back to article Coinbase CEO cuts 1,100 jobs, warns of 'crypto winter'

Coinbase has axed 1,100 employees, cutting its workforce by 18 per cent, while the value of digital assets including Bitcoin plummet amid rising inflation rates in the US. CEO Brian Armstrong announced on Tuesday he was "making the difficult decision to reduce the size of [the] team ... to stay healthy during this economic …

  1. Randy Hudson

    Hopefully those about to be canned had the wisdom to short crypto, especially after seeing how the pyramid is being built.

  2. Anonymous Coward
    Anonymous Coward

    And so, another scam ends. Good.

  3. AnAnonymousCanuck

    Good Way to Let People Go

    14 weeks severance for 1 year is exceptionally good.

    A good way to pay for your mistakes in over-hiring.

    Another Anonymous Canuck

    1. Def Silver badge

      Re: Good Way to Let People Go

      For the US, I'd say it's almost unheard of.

      One thing that strikes me as a little odd though is the idea that it's acceptable for a CEO to not run a company efficiently until the going gets tough.

      But at least in this instance they're paying for that mistake in a good way. Far too many companies let people go at the drop of a hat without a second thought.

  4. msobkow Silver badge

    As someone who has concerns for the environment and the pollution created by the energy use of Bitcoin, Ethereum, NFTs, and the like, I can only say I am absolutely thrilled at the recent crash. Maybe people will stop gambling with the planet for the sake of their precious lucre after being burnt like this. One can only hope...

    1. Flocke Kroes Silver badge

      Big ask

      You are asking people who have more than enough money but still want more to stifle their fear of missing out now in return for benefits to other people in the future. Try exploiting their strongest personality trait (greed) instead:

      NFT wash trades separate $2.9M from foolish trader.

    2. EverWonderWhy

      Energy source

      It's not Bitcoin per se that is creating the pollution. If we managed to create cleaner energy, then using energy would not be an issue.

      And why single out Bitcoin? What about the energy used by any other activity?

      (not a crypto investor btw)

  5. DS999 Silver badge

    The cryptobro lie

    That bitcoin is somehow a hedge against inflation sure is being well exposed.

    I'm interested to see if some of those "whale" wallets from some of the early "investors" start showing serious outflow. That's when you'll know the party is over for good.

    1. breakfast

      Re: The cryptobro lie

      From what I can gather as someone with only marginal interest in the whole crypto world but enjoys awful people facing a degree of comeuppance, the current situation was partly triggered by some whales starting to migrate.

      1. DS999 Silver badge

        Re: The cryptobro lie

        The "DeFi" movement risks making things worse from what I've read on Twitter (for what that's worth) because the ability of people to take loans against bitcoin holdings and buy on margin will accelerate the downward momentum over time - as prices fall, the more margin calls there are, which forces selling which causes prices to fall further.

        The stock market is relatively insulated from that, while you can buy on margin and take loans against stock it is pretty tightly regulated as far as amount of margin, and most of the vast holdings in retirement accounts etc. are not permitted to trade on margin, at least in the US. Despite that you still see some good sized drops every decade or so when "irrational exuberance" gets out of control.

        Bitcoin has none of those protections, and unlike stock in a company with solid revenue streams you know will be around after the bear market is over (i.e. Apple, Microsoft, etc.) bitcoin has zero intrinsic value, so it could conceivably fall to zero. It won't, of course, because there will still be some true believers left no matter how much carnage there is, but I think it is quite possible and perhaps likely to fall below $10K - which would mean falling below the cost to mine 1 bitcoin. If almost all mining (i.e. except that supported by stolen electricity) halts, the cost of a bitcoin transaction may become higher than 1 bitcoin. Not sure what happens then, but it can't be good!

        1. Michael Wojcik Silver badge

          Re: The cryptobro lie

          the ability of people to take loans against bitcoin holdings and buy on margin will accelerate the downward momentum over time - as prices fall, the more margin calls there are, which forces selling which causes prices to fall further

          Indeed. If only something similar had happened in, say, the past century so we could have predicted it!

          (Obviously a great many did predict it. Oh, well.)

