Analysis | Coinbase Made Some Mistakes


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Crypto has long been sold as the tradition-busting future of finance, but its collapse is following a decades-old script.

Take Coinbase. The crypto exchange went public at $250 a share in April 2021, when Bitcoin was worth more than $63,000, near its all-time high. Now Bitcoin is flirting with $20,000, and Coinbase is trading at less than $50 a share. It’s also laying off 18% of its workforce, roughly the number of people it hired this year.

It’s not alone. Peter Thiel-backed crypto lender BlockFi is laying off 20% of its people. Gemini Trust Co., founded by the Winklevoss twins, is cutting staff by 10%. (The Winklevi drowned their sorrows soon after by playing a rockin’ set in Delaware, including a Rage Against the Machine cover.)

It’s all too reminiscent of the dot-com bust, when nosebleed stock prices deluded founders into ignoring warnings of a bubble and hiring too many people too quickly. The payback left acres of empty office space and abandoned Aeron chairs.

“We grew too quickly,” Coinbase CEO Brian Armstrong wrote in a blog post. He noted the company, which makes money on crypto transaction fees, had just 1,250 in headcount at the start of 2021, ballooning to nearly 5,000 in the latest quarter. “It is now clear to me that we over-hired.”

The common themes in all these crypto layoff announcements are the need for cost-cutting ahead of a “crypto winter.” But these companies didn’t need a Ned Stark to tell them winter was coming. The dot-com bubble seemed obvious to anyone with eyes to see by early 2000, and the froth in crypto has been undeniable for a year or more. “This could get very big, and very dangerous, very fast,” our editorial warned last July.

But just as blew millions (in 2022 dollars) on a Super Bowl ad in 2000, Coinbase dropped about $14 million on its own spot for this year’s big game. Both were huge successes in one sense: The sock puppet will never be forgotten, and the Coinbase bouncing QR code was such a hit it crashed Coinbase’s app. Neither ad could hold back the tidal wave that was about to break on their respective industries.

About a year after that Super Bowl ad, was liquidated. Coinbase will probably not suffer that fate. A better analogue might be Dogecoin — outwardly unserious, obsessed with cartoon dogs and ultimately worthless.

Still, had only 320 employees at its peak, despite being involved in the physical business of warehousing and shipping pet stuff. Coinbase and its peers have many times more. They may survive the winter, but end up burning a lot of furniture in the process.

Like the dot-com, railroad and other busts before it, crypto’s winter will probably leave some hardy survivors. Despite the vaporization of $2 trillion in paper wealth, founders and many crypto millionaires will land on their feet. Early Coinbase backer Union Square Ventures walked out of the IPO with billions.

Not so lucky are the latecomers who took Matt Damon’s advice in that other infamous 2022 crypto Super Bowl ad, “Fortune Favors the Brave” — an ad for, which won the naming rights to LA’s Staples Center at the absolute peak of the bubble, an event that dropped so many anvils of dot-com reference that it broke the irony matrix.

Neither are the thousands of young workers who hoped to make a lucrative career in a supposedly cutting-edge industry. Instead, they are casualties of another generation of founders making far too many familiar mistakes.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mark Gogloff is a Bloomberg Opinion editor and writer of the Opinion Today newsletter. A former managing editor of, he ran the HuffPost’s business and technology coverage and was a reporter and editor for the Wall Street Journal.

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