Coinbase is cutting roughly 20 percent of its workforce as part of a broader cost-cutting measure. This is the cryptocurrency exchange’s second big round of layoffs in the past 12 months, after July 2022 cutbacks to 18 percent of the workforce.
“I've made the difficult decision to reduce our operating expense by about 25 percent Q/Q, which includes letting go of about 950 people,” Coinbase CEO Brian Armstrong wrote in a statement posted on the company’s blog.
Coinbase has survived previous downturns in the crypto market, he added, although this is the first time that such a dip has coincided with a potential recession in the broader economy. “As we examined our 2023 scenarios, it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario,” he wrote. “While it is always painful to part ways with our fellow colleagues, there was no way to reduce our expenses significantly enough, without considering changes to headcount.”
Coinbase will cut back on programs with a “lower probability of success,” while reducing the team size for essential projects.
Like executives at other tech companies facing layoffs, Armstrong blames overexuberant hiring for the current situation. “Over the past ten years, we, along with most tech companies, became too focused on growing headcount as a metric for success,” he wrote. “Especially in this economic environment, it's important to shift our focus to operational efficiency.”
Over the past few weeks, a handful of the biggest tech companies have announced cutbacks, including Amazon (which is slicing 18,000 workers) and Salesforce (which will reduce its staff by 10 percent). Although these tech giants are adjusting to a new reality, it’s important to keep in mind that the overall tech unemployment rate dipped to 1.8 percent in December, well below the national unemployment rate of 3.5 percent, as companies everywhere scramble for tech specialists.