BlockFi, a cryptocurrency lender that offers instant loans to purchase digital currencies, is laying off about 20% of its employees as the firm tries to navigate through a tough cryptocurrency market and growing worries about an economic downturn.
A “dramatic shift has hit BlockFi in macroeconomic conditions,” which have had a “depressing influence,” according to Zac Prince.
BlockFi, launched by venture capitalist Peter Thiel, has risen rapidly within the past two years owing to low borrowing rates and bitcoin prices. The firm went from 150 workers at the end of 2020 to more than 850 today before the most recent reductions.
BlockFi, which offers a popular discount savings program that rewards clients with interest in their cryptocurrencies, has raised more than $957 million since its inception in 2017 and was aiming for a valuation of roughly $5 billion last year. However, according to The Block, the firm has been raising a down round at a valuation of $1 billion.
BlockFi is a tweet that publicly distanced itself from Celsius, stating that it “has no exposure to Celsius” and “has never worked with them as a partner.”
Prince said the company’s mission is “to become profitable.” According to him, BlockFi’s primary goal is “to achieve profitability,” and the firm is “here for the long haul.”
Costs are being reduced across the board for crypto firms as investors rotate out riskier assets, dragging trading volumes. Bitcoin has dropped by almost half this year, and ethereum has shed two-thirds of its value, tumbling 16% to start the week. The crypto market has slipped below $1 trillion, from a high of $3 trillion in November 2021.
Besides Blockfi, Coinbase fires 18% of its workers as they prepare for crypto winter
Coinbase is cutting almost a fifth of its staff amid a collapse in its stock and cryptocurrency values.
According to an email sent to employees Tuesday morning, the cryptocurrency exchange will eliminate 18% of full-time positions. Coinbase has about 5,000 full-time workers, equating to a headcount reduction of around 1,100 people.
Brian Armstrong, the CEO of Coinbase, acknowledged a recession and the need to balance out Coinbase’s burn rate while improving efficiency. He also said that during a bull market, the business grew “too quickly.”
“We appear to be entering a recession following a ten-year economic boom. A recession might lead to a crypto winter that lasts for an extended period,” Armstrong said in the email, adding that past crypto winters have resulted in substantial trading activity loss. “While predicting the economy or the market is difficult, we try to prepare for the worst so that our business may function in any condition.”
Coinbase had announced that it was halting recruitment. Two weeks later, the cryptocurrency giant announced that it would continue to delay hiring for the “foreseeable future.” Coinbase said it wanted to hire 2,000 people in various departments in January.
“Our employee expenses are too high to handle this volatile market effectively,” said Armstrong. “While we tried our best to get it just right, in this case, it is now clear to me that we over-hired.” The announcement comes amid a dramatic drop in Coinbase’s stock. The company went public via a direct listing last April, during an era of record highs for cryptocurrency markets and investors looking for high-growth technology stocks.
Coinbase’s stock price has dropped by 79% this year and 85% from its all-time high. Meanwhile, bitcoin has plummeted to nearly $2200 and lost over half its value.