Coinbase cuts headcount by 14% citing AI acceleration. The shares are gaining
Monitors show Coinbase signs during the company’s initial public offering on the Nasdaq MarketSite in New York City on April 14, 2021.
Robert Nickelsberg | Getty Images News | Getty Images
coinbase CEO Brian Armstrong said Tuesday that the company will cut about 14% of its workforce, citing a combination of market volatility and artificial intelligence rapidly changing the way the company operates.
The move comes ahead of first-quarter earnings that Coinbase plans to report on Thursday. Shares were up about 4% in premarket trading.
In a memo sent to employees, shared on x Earlier on Tuesday, Armstrong explained that this decision was necessary to position the firm for the “next phase of growth” while managing the current downturn in the crypto market. He talked about “two forces converging at the same time”: the current downturn in the crypto market and “AI changing the way we work.”
Although crypto is “on the cusp of the next wave of adoption,” “our business is still variable from quarter to quarter… we are currently in a down market and we need to adjust our cost structure now so we can emerge from this period leaner, faster and more efficiently for our next phase of growth.”
Moreover, he said of AI, “The pace of what is possible with a small, focused team has changed dramatically and is accelerating every day.” “We are adapting early and deliberately to rebuild Coinbase to be lean, fast, and AI-native. We need to get back to the speed and focus of our startup process, keeping AI at our core.”
Coinbase’s move comes amid a broader wave of layoffs in the tech industry due to a surge in artificial intelligence investments. Earlier this year, Block announced it was reducing “almost half” its workforce, citing “the opportunity to move faster with smaller, highly skilled teams using AI to automate more work.”
Other companies like Pinterest, CrowdStrike, and Chegg have recently announced layoffs, attributing the layoffs to AI reshaping the workforce.
But Coinbase isn’t moving away from crypto. Armstrong reaffirmed his bullish view on crypto, pointing to stablecoins and tokenization, as well as prediction markets, as drivers of the “next wave of adoption.”
In the crypto industry, exchanges are moving away from the extravagant, yield-driven revenue streams that initially fueled their growth and are instead entering a more disciplined phase focused on more stable revenue, regulation, compliance and institutional adoption.
This isn’t the first time Coinbase has cut jobs during the crypto crisis; It also made significant cuts during the 2022 market downturn.
