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Comment by Saline9515 | Hacker News Reader

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.

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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...

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.

This assumes you have more valuable ideas than you can implement. Which, at first glance, seems like something you can take for granted. But in my career over 15 years I was surprised to find it's not the case for most established businesses. The existing business acts as a constraint that limits the idea space way down, and the ability for owners and product managers to generate ideas is way lower than I ever expected.

Execution of unrelated ideas seems like a natural follow on, and having managed several such "labs" efforts, it's actually a good idea but it inevitably grinds up against the lack of will to continue investing in the face of headwinds, especially since the main business line is several orders of magnitude larger than anything labs can deliver in a foreseeable timeframe.

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.

This. Until we get regulations on AI-related layoffs, even the cheese making company will claim that their regular layoffs are to "invest more in AI".

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.

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.

Because the data shows exactly the opposite?

https://www.businessinsider.com/ai-isnt-killing-software-cod...

If it were 2018 I would personally have hired at least 3 devs at my company in the last 18 months. The only reason I haven't is due to the existence of LLMs. Not budget, not covid overhiring. Not soft demand. I literally do not need more engineer butts in seats. It is not longer a bottleneck.

The only way I can rationalize that so many people refuse to believe this is happening is that they are on the seller side and not the buyer side of engineering labor. This means they have blind sides to the buyers view of the market (some sort of information asymmetry), and secondly they exhibit cognitive dissonance to protect their self-esteem as a seller.

> The only way I can rationalize that so many people refuse to believe this is happening is that they are on the seller side and not the buyer side of engineering labor. This means they have blind sides to the buyers view of the market (some sort of information asymmetry), and secondly they exhibit cognitive dissonance to protect their self-esteem as a seller.

This is an interesting response when faced with concrete data that the buy-side of engineering is actively heating up in direct correlation with LLM adoption.

An alternative interpretation of your observation is that perhaps your company has particular traits that are helped more by LLMs than the average eng org. There's a growing SWE consensus that LLMs boost productivity by 10-20%. However, there are contributing factors that can make LLMs much more of a human replacement:

* Selling labour & services, rather than engineered software. ie an agency that builds customized versions of well-understood software, rather than net new capabilities.

* Selling software that has a low ceiling of complexity and a short half-life, such that LLMs can realistically architect & maintain it over its useful lifetime.

The problem is we can't see the counter factual of what hiring looks like without LLMs on some alternative timeline.

It is perfectly plausible that hiring would be much more without LLMs so that data is not proof of what the article pretends it to be.

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.

I just don't think there is infinity opportunity for positive EV projects for every single company.

Let's try with you providing some proof instead of talking about belief. We're not a church.

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.

Honest question: On what basis do people even trade crypto? Like, how would one even decide when to buy and when to sell? Is it just based on looking at the charts? Are there any "fundamentals" (like there are for actual companies) that can be used to make investment decisions? From an outsider's point of view, the whole thing looks like a casino where people bet on random price movements on underlying assets that have no actual value.

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.

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.

It sounds way better to investors than, we are in a dying business guys!

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

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.

It's going the opposite direction. Those offering real world and tradfi assets are moving into the crypto space. That is going to eat Coinbase's lunch.

The worst part of using something like Coinbase is having to do yet another bank transfer, waiting for it to clear, doing KYC/AML yet again, etc etc for what most people is just to buy one or two single asset (BTC or maybe ETH probably). Instead just click buy in Robinhood or Schwab along with everything else.

The major prop shops and market makers are all over crypto, for sure. But they're only there because these markets are poorly regulated and there's a lot of retail juice to squeeze.

A friend of mine works for one of the major crypto firms and they're starting to deploy algorithmic trading bots on their own exchange.

The spreads on these markets can be diabolical

That makes sense, thank you for explaining. TradFi already offer access (direct or ETFs) to major cryptos who have demonstrated some utility like BTC, ETH, XRP, SOL and a few others.

If interest in tokens and altcoins wanes, Coinbase may be in a weak position.

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.

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.

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