Jack Dorsey cited AI as the driving force behind his company’s 40% workforce reduction, but other factors such as a weak crypto market, overstaffing, and declining stock prices may have also motivated the move.
Last week, financial technology company Brock announced it would lay off 4,000 of its 10,000 employees. Block CEO Dorsey said in a letter to shareholders that advances in AI have “changed what it means to start and run a company.”
“We’re already seeing it internally: The tools we’re building allow significantly smaller teams to do more and achieve better results, and the capabilities of our intelligence tools are rapidly evolving every week,” he wrote. He also said the block’s business remains strong and the cuts are not an austerity measure.
Could AI run 40% of the business? Perhaps other ghosts haunt Dorsey’s company.
The CEO, and by extension Block, has been fully committed to cryptocurrencies for the better part of a decade, rebranding from Square to Block in 2021 to evoke “blockchain.” At the time, Dorsey pivoted his business toward blockchain, Bitcoin, and the successful Cash App. The company announced that in 2024, it will invest 10% of gross profits from Bitcoin products into Bitcoin itself.
There may be reasons other than the miracle of AI for companies that have concentrated their business on cryptocurrencies to cut employees. Estimates based on Block’s public financial reports peg the company’s Bitcoin holdings at around 8,500 BTC. Bitcoin has lost nearly a quarter of its value since the start of the year, and the broader crypto market has similarly lackluster performance. Before Mr. Dorsey’s announcement, Block stock was down about 35% from its October peak.
The combination of crypto winter and stock market weakness provides a less futuristic and more concrete rationale for Dorsey’s cuts. He achieved immediate results by announcing drastic job cuts. Block’s stock price soared 20% and maintained its growth in the following days.
In recent months, the market has reacted unexpectedly to announcements of layoffs in the technology industry.
Just before its last two quarterly earnings releases, in October 2025 and January 2026, Amazon announced layoffs of 14,000 and 16,000 employees, respectively. The e-commerce giant’s stock soared after the 2025 call. The company’s stock price fell after the January 2026 announcement. Block didn’t have that problem, as spending on data centers has increased Amazon’s costs astronomically.
Salesforce cut its customer support workforce by 4,000 people last year after CEO Marc Benioff said AI could handle about 50% of customer interactions. The company’s stock price has only fallen in response, as investors view the software division, of which Mr. Block is a part, as particularly susceptible to disruption. In a November 2025 analysis, Goldman Sachs found that companies that announced layoffs underperformed the market. In many cases, companies that specifically restructured in response to advances in automation and technology fell further behind.
A former business leader at Block wrote a lengthy blog post about the company’s “headcount bloat era” that began in 2020 due to overstaffed teams outside of the “Bitcoin hardware team” and near-nonexistent interest rates in the United States.
Dorsey has overstaffed companies before. Regarding X, the CEO claimed that Block had overhired in the past, but that issue would be resolved in 2024 and that the recent layoffs were unrelated.
How the block performs after these deep layoffs will provide insight into what AI can do in the absence of human employees. Bosses across the United States are raising their productivity expectations based on the promise of AI. The pressure is particularly high on software engineers, whose work can be performed, at least in part, by AI coding models. Startup founders are working hard, fearing that their rivals are accomplishing more.
But for now, AI appears to be adding more work for the majority of workers than it is automating. A Harvard University study of 200-employee technology companies released last month found that “AI tools consistently made jobs better, not less.” The rest of Mr. Block’s employees may find themselves in the same situation.
