Coinbase will lay off 1,100 employees, or roughly 18 percent of its workforce. Those layoffs reflect the continuing turbulence in the cryptocurrency market—but should technologists in other industries worry about a downturn and layoffs?
To answer that question, it’s helpful to break down what’s happening inside Coinbase. In a posting on Coinbase’s corporate blog, CEO Brian Armstrong blamed the layoffs not only on the cryptocurrency market, but also the company’s fierce growth rate over the past few years.
“We were in the early innings of the bull run and adoption of crypto products was exploding,” Armstrong wrote. “We saw the opportunities but we needed to massively scale our team to be positioned to compete in a broad array of bets. It’s challenging to grow at just the right pace given the scale of our growth (~200% y/y since the beginning of 2021).”
While Coinbase did its best to get the pace of hiring right, he added, “in this case it is now clear to me that we overhired.”
News of Coinbase layoffs comes a few weeks after the company announced a hiring slowdown and “reassessment” of its future strategy. Those moves came soon after the initial turbulence in the cryptocurrency market, marked by a crash in which many crypto assets, including Bitcoin, lost significant value. Overall, the market lost at least a trillion dollars in paper value by late May.
If you’re interested in working with crypto, news of layoffs and a plunging market are scary. But for technologists as a whole, the overall market presents a lot of positives. For example, the unemployment rate for tech occupations hit 2.1 percent in May, according to CompTIA, significantly below the national unemployment rate of 3.6 percent. Employers posted some 623,627 tech positions in May, representing a year-over-year increase of 52 percent.
Also, keep in mind that the crypto market has sprung back before. Many technologists envision a whole range of applications for its underlying technologies, including the blockchain—some familiarity with the basic concepts could have a long-term payoff.