Original | Odaily Planet Daily (@OdailyChina)

Author | Azuma (@azuma_eth)

On the evening of May 5, Beijing time, the leading compliance firm in the crypto world, Coinbase, officially announced a 14% layoff, expecting to cut about 660 employees. Layoff notices have 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), the next equity vesting, and six months of COBRA health insurance. Employees with work visas will receive additional transition support.

In the layoff announcement, Coinbase's founder and CEO Brian Armstrong stated that there are two main reasons for the layoffs, with Armstrong emphasizing the second point.

The 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 more streamlined, faster, and more efficient state.

The second is the AI technology revolution— Armstrong emphasized that AI is changing the way companies work. Nowadays, an engineer proficient in AI can complete tasks that once required a team several weeks to finish in just a few days, and non-technical teams are also beginning to deliver production-level code. This change is accelerating every day, and all companies, including Coinbase, are facing the same challenge. Rather than sitting idle, it is better to proactively and consciously adjust and rebuild Coinbase as a lean, fast, AI-centric company.

• Odaily Note: Just to add, Armstrong's statement, "non-technical teams are also beginning to deliver production-level code," has sparked some controversy on X. As a company that directly manages user assets and has previously faced information leakage scandals, some professionals have criticized the rigor of Coinbase's business.

Looking ahead, Coinbase aims to fundamentally change the way the company operates—to rebuild Coinbase as an "intelligent entity," with humans coordinating at its periphery. Specifically, Coinbase will promote a compressed organizational hierarchy (no more than 5 levels below CEO/COO), requiring management to participate in frontline work and build more flexible small-scale organizations around AI talent.

Layoffs blamed on AI have become the new trend in Silicon Valley

Using "AI iteration productivity" as a reason for layoffs is no longer a novelty.

Last October, Amazon cut as many as 30,000 positions across logistics, payments, video games, and cloud computing departments. The company's CEO Andy Jassy had previously indicated this round of layoffs: "As the company increasingly uses AI to perform tasks once done by humans, the workforce at Amazon may shrink."

At the end of February this year, Jack Dorsey (also the founder of Twitter) announced that his fintech company, Block, would cut 4,000 positions, reducing the total number of employees from over 10,000 to less than 6,000, to push for a more streamlined, flat, and AI-centric organizational structure. Block's Chief Financial Officer and Chief Operating Officer Amrita Ahuja revealed that after the layoffs were announced, a large number of corporate executives reached out to Block seeking to replicate this “script.”

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

Following that, Reuters reported that Meta also plans to kick off its first round of large-scale layoffs on May 20, cutting about 10% of its global workforce (approximately 79,000 people), which means around 8,000 employees. Insiders revealed that Meta also plans further layoffs in the second half of this year, but the specific timing and scale have not yet been finalized. As observations continue regarding the development of AI capabilities, Meta's executives may adjust their plans.

• Odaily Note: See more in “At Jack Dorsey’s company, 4,000 white-collar workers are being replaced by AI”; “After returning to the AI table, is Zuckerberg’s first move layoffs?”.

But is this really the main reason these companies chose to lay off workers? The answer may not be so clear. Several industry leaders have commented that many companies using "AI iteration productivity" as a reason for layoffs are merely covering up business outlook or revenue pressures.

During Nvidia's GTC 2026, Jensen Huang criticized those companies laying off workers in the name of AI efficiency: “Those leaders who respond to AI with layoffs are merely unable to think of better solutions. They have no new ideas left in their heads, and no matter how powerful the tools they obtain, they will not use them to expand.”

Tech journalist Derek Thompson also commented after Coinbase announced layoffs: “AI indeed excels at coding… but many layoff plans would have happened anyway, and are now being disguised by AI. Macroeconomic history shows that shifts in the tech industry often accelerate during economic downturns, so companies in distress must complete more work with fewer resources.”

Compared to other companies that performed well financially during layoffs (like Block), Coinbase's situation seems to fit into this logic more easily.

Coinbase's real revenue pressure

Coinbase's core business nature determines that the company's revenue situation is highly correlated with the cyclical fluctuations of the cryptocurrency market.

As shown in the above chart, since the cryptocurrency market peaked and gradually entered a bear market starting from Q2 2025, Coinbase's revenue and net profit data have shown a clear reversal—income growth has slowed or even declined; net profit has significantly contracted for three consecutive quarters, with a massive loss of $670 million in Q4 2025 (mainly due to impairment of crypto assets).

As of now, although BTC has recently reclaimed the $80,000 mark, there are still no signs of cyclical rotation in the market in the short term. Against this backdrop, Coinbase has a very ample and direct motivation to conduct "cost reduction and efficiency improvement."

According to Dragonfly investor Omar Kanji's estimates, after the 14% layoffs, Coinbase expects to save $225 million in annual salary expenses. This will undoubtedly significantly alleviate Coinbase's current revenue pressure.

Financial report on Friday

As of May 5, 2023, 23:20 Beijing time, COIN shares reported $198.98, down 1.98% for the day. It seems the market is not very enthusiastic about this layoff announcement.

Local time on May 7 (May 8 Beijing time), Coinbase will officially announce its financial performance report for Q1 2026 and hold a video conference at 5:30 on May 8 to interpret the results. However, considering the state of the cryptocurrency market in Q1, it is hard to estimate this financial report optimistically.

In just a few days, we will see the real answer regarding Coinbase's current revenue situation.

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