Embrace AI or be left behind: layoffs spread among crypto companies

issued Wednesday, May 6, 2026 · 01:58 PM

[LONDON/PORTLAND] A spate of AI-related layoffs at crypto and payments companies raises interesting questions for analysts and investors. The question is how to evaluate whether the artificial intelligence part is genuine or not.

The debate began in February after Block, the owner of Square and Cash App, announced it would cut a whopping 50 percent of its workforce, citing long-term changes in how AI will impact its operations. Gemini Space Station and Crypto.com made similar announcements, followed this week by Coinbase Global and PayPal Holdings.

“The biggest risk now is inaction,” Coinbase CEO Brian Armstrong posted online on Tuesday, May 5th. “We are making early and intentional adjustments to rebuild Coinbase to be lean, fast, and AI-native.”

But just as Block’s Jack Dorsey faced almost immediate criticism for “AI washing,” a trendy term that suggests forward thinking but hides deeper business problems, industry observers wondered how anyone could know what was really going on inside these companies.

Bitcoin has fallen by about a third since its peak in October, trading volumes for the cryptocurrency have declined, and the payments industry has become more competitive than ever, making it harder to make money. Companies also have their own problems, which an announcement of across-the-board layoffs could help solve.

For example, PayPal, for example, is trying to turn around with a new CEO, even though Mr. Block went into a hiring frenzy during the boom.

On the other hand, as AI is truly transforming the way the corporate world works, it’s not unreasonable to think that this technology could render a large portion of a company’s staff irrelevant overnight, especially if staff levels were bloated to begin with.

Raman Shalupau, founder of CryptoJobsList, who recently conducted research on the subject, said, “There’s probably an 80/20 split across the industry at this point between actual gains in AI efficiency and reductions from the last bull market.”

Shalpau’s team found that not only can AI replace workers, but the remaining workers must have serious AI legitimacy to remain employed. This is especially true for business owners, who have been targeted by recent job cuts and are expected to leverage AI to do more with less, he said.

“This is not a blanket rule and each reorganization must be looked at internally. However, advances in AI cannot be denied if leveraged by skilled talent.”

For investors, layoffs can have an immediate impact on stock prices. However, given the widespread skepticism surrounding AI washing, it can be difficult to parse the actual impact on people attributed to AI.

Brock shares are up about 38% since Dorsey outlined the painful layoffs. PayPal fell as much as 12% on Tuesday, and Coinbase was down nearly 4% at one point.

Coinbase’s Armstrong said the company is flattening its structure, with no more than five levels of managers under him and his executive director. While teams equipped with AI agents will take on more work, he said all managers will also need to contribute to the “player-coach” model.

PayPal CEO Enrique Lores outlined plans for the AI ​​Transformation and Simplification Team to support that effort and save the company $1.5 billion over the next two to three years. The plan includes cutting 20 percent of the company’s workforce, Bloomberg reported.

Block and Crypto.com leaders emphasized that we need to embrace AI to make fundamental changes or we will be left behind.

0G Labs, which develops blockchain systems for AI agents, decided to cut its workforce by 25% in late April, according to an internal memo seen by Bloomberg and confirmed by a spokesperson.

“As a company building AI infrastructure, we believe in using our technology internally,” said CEO Michael Heinrich. “The efficiencies we’ve seen are real, and this shift reflects how AI is already reshaping the way modern businesses operate.”

Mark Marr, an associate professor of business administration at the University of Pittsburgh, has been tracking AI-related layoffs in recent months. He and his colleagues have tried to categorize layoffs as either AI-induced layoffs or actual job losses, but he said it’s nearly impossible to tell from the outside.

John Todaro, a Needham analyst who covers crypto companies, tends to attribute the recent layoffs to months of economic downturn rather than modern efficiency metaphors.

“Every time I see layoffs like this and part of the reason is AI, I step back and ask, can something like this happen even in companies where the market is so hot?” he said. “I don’t know if I buy that AI perspective.”Bloomberg