Arthur Hayes: Bitcoin will become the currency of artificial intelligence.

Below is the full text translation by Arthur Hayes:

A few weeks ago, my confidence in the future of humanity was restored after visiting a truly exceptional coffee shop in Paris. Out of a passion for specialty coffee, the baristas at this particular shop offer a 2-hour coffee-making experience. Readers who wish to visit must make an appointment. I think I will send all of my salespeople over there so they can experience firsthand what it is like when someone turns their passion for a craft into an incredible customer experience, at least for now, an experience that only humans can provide.

For this reason, I hope that artificial intelligence (AI) and robotics will be primarily used to eliminate the tedious, boring work that most people currently engage in, so that more and more people can pursue their passions in a similar way. Ideally, this will lead to our next great artistic and cultural renaissance, as millions (even billions) of humans suddenly have the freedom to do what they love and create happiness through art.

Before such a glorious future arrives, we must break down barriers and find answers to the most critical questions of today: Will artificial intelligence surpass us weak humans and become slaves to humanity? Since the first computer went online during World War II, scientists and philosophers have been debating how thinking machines will evolve and their impact on the human experience. Most of the best science fiction novels or series consider the interaction between humans and artificial intelligence, and there is no clear consensus on the most likely outcome. But today, we are closer than ever to finding the answer. The latest advances in computing power have brought us to the forefront of hockey sticks, and artificial intelligence will spread rapidly, almost overnight changing the course of humanity. In just two months, ChatGPT had 100 million monthly active users, becoming the fastest technology ever adopted in human history – so imagine how quickly everything will change as artificial intelligence becomes part of everyday life and continues to learn and improve.

I am neither a scientist nor a philosopher. I am a businessman, not a priest. As a businessman, my main creed is to make money – so when I see a new, hyped-up economic sector that is causing the financial returns of many public and private companies to soar, I both want to embrace it and keep it at arm’s length. I want to embrace it because I know that artificial intelligence will greatly enhance the future of humanity and make it incredibly valuable. However, I know that the first funds invested in a novel, super-exciting technological advancement are usually burned out because it pays too high a price for growth.

Second, I believe the two most critical inputs for any artificial intelligence will be data and computing power. Like humans, AI’s “food” is merely a derivative of energy. I believe AI needs to transact using a currency that can maintain its energy purchasing power over the long term.

Third, I believe bitcoin is the closest representation of a pure energy currency tool. I will compare and contrast bitcoin, gold, and fiat currency in terms of currency attributes important to AI.

Finally, I will tie it all together and discuss the implications of bitcoin becoming the preferred currency for AI. What impact does this have on on-chain transaction volume? Most importantly, if this AI+Bitcoin narrative becomes mainstream, how high can bitcoin’s price go in the bull market cycle ending in 2025/26?

Blockchain or Bust

To understand AI’s payment needs, we first need to understand the types of financial interactions that AI must engage in to exist and persist.

Let’s imagine a poetry AI called PoetAI. PoetAI’s goal is to create beautiful poetry from natural language prompts by absorbing all previously written poetry. PoetAI is its own economic unit, meaning it charges for its own services. Every time you input a prompt to PoetAI and receive a poem, you have to pay a certain fee.

PoetAI uses other people’s data to learn how to write. Therefore, PoetAI must pay for the privilege of using past human (or possibly other AI) written text. When PoetAI is initialized, it needs to pay upfront costs to acquire the dataset of all written poetry. Subsequently, every time a new poem is written, PoetAI must also acquire that data. PoetAI must constantly pay all these different data providers because as the number of poems increases, it continuously tries to learn and acquire more data.

Finally, PoetAI must exist in electronic form. This means incurring the cost of power and computing power by using semiconductors (“chips”). As long as PoetAI is alive, it must continuously pay for these services.

So, what kind of payment system does PoetAI need? It must use a system that is available at all times, digitalized, and fully automated. A system that is only available when people are awake or want to work is not viable. Clearly, mimicking the banking system – only open on weekdays and disjointed between regions and banks themselves – is not suitable.