          Incidentally, computer scientist and cryptographer Matt Green recently wrote a long blog post in support of cryptocurrency as a general concept, with many caveats. He was specifically responding to the recent letter to the US Congress by Schneier et alia.

          It's worth reading, even if you're a cryptocurrency skeptic (as I am) – if only to sharpen your arguments. Green is a smart guy who understands cryptography deeply, and doesn't pull his punches when he debunks something he finds lacking, so this is an interesting piece. He isn't an economist or public-policy expert, and he admits there are still technological problems to be solved, but it's useful to read an opposing argument from someone who's not selling snake oil or doesn't understand the technology, like most boosters.

  6. anonanonanonanonanon

    In past crypto winters

    Admittedly, I'm no crypto expert, but what the hell does he mean by "Past crypto winters", looking at a graph of bitcoin, I see 1 bubble, currently collapsing.

    Maybe there was another around the end of 2017.

    Anyway, it seems like a thinly veiled attempt to try to say it's a short term hitch that happened before, but it's not.

    1. John D'oh!

      Re: In past crypto winters

      I thought the same thing. What a load of bullshit!

    2. Tom 38 Silver badge

      Re: In past crypto winters

      For an exchange, a "winter" might be a fall in traded volumes rather than just a fall in price. I mean isn't that the point of trading firms, they don't really care about what goes up and what goes down, just as long as lots of people are buying/selling. I don't really know, my knowledge of trading firms comes from the Duke Brothers training seminar.

    3. pimppetgaeghsr

      Re: In past crypto winters

      It crashes all the time, yet even after this crash it is still more expensive than the 2017 bubble.

      There's a lot more emotion in the market now.

    4. lidgaca-2

      Re: In past crypto winters

      Well if you look at the figures, from Dec 2017 (~ $16,000 +) to Dec 2018 (~ $3,500) that's a loss of nearly 80% of value. That's bigger the current plunge mid Nov 2021 (~$65,000) to mid Jun 2022 (~ $20,000) of ~70% ... Admittedly that's over a longer time, and this one may still be on the down escalator.

      But trust me, If you held bitcoin them, you'd think it was winter.

      Two bubbles in 5 years is not a good basis for fiscal stability.

  7. thejoelr

    Quick to fire.

    Lots of loyalty to employees I see. They massively overhired and are chucking 18% of their employees immediately when things look rough. So, did they not plan for this possibility, or do they just not care about the people? What other cuts are they making? Executive salaries? The actions of these companies make it clear what kind of people run them.

  8. elsergiovolador Silver badge

    Two folds

    The reasons are probably two folds.

    One is that cost of living crisis make people dip into their savings and younger generation stored their assets in crypto, so as people sell the price goes down.

    Now the other people see the price goes down and they know they are going to need the money to get through the crisis they go to sell, even if they don't need right now, out of fear they'll lose their padding.

    The second fold is that the strategy of majority of "investors" is buy high sell low.

    Anyway, crypto crashing is not a new thing. To make a success you need to reverse your strategy - buy low sell high.

  9. Howard Sway Silver badge

    60-second Superbowl ad at the start of the year that was a QR code bouncing around the screen

    The dotcom boom madness never really ended did it? It just went into hibernation for a couple of decades whilst real businesses built up their online offerings to a decent level, but now that's pretty much complete, the ludicrous shit has been able to re-emerge in the the form of the crypto boom and waste lots of idiot investors money on such risible crap again.

    1. nintendoeats Silver badge

      Re: 60-second Superbowl ad at the start of the year that was a QR code bouncing around the screen

      I expect there will always be some semi-legitimate scam to extract large amounts of money from dentists.

  10. pimppetgaeghsr

    Not sure where the pure hatred of crypto has come from, bitcoin itself was a response to the ludicrous printing of free money for the elite during the 2008/09 meltdown as a way to ensure there is only ever a finite amount. Then for sure it turned into a complete pump and dump ponzi scheme with everyone having one.

    I suspect there are a lot who missed the boat a few times and are just angry, otherwise we would have these people discussing what Bitcoin is about, and that is the fact that we have printed away the value of our currencies for too long now and stagflation is here to stay. When it plunged to 3k in 2019 nobody had any issue with it.

