Changpeng Zhao, the former CEO of Binance, has stated that he prefers investing in AI “shovels” rather than AI itself, echoing a classic infrastructure-over-application investing thesis that carries particular weight in crypto markets.
The remark, shared on his X account, draws on the well-known “picks and shovels” investing metaphor. During the California Gold Rush, many of the most reliable fortunes went not to individual miners but to the companies selling them tools. Zhao is applying the same logic to artificial intelligence.
Key Takeaways
- Changpeng Zhao said he favors AI infrastructure plays over direct AI product bets.
- The “shovels” thesis targets compute, tooling, and platform layers that benefit from broad AI adoption regardless of which individual app wins.
- Coming from one of crypto’s most influential figures, the comment may shape how the industry frames AI-adjacent investment narratives.
Why does this framing matter coming from Zhao specifically? As the founder of the world’s largest crypto exchange by trading volume, his public statements routinely move market conversation. A Fintech Weekly profile noted his growing interest in AI agents and crypto payment infrastructure, suggesting the “shovels” comment reflects a broader strategic view rather than an offhand remark.
Why Infrastructure Plays Appeal More Than Individual AI Apps
The logic behind the shovels thesis is straightforward. Infrastructure providers, whether they supply compute, data pipelines, developer tooling, or platform APIs, can capture value across the entire AI ecosystem. They do not need to pick the winning consumer app.
Individual AI products face fierce competition and rapid commoditization. A chatbot or image generator that leads today may be displaced within months. Infrastructure layers, by contrast, tend to be stickier. Switching costs are higher, and demand scales with total sector growth.
For investors, this translates to a different risk profile. Infrastructure bets trade single-product upside for broader, more durable exposure. That tradeoff appeals to those who believe AI adoption will accelerate but remain uncertain about which end-user products will dominate.
This article analyzes Zhao’s publicly stated view and is not financial advice. Readers should conduct their own research before making investment decisions.
What CZ’s AI Framing Means for Crypto Narratives
Crypto markets are deeply narrative-driven. Sectors like DeFi, NFTs, and more recently AI-linked tokens have all experienced sharp rotation cycles based on shifting investor attention. Zhao’s explicit preference for AI infrastructure could nudge market discussion toward projects positioned as “picks and shovels” rather than consumer-facing AI tools.
This is relevant at a time when major financial institutions are also entering crypto-adjacent spaces. Schwab recently began a phased Bitcoin and Ethereum trading rollout for retail clients, broadening the investor base that pays attention to crypto thought leaders like Zhao.
The comment also arrives as the broader crypto industry grapples with regulatory clarity. The CLARITY Act faces over 100 amendments in its current legislative process, and how regulators classify AI-crypto hybrid projects could determine which “shovel” plays are viable long-term.
Meanwhile, the space continues to deal with trust challenges. CoinMarketCap recently warned users about fake token scams, a reminder that narrative-driven enthusiasm can attract bad actors alongside legitimate builders.
Zhao’s framing is not new in traditional finance, but applying it explicitly to AI from a crypto-native perspective signals how the industry’s most prominent figures are positioning themselves. Whether crypto projects branding as AI infrastructure can deliver on that promise remains the open question, one that will be answered by adoption metrics and revenue, not by social media posts alone.
Additional source references: source document 1.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
