Paolo Ardoino warns: the hidden debt of tech giants threatens a collapse similar to the 2022 crypto market scenario
Tether CEO and Bitfinex CTO Paolo Ardoino drew an alarming parallel between the current position of the largest American technology corporations and the crypto crisis of 2022. His comment came in response to data indicating an explosive growth in hidden debt obligations of giants such as Alphabet, Microsoft, Amazon, Meta, and Oracle.
According to my analysis, the situation indeed resembles events from three years ago, when a chain of interconnected defaults in the crypto industry led to a domino effect. Ardoino notes that history is repeating itself: tech giants are actively lending to each other using opaque off-balance-sheet agreements, masking the real level of risk.
The total hidden debt of the five mentioned companies has grown approximately eightfold over the past four years, reaching an estimated $1.65 trillion. This explosive growth is directly linked to massive investments in artificial intelligence (AI). The key issue is that these liabilities are not reflected on the companies' balance sheets, making them invisible to most investors and analysts.
History Rhymes: From Terra to Big Tech
Ardoino draws a direct analogy to 2022, when the collapse of one borrower—the algorithmic stablecoin Terra—exposed the hidden liabilities of other market participants, leading to bankruptcies of Celsius, Voyager, and Three Arrows Capital. Now we see a similar picture: companies are taking on massive debts to finance the AI race, but the true extent of their interdependence and vulnerability remains behind the scenes.
What's Wrong with Hidden Debt
Hidden debt, by its nature, is not reflected in standard reporting. In the last reporting quarter, its volume already exceeded the debt reflected on balance sheets, which stands at about $1.35 trillion. This means that the real debt burden of Big Tech is significantly higher than assumed. Four out of five companies (except Oracle) are publishing their second-quarter reports this week, and the final figures may prove even more alarming.
My expert assessment: The AI market is overheated, and financing this sector through opaque debt instruments creates systemic risk. If one of the key players faces liquidity problems, we could witness a cascading collapse that, in scale, would surpass the crypto crisis of 2022. Investors should closely monitor the reports and prepare for increased volatility.