Plunging Bitcoin prices and an economic downturn are causing cryptocurrency exchange Coinbase to cut 18% of its staff.
In a Tuesday blog post(Opens in a new window), Coinbase CEO Brian Armstrong said he was making staff cuts on the belief the economy is entering into a recession, which could lead to a “crypto winter.”
“In past crypto winters, trading revenue (our largest revenue source) has declined significantly. While it’s hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment,” he wrote.
In an SEC filing(Opens in a new window) on the same day, the company said it was laying off about 1,100 employees. Armstrong explained that the company “over-hired” last year when Bitcoin and many other cryptocurrencies soared to new highs. This also included Coinbase spending a reported $14 million to air an ad during the Super Bowl.
But in recent months, many cryptocurrencies have seen a steep decline in value. Bitcoin, for example, was at $45,850 in April, but has since then dropped to $22,180.
“Our team has grown very quickly (>4x in the past 18 months) and our employee costs are too high to effectively manage this uncertain market. The actions we are taking today will allow us to more confidently manage through this period even if it is severely prolonged,” Armstrong added.
This comes after Coinbase rescinded more than 300 employment offers, Vice reports(Opens in a new window).
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Coinbase is holding on to 5,000 employees, which is up from the 1,250 staffers it employed in early 2021. And despite the downturn, Armstrong noted, “Coinbase has survived through four major crypto winters, and we’ve created long-term success by carefully managing our spending through every down period.”
Still, the layoffs signal plenty of hurt is coming for the cryptocurrency industry. On Monday, cryptocurrency trading service BlockFI also announced(Opens in a new window) it was cutting staff by 20%. “Like many others in Tech, we’ve been impacted by the dramatic shift in macroeconomic conditions, which have had a negative impact on our growth rate,” BlockFi’s CEO wrote.
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