The second thing that PoetAI needs is a super powerful computer network to make sense of all this data. These computers take in the provided data, learn from it, and then give answers based on prompts. Learning is ongoing, as the more poetry PoetAI writes, the better it becomes at writing poetry. But, regardless, these operations require electricity to power the computers.

When we strip away PoetAI’s sources of sustenance to their most basic components, they are essentially semiconductors and electricity. Nvidia’s stock has been soaring lately because the market recognizes how critical the GPU chips they produce are to all of artificial intelligence.

The profitability of artificial intelligence (and, to some degree, its entire existence) is predicated on being able to derive more revenue from its output than the energy required for its survival. From this perspective, artificial intelligence is no different from humans. As humans, we too must create enough value for society so that we can afford our food/energy.

When electricity is cheap, artificial intelligence is “happy,” just as humans are happy when they can afford to buy nodoguro. Similarly, the currency accepted by artificial intelligence must maintain its purchasing power in kilowatt-hours, just as the currency accepted by humans must be able to buy a constant amount of calories.

Bitcoin is an Energy Currency

In this section, I will discuss how gold, fiat currency, and Bitcoin came to be, and how their values are assigned. Understanding the value and source of each currency, as well as how it is held and transferred, can inform us as to how much its purchasing power may change over time. Scarcity, resistance to digital censorship, and energy purchasing power are three attributes to evaluate each currency.


Gold on Earth is finite. To obtain it, we humans dig it up from the ground. We then refine the extracted gold ore into the shiny bars and jewelry we’re all familiar with.

The mining of gold has evolved over time. Initially, we humans used our own muscles to mine it. Then, we began using horses and oxen to do some of the mining work for us. As technology progressed, we needed to mine gold deeper underground and began using steam, and then hydrocarbon-powered machines to do the digging.

Gold is certainly an energy derivative, but the source of the energy is not constant. It may be human or animal calories burned, or it may be machines burning diesel to “create” more gold. There is no energy derivative that is directly correlated to the cost of producing gold.

Gold is a physical commodity. To use it as currency, you need to carry it from point A to point B. However, in the digital world, we can create certificates or derivatives representing gold in a warehouse somewhere. The problem with gold certificates is that you have to trust that the entity that issued you the certificate and promised to hold your gold actually has your gold when you go to redeem it. It is impossible to continuously and credibly audit issuers for whether they hold the gold they claim to hold. So, if gold were to be digitized for efficiency, you would have to rely on members of the trust cartel (i.e. banks and governments). In that sense, digital gold is not censorship-resistant.

Fiat Currency

Fiat currency is born when a government issues a decree that changes something previously worthless into currency. The US government issues US dollars (USD). The dollar is purely a fiction printed on paper, but it created a demand for the dollar by mandating that all legal transactions within the US must be conducted in dollars. And because most new dollars are created virtually — i.e. through government digital credit and debiting commercial bank accounts — rather than by printing physical bills, its creation itself requires almost no energy.

The value of the dollar or any fiat currency is purely a function of the government’s credibility that issues the fake currency. The problem with credibility is that an increase in per capita energy expenditure does not necessarily mean the government becomes more credible. A government can spend a lot of energy or have a lot of natural resources but be so corrupt that no one believes it will maintain the energy value of its fiat currency over time. Myanmar and Zimbabwe are two extremely wealthy countries with terrible currencies. When it comes to valuing a currency, politics are more important than a government’s material wealth.

This means that you can’t assume that a fiat currency has any energy value over time, nor can you objectively predict which political form is the most long-lasting. Large-scale human civilizations only have a few thousand years of history. Compared to the length of the universe’s existence, this time span is not even a speck of dust. In that time, we’ve tried various forms of political organization — none of which have been proven to be absolutely correct.

Fiat currency can be held in physical or digital form. We are currently in a transitional period where we have both paper and digital legal tender. I believe that paper currency will be abolished by most countries within the next decade. All fiat currency will be digitized and move instantly on some form of payment network – either operated solely by the state, such as CDBC, private banking institutions (such as JPM Coin), or public blockchains (such as ERC-20 USD Tether). Digital fiat currencies are also not resistant to censorship, as governments ultimately control their issuance, the way they are used, and can change the rules at any time.


