Coinbase lays off 14%, which is the main reason—bear market or AI?

null

Author | Azuma (@azuma_eth)

Beijing Time, May 5 evening, the number one compliance giant in the crypto world, Coinbase, officially announced a 14% layoff, expected to cut about 660 employees. The layoff notices have now been sent via email, and all affected U.S. employees will receive at least 16 weeks of base salary (an additional 2 weeks for each year worked), next vesting of stock options, and six months of COBRA health insurance; employees on work visas will receive additional transitional support.

In the layoff announcement, Coinbase founder and CEO Brian Armstrong stated that there are two main reasons for the layoffs, with Armstrong focusing on explaining the second.

First is the market environment — Coinbase’s business performance will still fluctuate with market cycles. To cope with the current downturn, immediate adjustments to the cost structure are needed to enter the next growth phase in a leaner, faster, and more efficient state.

Second is the AI technology revolution — Armstrong emphasized that AI is changing how companies work. Today, a skilled AI-using engineer can complete tasks in days that previously required a team of weeks, and non-technical teams are also beginning to deliver production-level code. This change is accelerating daily, and all companies, including Coinbase, are facing the same test. Instead of passively waiting, it’s better to proactively and consciously adjust, rebuilding Coinbase into a lean, fast, AI-centered company.

Odaily note: Here, a side note—Armstrong’s statement that “non-technical teams are also beginning to deliver production-level code” sparked some controversy on X. As a company that directly manages user assets and has previously had an information leak scandal, some industry professionals criticized Coinbase’s business rigor based on this.

Looking ahead, Coinbase hopes to fundamentally change the company’s operation — rebuilding Coinbase into an “intelligent entity,” with humans coordinating at its edges. Specifically, Coinbase will promote organizational hierarchy compression (no more than 5 layers below the CEO/COO), requiring management to participate in frontline work, and build more flexible small-scale organizations centered around AI talent.

Using AI as a reason for layoffs has become a new “trend” in Silicon Valley

Using “AI iteration to boost productivity” as a reason for layoffs is no longer new.

Last October, Amazon laid off as many as 30k positions across logistics, payments, gaming, and cloud computing departments. The company’s CEO Andy Jassy had earlier hinted at this round of layoffs: “As the company increasingly uses AI to perform tasks previously done by humans, Amazon’s workforce may shrink.”

At the end of February this year, Jack Dorsey’s fintech company Block announced 4,000 layoffs, reducing its total staff from over 10k to less than 6,000, to promote a leaner, flatter, AI-centric organizational structure. Block’s CFO and COO Amrita Ahuja revealed that after the layoffs, many corporate executives proactively contacted Block seeking to replicate this “script.”

In mid-April, Snap also cut about 1,000 jobs, with CEO Evan Spiegel stating: “AI will enable our team to reduce repetitive work, improve efficiency, and better support our community, partners, and advertisers.”

Following closely, Reuters reported that Meta also plans to launch its first round of large-scale layoffs this year on May 20, cutting about 10% of its global staff (around 79,000 employees), roughly 8,000 people. Sources said Meta also plans further layoffs in the second half of the year, but the specific timing and scale have not yet been finalized. With ongoing observation of AI capabilities, Meta’s senior management may adjust these plans.

Odaily note: See “Jack Dorsey’s company, 4,000 white-collar workers being replaced by AI”; “Back at the AI table, Zuckerberg’s first move was layoffs?”

But is this really the main reason these companies are choosing layoffs? The answer may not necessarily be. Several industry leaders have commented that many companies citing “AI iteration to boost productivity” as a reason for layoffs are actually just hiding business prospects or revenue pressures.

At NVIDIA GTC 2026, Jensen Huang criticized companies using AI efficiency as a reason for layoffs: “Leaders who rely on layoffs to cope with AI are just because they can’t think of better solutions; they have nothing new in their minds, and even with powerful tools, they won’t use them to expand.”

Tech journalist Derek Thompson also commented after Coinbase announced layoffs: “AI is indeed good at writing code… but many layoffs were already going to happen, now masked by AI. Historically, the tech industry’s shifts tend to accelerate during economic downturns, so struggling companies have to do more with fewer resources first.”

Compared to other companies with strong revenue performance during layoffs (like Block), Coinbase’s situation seems more prone to this logic.

Coinbase’s Actual Revenue Pressure

The nature of Coinbase’s core business means its revenue is highly correlated with cryptocurrency market cycles.

As shown in the chart above, since the crypto market peaked and entered a bear phase starting in Q2 2025, Coinbase’s revenue and net profit data have shown a clear shift — slowing or declining growth; net profit has shrunk significantly for three consecutive quarters, with a massive loss of $670 million in Q4 2025 (mainly due to crypto asset impairments).

Currently, although BTC has recently regained the $80k mark, there are no signs of market cycle rotation in the short term. Against this backdrop, Coinbase has very strong and direct motivation to reduce costs and improve efficiency.

According to Dragonfly investor Omar Kanji, after the 14% layoff, Coinbase is expected to save $225 million annually in salary expenses. This will undoubtedly significantly ease Coinbase’s current revenue pressure.

Earnings report on Friday

As of 23:20 Beijing time on May 5, COIN stock price is temporarily at $198.98, down 1.98% for the day. It seems the market is not very interested in this layoff announcement.

After the U.S. stock market closed on May 7 (Beijing time May 8), Coinbase will officially release its Q1 2026 financial results, and a video earnings call will be held at 5:30 on May 8. But considering the crypto market conditions in Q1, it’s hard to be optimistic about this earnings report.

How Coinbase’s actual revenue situation is will be revealed in just a few days.