. Not that I believe that they did it. I 100% believe that there was nothing nefarious that happened. That's not the point. I demand the amount of money that I had I had in Zcash demands perfection against big tech, big government, and big AI. And without perfection, then what do you have? you're worried that you got something wrong that you wake up one morning and there's another bug and you're down 50%. So if dcash was at a thousand I wouldn't buy it back in unless this is this issue is fixed with formal verification that if there's a bug detected you fix it and you make sure that no one use it in an improper way and it doesn't matter what the price of Zcash is until you have that I think it it's something that I cannot invest in in the size that I would like to invest in. So in the new upgrade, which is the upgrade that makes Zcash quantum resistant, they actually I think the problem is that you've got the shielded pool and the unshielded pool and no one knows what's going on in the unshielded pool. But in in the new upgrade, it's called the Tachion upgrade. Effectively, what happens is you can audit the shielded pool as well. So that problem then becomes resolved. Now there's a little bit of time between now and the upgrade. The upgrade is I think scheduled for Q3.
>> I think it's Q3
>> November I think.
>> Yeah. Okay. Q3, Q4 is is is that is that upgrade and then hopefully this this problem is sorted and then and then that goes away. That's why I stayed in Zcash because I was like, "Okay, they caught the bug. Chances are that the that no one minted. We'll never know. Well, we will know. We'll know when they move to the new pool." Um, and hopefully if we can get through that hurdle, there is a fix and the fix is a permanent fix and then we're back. We're back on the bike. Um, but yeah, I mean
>> I mean it's that's three months is a long time, right? you know, if there's some new model that comes out and
>> there's another zero day bug. Game over.
>> Zero. See you.
>> Um, and was your was your decision to sell NIA because your thesis around NIA is the Zcash thesis.
>> No, that was more just it's a liquidity thing, right? I'm I'm taking profit on everything. I don't believe that there's I don't believe the macro is favorable to my positioning um and my belief about the future and therefore I should take my chips off the table and see if I'm right or wrong. Um but do it in a position of strength and a position of not actually giving a [ __ ] what happens and it's a summer time. I'm going to be on vacation so like I'm not really going to worry about this [ __ ]
>> What about uh Worldcoin? Because you were very bullish world coin. Like I I was going to actually phone you when I saw you tweeting. the the SpaceX um IPO per is not going in the right direction on Hyperlid. It's I think it started at like 200 now it's down to like 155. That current need to be going the opposite direction.
>> It's not going the right direction.
>> But wait, what's the link between that and Worldcoin?
>> Rollcoin is a proxy for Open AI. The better that SpaceX does, the better that people assume Open AI will do and therefore the better that Worldcoin does.
>> Okay, I got it. Okay, I didn't actually think about it like that, but I should have. Damn. All right, my friend. Listen, it's been it's been amazing having you on. A lot to think about, I must say. My brain's fried and I'm looking at Hottis here, who who's here, my producer, and his there's smoke coming out of his ear. So, so good to see you, my friend. Have fun where you where you're at. Uh, yeah, and and I'm glad we got this first. I'm glad I woke up this morning and and the the essay was out. I was so happy to get it there. So, thank you very much, my friend. Thanks for coming on.
>> Awesome. Thank you.
>> Cool. Guys, guys, if you want to follow Arthur, all his socials are below. Um, we got this first uh right here on Crypto Insider. Now, remember, if you want more institutional side content, institutional style content, subscribe to Crypto Insider because that's where we we bring it to you. This is a collab between Crypto Insider and CryptoBanter. But subscribe to Crypto Insider because, as you can see, a lot of the interviews, a lot of the alpha that comes from interviews, we're actually dropping on the new channel. So, Mert, Gareth, uh, Ben Khan, all on Crypto Insider. Lastly, before we go, remember that I said to you guys that we're having that big trading competition, uh, the one on Trade Stars? Right? So, Trade Stars is a poker stars style interface where effectively um, there's going to be a whole lot of us doing a trading competition. The trading competition starts tomorrow at 9:00 a.m. EST. There's only a,000 spaces of which 171, as you can see, have already been taken. You don't have to put in money to play. It's free. Um, and the rewards are real. So, if you win, the $5,000 and the $10,000 that you actually get are actually real. It's open to anyone using a a banter link. You don't have to pay. There's not there's no money. You don't have to, you don't use money to actually trade. Uh, there it is. Sign up to trade stars over there. And then go get secure your seat at the table. I'll be there. Sheldon will be there. Kyle will be there. Dylan will be there. We'll all be there. We'll all be having a trading competition. We'll be we'll be [ __ ] talking one another because there's a chat in the in the thing here which pops here. There's a live chat here where we can all smack talk one each other. Yeah, it'll be a lot of fun. So, I'll see you guys there. Go and sign up. Otherwise, is there anything else? All right. Uh, see you guys again tomorrow. Until then, trade well, my friends.