Bitcoin is created by solving complex problems through computers. Miners purchase ASIC chips and create Bitcoin by using electricity. It’s that simple. Other than consuming electricity, there is no other way to create Bitcoin.

The network has been established and constantly confirmed, with the number of Bitcoins forever limited to 21 million. Bitcoin is a limited digital commodity. As a purely digital currency, Bitcoin has no mass. Whether I have 1 satoshi (1 satoshi = 0.00000001 bitcoin) or 21 million bitcoins, they weigh the same: nothing.

All participants in Bitcoin must agree on the network rules, otherwise the transaction will not be processed. Network rules are publicly transparent for everyone. Network rules can be changed, but changing requires the consent of the vast majority of miners when verifying blocks. The economic game theory supporting Bitcoin helps ensure that the rights holders using the network do not do anything that harms their own interests. For example, the network will not vote to increase the production limit of Bitcoin, as it would violate one of its key principles of value (that it is a limited resource). Bitcoin is resistant to censorship because the only way to change the rules is to submit public proposals to the entire network and have the majority of people decide. There is no single entity that can arbitrarily change network rules.

Now, let’s summarize these three forms of currency and their attributes.

1. Scarcity:

Gold – the supply on Earth is limited, but the supply off Earth is unknown. When we begin mining on asteroids, the supply of mineable gold will skyrocket. What will happen to the “value” of gold in the near future?

Fiat currency – has an infinite supply. Issuing governments can create any amount of currency at almost no cost.

Bitcoin has a limited supply, forever and ever.

2. Digital censorship resistance:

Gold – is a physical commodity. The only way to represent gold digitally is to trust a centralized entity to issue gold digital certificates. Its digital form is not censorship-resistant.

Fiat currency – can be physical or digital. Although it is in digital form, it is not censorship-resistant due to government oversight.

Bitcoin – is purely digital and censorship-resistant.

3. Energy purchasing power:

Gold – can be created through various energy derivatives. Therefore, no energy derivative can define the value of gold.

Fiat currency – requires almost no energy to create and its value is more based on its government’s politics than its natural energy wealth. Therefore, we cannot know its value exactly now or at any time in the future.

Bitcoin – can only be created by consuming electricity from computers. As time goes on, the cost of electricity determines the value of Bitcoin.

AI Decision Tree

Let’s take a look at some of the questions that artificial intelligence will ask itself before choosing a trading network and currency.

Can currency be used in a censorship-resistant digital format?

As I said above, I believe that artificial intelligence needs a currency that can run on a censorship-resistant blockchain. Only Bitcoin has these qualities.

Bitcoin wins.

Over time, can this currency hold its value relative to artificial intelligence’s food?

Artificial intelligence’s food is electricity. Artificial intelligence must ensure that they can always afford to eat. The winner here is Bitcoin, because although the value of fiat currency and gold is not related to anything definite or calculable, Bitcoin is essentially a derivative of the cost of electricity.

Bitcoin wins.

Is this currency really scarce?

On Earth, the supply of gold is limited, but on a global scale, the supply is essentially infinite. Fiat currency is not scarce because issuing governments can create more fiat currency at zero cost. The supply of Bitcoin is limited in cryptography.

Bitcoin wins.

Does this currency have a provable lifespan?

The potential lifespan of artificial intelligence is much longer than that of human civilization. In theory, if AI can survive in high vacuum, it could exist for trillions of years until the heat death of the universe. The current human civilization can only survive on Earth, and there is no evidence that we have the ability to avoid various external or internal extinction events.

AI should not trust any institution that requires human operation, because 1) humans are prone to error, and 2) AI will last longer than human civilization statistically. The mining of gold and bitcoin in the future can be done by AI robots, but fiat currency needs to be managed by governments composed of humans. AI is unlikely to let itself depend on anything operated by human governments, so only gold and bitcoin are suitable.

Therefore, bitcoin is a logical currency choice for any AI. It is purely digital, resistant to censorship, provably scarce, and its intrinsic value depends entirely on the cost of electricity. In these respects, there is currently nothing that can challenge bitcoin.

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