Comment by Saline9515
1 day ago
The reality is that Coinbase earns on trading volume, and since we are in a crypto bear market, revenue is down. So they have to cut to keep the company profitable (or in line with what the investors expect).
While AI is likely a productivity boost, the underlying reason is not AI.
Yes, I'm not buying this story about layoffs due to AI. It's a convenient excuse, which these companies seem to be getting away with too.
And something else I don't get about these AI related layoff announcements: if AI was a productivity boost wouldn't you hire more engineers and technical staff to capture the value? Or else you're basically saying "we're a tech company that has no idea what to do with more super-engineers".
The layoffs being "due to AI" is usually about freeing up the budget to build a couple datacenters and buy GPUs. And they have to layoff 14% of their workforce because they are buying those GPUs at many times the normal price thanks to the zeitgeist.
They aren't saying that they don't know what to do with the AI productivity boost, but rather they think it worth taking a huge productivity hit right now so they can invest in the future. Whether their vision of the future is realistic...
Reading only the parts of the post that are not about AI does not instill the sense that Mr Armstrong is the kind of person who would hesitate to say that people are let go because the company wants/needs to save money.
Saying they're being let go due to the amazing efficiency of AI juices the stock prices more though.
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There are diminishing returns to more engineers. Also hiring more is like investing with leverage. You might increase EV but also increase the chance of going bust if things go poorly.
This assumes they had a deficit of engineers pre-AI. What if they had as much as they needed?
If engineering ability actually became cheaper you would want more of it, as ideas that were previously too marginal became worthwhile.
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At this point, I truly do not believe there is anything that could happen that would convince HN that LLMs reduce demand for engineering labor hours.
He's actually agreeing it reduces the need for engineers to produce the same level of output as now. He's making the argument that companies would then desire more output to capitalize on additional ideas/projects. I could see it going either way, but likely demand will fall.
Because the data shows exactly the opposite?
https://www.businessinsider.com/ai-isnt-killing-software-cod...
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Indeed. COIN releases earnings on May 7 in the evening. Q4 2025 was the first quarter where they had a negative EPS in the past couple years. Most analyst estimates for Q1 2026 are trending downward. This "difficult decision" seems to be all about getting in front of a bad earnings release.
Yeah AI is the perfect scapegoat for layoffs recently to soften the impact on stock price and investor confidence. Coinbase is obviously doing layoffs because they are strongly tethered to a stock market that is rattled by political conflict and economic uncertainty.
It's a nice spin. The AI is so productive that we can cut people. Not "revenue is down, so we have to cut people"
Oh yeah, AI is just an excuse to sell it to the public. But it's not about that at all. It's about bad leadership.
It sounds way better to investors than, we are in a dying business guys!
Isn't this what he says in the post? The first reason listed is market cycle not ai.
Yeah, but imagine if he had said that AI was the reason, and how wrong he would have been if he had said that.
They're so tied to crypto that i'm surprised they haven't been tempted to diversify into other asset classes, or even yolo into prediction markets like robinhood did.
It would be slop, but the market would love it
I was logged in when I read your comment, so I flicked over to the tab to see what they have. There is a whole "Predict" section of the site I'd not looked at before with sports betting, elections, commodities etc.
Very curious why they haven’t diversified into real world assets. It seems like an obvious move, even if the margins would be lower than their fee business (~85% margins!!).
They’ve added tokens and altcoins to the platform, but I don’t think that’s a particularly strong long-term bet.
Because real world assets are heavily regulated and regulation has costs.
The competition is also stiff with decades of experience and network effects
The truth is these crypto shops have a pretty poor reputation in the traditional finance industry. Nobody in trading tech goes to work for them unless they offer insane salaries, because they (we) know it's an unstable place to be.
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Have they not? When I log in, I'm given the option to trade (apparently stocks, futures, commodities) and predict (via Kalshi, I think).
oh they have too! came out a couple of months ago.