May is kicking off with another brutal round of tech layoffs that have been affecting the industry for much of the year. Today, the U.S.’s largest cryptocurrency exchange, Coinbase Global, Inc. (Nasdaq: COIN), announced it was laying off a staggering 14% of its staff.
The company’s CEO says one of the main drivers of those layoffs is AI adoption at the company. Here’s what you need to know.
Coinbase cuts hundreds of jobs in ‘AI-native’ restructuring
This morning, Coinbase CEO Brian Armstrong posted a letter on X that he sent to the company’s nearly 4,700-strong workforce. In the letter, Armstrong announced that Coinbase was letting go of around 14% of its staff, or roughly 700 employees.
The CEO said two factors were at play behind the layoffs. First, the company’s business is highly volatile, and the crypto industry is in a downward market. As a result, Coinbase needs to adjust its cost structure. And one of the fastest ways to cut costs is always by cutting human labor.
But Coinbase apparently isn’t too worried that letting go of hundreds of talented people will hurt the company in the long term. That’s because Armstrong seems adamant that artificial intelligence will allow the company to operate more efficiently.
The CEO spent a large portion of his letter to employees espousing the benefits of AI to the company’s operations and bottom line, noting that over the past year he has “watched engineers use AI to ship in days what used to take a team weeks.”
Indeed, Armstrong says that the biggest risk to the company is “not taking action.”
“We are adjusting early and deliberately to rebuild Coinbase to be lean, fast, and AI-native,” Armstrong’s email read. “We need to return to the speed and focus of our startup founding, with AI at our core.”
An ‘AI-native pod’ future?
Armstrong’s email also outlined how the company plans on shifting towards “AI-native pods.”
At Coinbase, “pods” are teams of employees focused on various tasks. Those teams have always been made up of humans. But under its new AI-native focus, Coinbase’s teams of pods will include AI agents.
Armstrong says this new breed of pod will concentrate “around AI-native talent who can manage fleets of agents to drive outsized impact.”
The CEO encapsulated his thoughts on artificial intelligence by noting that “AI is bringing a profound shift in how companies operate,” adding, “we need to leverage AI across every facet of our jobs.”
Of course, this isn’t the first time a tech CEO has embraced a fervent attitude towards AI at the expense of a company’s human employees. In February, Block CEO Jack Dorsey abruptly announced the fintech company would cut a staggering 40% of its workforce, or 4,000 roles, due to advancements in artificial intelligence tools.
It is a trend that will likely continue across the tech industry in the near future, unless, of course, the AI bubble pops.
COIN stock sinks after layoffs announcement
Layoffs usually boost a company’s stock price, because cutting jobs is the fastest way to reduce costs. Armstrong publicly announced the job cuts hours before Coinbase is expected to announce its Q1 earnings today. But the news has done nothing to benefit the stock.
As of the time of this writing, COIN shares are currently down more than 2% to $198.55. With today’s fall, COIN shares are now down more than 12% for the year. Over the past 12 months, COIN stock has been nearly flat.
Coinbase is scheduled to announce its earnings after the close of trading this afternoon.