Coinbase Lays Off 950 Staff, Cuts Operational Costs By 25%
Coinbase is axing more staff and reducing costs to navigate the ongoing crypto bear market, which looks soon to be the longest on record
Coinbase CEO Brian Armstrong | Exclusive art by Axel Rangel modified by Blockworks
Coinbase is cutting an additional 950 staff as part of cost-saving measures that will see its operational expenses shrink by a quarter.
The move was announced by CEO Brian Armstrong in a Tuesday morning blog post. Armstrong said Coinbase runs various scenarios for revenue each year as part of its annual planning process, split between bull, bear and base cases.
“As we examined our 2023 scenarios, it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario,” Armstrong said.
“While it is always painful to part ways with our fellow colleagues, there was no way to reduce our expenses significantly enough, without considering changes to headcount.”
The cuts come around nine months after Coinbase laid off 18% of its staff, around 1,100 people, in anticipation of a US recession, and even rescinded a number of accepted job offers.
Coinbase’s latest cuts represent a further 20% headcount reduction. Affected staff immediately had their internal system access removed and would be informed of their employment status throughout the day.
Armstrong said US workers would receive minimum 14 weeks base pay (with two additional weeks per year worked), health insurance and other benefits.
Coinbase would provide transition support for employees on work visas, and those outside the US were said to receive “similar support in line with the employment laws of your country.”
Coinbase revenues, share price, headcount all down
Crypto-related companies have disclosed laying off an estimated 27,000 staff since the bear market took hold last April, including Kraken, Silvergate and Galaxy (that figure also counts Meta’s 11,000 layoffs in November).
Coinbase persists as the top US crypto exchange by trade volume, currently processing around $1.9 billion in daily trades. But Coinbase’s fresh firings might come as little surprise to those paying attention to its revenues.
Those revenues are mostly made up of trading fees, historically more than 90% (based on 2020 filings). Sinking trade volumes last year led the firm to report just $576 million revenue in Q3 2022 — its lowest in two years.
Coinbase generated as much as $2.5 billion in Q4 2021 — a quarter which saw bitcoin set all-time highs around $69,000.
Falling revenues have been reflected in Coinbase’s share price. Coinbase stock has tanked nearly 85% over the past year, shrinking its market value from $60 billion to $10 billion.
Coinbase noted it would be shutting down “several projects where we have a lower probability of success” alongside the staff cuts, with further details to be released later today via SEC filings.
Updated Jan. 10, 2023 at 7:50 am ET: Updated context throughout.
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