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

Original | Odaily Planet Daily (@OdailyChina)

Author | Azuma (@azuma_eth)

Beijing Time, May 5 evening, The leading compliant 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 period’s equity vesting, and six months of COBRA health insurance. Employees on work visas will also 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, it is necessary to immediately adjust the cost structure to enter the next growth phase in a leaner, faster, and more efficient manner.

Second is the AI technology revolution — Armstrong emphasized that AI is changing how companies work. Now, a skilled AI-using engineer can complete in days what used to take a team weeks to accomplish, 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 challenge. Instead of waiting passively, it’s better to proactively and consciously adjust, rebuilding Coinbase into a lean, fast, AI-centered company.

• Odaily note: Here’s a side note—Armstrong’s statement that “non-technical teams can also 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 have criticized Coinbase’s business rigor based on this claim.

Looking ahead, Coinbase hopes to fundamentally change the company’s operation — rebuilding Coinbase as an “intelligent agent,” with humans coordinating at its edges. Specifically, Coinbase will push for organizational flattening (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.

Layoffs Under the Banner of AI, 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 jobs across logistics, payments, gaming, and cloud computing departments. The company’s CEO Andy Jassy had previously 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 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 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 suit, Reuters reported that Meta plans to launch its first major round of layoffs on May 20, cutting about 10% of its global workforce (around 79,000 employees), roughly 8,000 people. Sources said Meta also plans further layoffs in the second half of the year, but the timing and scale are yet to be finalized. As AI capabilities continue to develop, Meta’s senior management may adjust these plans.

• Odaily note: See “Jack Dorsey’s company, 4,000 white-collar workers being replaced by AI”; “After returning to the AI game, is Zuckerberg’s first move layoffs?”*

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

At NVIDIA’s GTC2026, 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; their minds are already out of ideas, 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 coding… but many layoffs were already going to happen, now masked by AI. Historically, technological 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 core nature of Coinbase’s business means its revenue is highly correlated with the crypto market cycle.

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 — growth slowed or declined; net profit shrank 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 strong and direct motivation to reduce costs and improve efficiency.

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

Upcoming Earnings Report

As of 23:20 Beijing time on May 5, COIN stock price is roughly $198.98, down 1.98% for the day. The market doesn’t seem very interested in this layoff announcement.

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

How Coinbase’s actual revenue looks in the near future will be revealed in just a few days.