Byline: Hannah Parker
The tech sector has experienced a spike in layoffs in the last few years, particularly in the first quarter of 2023. As businesses battled market saturation, escalating rivalry, and unclear economic conditions, more mass layoffs took place. As businesses in this industry have begun to experience significant layoffs, this pattern has seeped into the world of cryptocurrencies. Known as “crypto layoffs,” this occurrence has alarmed business professionals and many workers.
So, why exactly do these layoffs happen and why did many companies hop onto this trend?
Causes Of Tech Layoffs
Social media platforms were taken by storm when several tech employees at large companies like Google, Microsoft and Twitter began to speak about their experience with a tech layoff, as thousands of employees were let go.
The global recession continues to push companies to lay off thousands of employees to maintain business breakeven.
Meta began a layoff in November 2022, where 11,000 Meta employees were laid off. This was one of the most significant layoffs in the tech pioneers’ history. Many quickly blamed the company for over-hiring staff during the pandemic, while experts suggest that investor expectations were a cornerstone in the decision to lay off staff.
The tech sector has been growing over the last few years, leading to more companies expanding their workforce while capitalising on tech trends. When the pandemic hit, many tech employees worked from home, and businesses, including Meta and Amazon, began hiring more staff within months. As the pandemic concluded, stock values drained, companies grew less, and high inflation began to tug at the executives who were now pushed, due to economics, to lay off staff. And so, hundreds of thousands of people worldwide were laid off.
CEO of Meta, Mark Zuckerberg posted, “not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have [led to lower-than-expected revenue]; I got this wrong, and I take responsibility for that”.
Tech layoffs happen because of:
- Economic slowdown: When the economy contracts, businesses may be forced to reduce expenditures, which could result in job losses.
- Business restructuring: Businesses may reorganise their operations, which may involve cutting expenses, streamlining operations, and removing redundant jobs.
- Poor business performance: If a business isn’t doing well, it might need to reduce expenses, which might mean firing workers.
- Acquisitions and mergers: When businesses combine or are purchased, job cuts and layoffs may occur.
- Technology disruption: Due to the speed at which technology is developing, some sectors may need to be updated and require layoffs.
- Outsourcing: Businesses may assign specific tasks to other nations, leading to employment losses.
Layoffs in the Crypto Industry
Metaverse enthusiasts at Bitcoin Apex official site suggest that in addition to some industry-specific variables, layoffs in the crypto sector can occur for causes comparable to those in the tech sector.
Here are some possible causes of unemployment in the cryptocurrency sector:
- Market fluctuations: Cryptocurrencies are extremely erratic, so market shifts can significantly affect the financial circumstances of crypto businesses. Companies may need to reduce expenses if the market suffers a downturn, which can result in layoffs.
- Regulatory adjustments: Authorities from all over the globe are still finding out how to control the cryptocurrency market. For cryptocurrency businesses to stay fiscally viable, they might have to fire workers if new regulations are implemented that raise their costs.
- Competition: With the crypto industry being relatively new, there is fierce rivalry among businesses to become industry champions. Companies unable to contend might experience financial difficulties and need to cut costs, including cutbacks.
- Technology disruption: The crypto business is based on quickly developing technologies, and as new technologies are developed, some firms may need to be updated. As businesses need help to remain competitive and current, this may result in cutbacks.
For months, a lot of business experts have been predicting a decline. Since its beginning, cryptocurrency has experienced several boom and bust cycles. Many contend that its most recent bull run was marked by excessively rapid development heavily founded on conjecture. Many businesses took precautions, such as creating war chests and investing in secure options, to guard against what seemed to be an impending decline.
Some seasoned professionals claim they are experiencing memories from 2018 when crypto startups fired dozens of workers and the sector went inactive for a few years. The recent cutbacks may portend a prolonged decline in the cryptocurrency market and result in fundamental changes. Rebounding might take years.
Here are some examples of layoffs in cryptocurrency firms:
Gemini:
On June 2, 2022, 10% of Gemini’s workforce was cut due to economic factors.
Crypto.com
On June 11, 2022, an announcement was made that it would be terminating 5% of the existing workforce.
Coinbase:
On January 10, 2023, Bitcoin announced it would also significantly reduce staff—950 workers, or 20%—of its workforce. Due to a “crypto winter,” the cryptocurrency business let go of about 10% of its workforce in June 2020.
But the choice made in January came from a slightly more surprising source: the shockwave brought on by FTX’s stunning failure. Brian Armstrong, the CEO of Coinbase, admitted this fact and called the consequences a “contagion [that] has created a black eye for the industry.”
The future of the cryptocurrency business still needs to be clarified because it is still in its infancy. There will probably be continuing modifications and changes as the market matures, which could result in additional cutbacks down the road.
The current pattern of tech cutbacks morphing into cryptocurrency layoffs emphasises the difficulties and risks the technology sector is currently experiencing. Although layoffs are often essential for businesses to stay competitive and fiscally viable, they can be devastating for the affected workers. Layoffs may continue as the crypto sector develops and deals with its particular challenges. Despite this, the industry has room for expansion and invention, and those who can adjust and succeed may find themselves at the head of a fascinating new industry. Employers and workers alike must be agile and adaptable in the face of change in every sector. We can continue to develop a robust and viable crypto business that helps all parties involved with the proper mentality and tactics.
