How AI became crypto's favorite reason to cut staff

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Armstrong's memo outlined three sweeping changes to how Coinbase will operate. Source: Brian Armstrong Block and Crypto.com have made similar moves in recent months, citing AI-driven efficiency gains that allow leaner teams to handle what once required larger headcounts. Coinbase and Crypto.com cut about 700 and 180 employees respectively. Jack Dorsey’s Block handed out 4,000 pink slips in February to reduce the company to under 6,000 employees. Crypto has weathered several bear markets before, and layoffs have always followed. But this time, the companies doing the cutting are using the downturn to rebuild with AI at the center. Coinbase’s Tuesday filing with the Securities and Exchange Commission detailed that the exchange expects its restructuring plan to cost up to $60 million in expenses tied to severance and termination benefits. Clear Street analyst Owen Lau told CNBC that Coinbase wants to “tell investors that management is actively managing the cost base to deliver positive adjusted EBITDA through the cycle.” “The first quarter results are expected to be weak because of the crypto bear market,” added Lau. On Thursday, Coinbase reported a weaker-than-expected first-quarter loss as falling crypto prices dragged down spot trading revenue. The exchange posted a net loss of $1.49 per share on $1.41 billion in revenue, missing analyst expectations while transaction revenue fell short amid weaker trading activity. The underperformance isn't specific to Coinbase, as Bitcoin lost 21% of its value in Q1. Across the tech industry, headcounts that ballooned during the bull run are now coming back down, with executives increasingly pointing to AI as the catalyst. Bitcoin has been in the red for two consecutive quarters but showed signs of recovery in April. Source: Coinglass Related: Reality of AI’s impact on employment clashes with C-suite optimism Whether AI is the real driver or a convenient explanation depends on who you ask. Speaking at the recent Semafor World Economy conference, Scale AI CEO Jason Droege pushed back on the idea of AI presenting a “white-collar apocalypse,” arguing that many companies are using the technology as cover. “A lot of the layoffs that are happening right now because of AI, if you really dig in, it’s sort of like washing the layoffs,” Droege said. “A lot of these companies are saying it’s because of AI, but a lot of it is just like rightsizing and they need an excuse.” According to jobs tracker Layoffs.fyi, the global tech industry in 2026 Q1 had the most layoffs since 2023 Q1, with more than 81,747 people losing their jobs. March was hit the hardest, with 45,800 layoffs in the month. Tech layoffs surged in early 2026, marking the industry’s highest quarterly job cuts since 2023. Source: Layoffs.fyi Related: How AI agents can reshape arbitrage in prediction markets The slowdown has continued into the first month of this quarter. According to a Thursday report from outplacement firm Challenger, Gray & Christmas, US employers announced 83,387 job cuts in April, up 30% from the 60,620 cuts recorded in March. AI led all reasons for job cuts in April for the second consecutive month, though it is not the leading cause for the year so far. Market conditions led with 53,058 cuts, followed by closings at 52,187. "Technology companies continue to announce large-scale cuts and are leading all industries in layoff announcements. They are also often citing AI spend and innovation. Regardless of whether individual jobs are being replaced by AI, the money for those roles is," said Andy Challenger, chief revenue officer at Challenger, Gray & Christmas. Crypto has always been cyclical, but the framing around this wave of cuts looks different from the last major downturn. During the 2022–2023 crypto crash, companies were largely reacting to collapsing token prices, the fallout from FTX and balance sheets strained by aggressive bull-market hiring. This time, executives are increasingly presenting layoffs as proactive restructuring tied to AI adoption and operational efficiency. Both Dorsey and Armstrong signalled that their companies remain well-capitalized, framing the cuts as deliberate attempts to flatten corporate structures rather than emergency survival measures. Crypto recoveries have come fast, and when they do, businesses often enter hiring sprees to expand during the bull market. Coinbase has been here before. It cut 18% in 2022, then hired aggressively when prices rebounded. This time, Armstrong is betting the AI-native model means he won't have to. Kraken was making the same argument in October 2024, when it slashed 15% of its workforce. In a blog post, co-CEOs Arjun Sethi and Dave Ripley said the exchange had "fallen into the trap of building organizational layers" and needed to become "leaner and faster" by giving power back to individual contributors over managers. The language is similar to Armstrong's and Dorsey's memos. The difference is, Kraken didn't mention AI. Leaner teams, flatter structures, faster decisions. Crypto has been here before, but AI is the latest reason why. Magazine: Guide to the top and emerging global crypto hubs: Mid-2026 More on the subject

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