    As for what 6000 employees are doing at Coinbase I cannot understand. Other than making work for themselves and passing around corporate capital and all the jargon that comes with it, it seems in this late stage of the tech market cycle there are a lot of people that mistake presenteeism for actual sound business operation and mangerial accumen.

    1. DS999 Silver badge

      When bitcoin plunged previously many people were pointing and laughing then too, but so long as the cryptobros were able to find more stupid people the bubble kept reinflating. This most recent bubble was due to making it easy for retail investors to buy like a stock, buy on margin, take out loans against their loans, etc. - the whole DeFi thing. That was great for inflating the bubble all the way to $67K, but it makes for a lot more margin call induced carnage as it bursts.

      There won't be another crop of greater fools, this is the swan song of the 21st century's tulip bulb.

      1. Michael Wojcik Silver badge

        There won't be another crop of greater fools

        Hmm, not sure I want to take that bet. Still no shortage of people playing the lottery, for example. If customers could buy $5 of some random cryptocoin along with their smokes and booze at the convenience store, I bet we'd see a lot of them doing so – regardless of what happens in the cryptocurrency markets.

        And here in the US there are people in Congress who'd like to see that happen. There's a push on to "remove barriers" to cryptocurrency adoption.

        And, after all, there is money to be made, if your timing is good and you don't mind fleecing other "investors", and you actually manage to cash out (rather than just playing hot potato with one coin after another). Hell, it might even be possible to make a profit from transaction fees if you buy used, outdated mining gear and have cheap power – I haven't tried to crunch the numbers, but transaction fees are going up. So it's the most enticing sort of bubble, where there are real, if atypical, success stories.

        1. DS999 Silver badge

          The number of people playing the lottery is relatively fixed, and losses are limited. The lottery is basically giving up your spare change against very very long odds of changing your life. You know as you hand over your cash that you almost certainly will never see it again.

          That's a far cry from the crypto promises of "it will only ever go up, so buy more on every dip" and the latest scams of loans where they get deposits to hand over their coins in exchange for "guarantees" of 20%. I guess none of the people who fell for that remember the name Madoff.

    2. Anonymous Coward
      Anonymous Coward

      "Not sure where the pure hatred of crypto has come from"

      well.

      1. it's not "money" or "currency" in any real shape or form.

      2. it's worthless shit

      3. it wastes huge amount of energy for no reason.

      4. only real practical use is scamming/ransomware.

      5. crypto bros are just a bunch of scamming douche bags

      1. pimppetgaeghsr

        For number 3, how much energy do we waste hosting social media servers? No-one seems to have issue with those.

        1. JimC

          I suppose the difference is

          That the social media servers are actually doing something with as little energy as the holsters can manage. OK the majority of it is just essentially meaningless chit chat "I'm alive, you're alive" to steal Pratchett's phrase, but essentially meaningless chit chat is a major part of the human experience.

          On the other hand bitcoin and the like are using huge amounts of energy to do utterly meaningless calculations that contribute nothing. To those of us who don't enthuse about the thing crypto mining has to be one of the most ridiculous wastes of energy ever devised.

          Look forward and back at the history of technology and innovation. If there is ever a real supra national electronic currency equivalent, will it be based on this energy profligate technology, or will it be something quite different and more responsible? And will it have this constant pyramid of value inflation and occasional contraction, or will it be something stable that is safe for poor people to use to protect their money? Secretly you know the answer, don't you? Even if you don't wish to accept it.

          Think forward ten years, twenty years. Sooner or later there will be no-one wasting energy on bitcoin and it will be replaced? What will the value of those database records be then? A bitcoin collapse is inevitable, its just a question of who it will take down.

        2. Anonymous Coward
          Anonymous Coward

          A better comparison would be "credit/card" processing.

          Presently with much less computing power, credit cards allow Millions of transactions per day. (just visa does around 150mill per day)

          Coin shit even with much more computing power they can do about 490644 a day in reallity a lot less (https://ycharts.com/indicators/bitcoin_transactions_per_day max was 490644 in 2017)

          https://towardsdatascience.com/the-blockchain-scalability-problem-the-race-for-visa-like-transaction-speed-5cce48f9d44?gi=4e5f2930a348

          So it is incredibly inefficient

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