Crypto meltdown triggers feeding frenzy for jobless tech talent - THE TELEGRAPH
A video of the billionaire Winklevoss twins singing “Don’t Stop Believin’” shortly after firing 10pc of staff at Gemini, their cryptocurrency exchange, was considered tone deaf by listeners.
The brothers, famous for suing Facebook founder Mark Zuckerberg after claiming he stole their idea for the site, belted out the tune at a bar in New Jersey. Just days earlier, the pair had told employees (or “fellow astronauts”) that the so-called “crypto winter” had begun and it was time to make drastic cuts.
The cryptocurrency market went into turmoil this week as lender Celsius Network halted withdrawals while Binance exchange temporarily paused trading, only adding to existing volatility in the space. As the downturn worsens, many are backing away from believing in the crypto dream. Gemini is far from alone.
Coinbase, one of the world’s biggest cryptocurrency companies, has unveiled plans to cut almost one in five staff after Bitcoin fell to its lowest level since December 2020 earlier this week. More than $100bn (£82bn) was wiped off the value of all cryptocurrencies.
Others in the sector, including BlockFi and Crypto.com, have also slashed hundreds of jobs as prices slump. More industry-wide cuts are expected as attitudes to digital currencies cool and savers flee high-risk assets.
It has left many investors furious after being lured into betting on digital coins by recent adverts featuring celebrities such as Matt Damon. “If you bought $1,000 of bitcoin the day Matt Damon's ‘Fortune favours the brave’ commercial came out, it would now be worth $375,” writer Jon Schwarz pointed out on Twitter.
But not everyone is losing out. Businesses outside the sector are bracing themselves for a tech talent feeding frenzy, hopeful they can benefit from the meltdown.
For years, crypto companies have been hoovering up much of the brightest talent, particularly software engineers, with promises of swift riches. In an extremely tight labour market, tech bosses are now waiting in the wings for any IT gurus in need of a job as demand and competition for digital skills soars.
John Mountain, Starling Bank’s chief information officer, believes those who have just been cut have reason to feel hopeful: “If you are a software engineer and suddenly available after a public announcement by your firm, your LinkedIn inbox will be very full.”
A recent slew of job postings explains why he feels optimistic. Vacancies for UK tech roles are at a ten-year high, according to job search engine Adzuna. In the US, postings for software developers and engineers hit a record in May, according to the Computing Technology Industry Association.
Businesses are scrambling to take advantage of the current crypto winter. Prashanth Chandrasekar, who runs Stack Overflow, a question and answer site for computer programmers, says his company is “hiring aggressively” and is after developers with blockchain experience. “It would be short-sighted to not take advantage of any talent available,” he says.
Traditional companies that have fallen out of vogue among graduates in recent years could benefit the most. Coinbase, which lets people buy and sell cryptocurrencies, hired from big banks including Goldman Sachs, Morgan Stanley, HSBC and Barclays between January 2020 and April 2022, according to data sourced from Bloomberg.
Now, top bankers hope the recent round of cuts will result in many of those recruits returning to banking - a sector that remains desperate for tech talent.
“We’ve had more difficulty hiring than we’ve ever had before, but maybe some of that will be eased by the layoffs we’ve seen at some of the crypto companies,” says one London-based banking chief. “A lot of talent could find their way back [to banks] in the future.”
Former bank executives who packed it all in for a cryptocurrency startup could well be questioning the revolution they bought into. Coinbase, for instance, was valued at $86bn (£69.5bn) in April 2021 when it floated on New York’s Nasdaq exchange, but shares have since fallen by around 85pc.
Public anger at big banks was also at a peak when Bitcoin was invented in the depths of the financial crisis, and promoted itself as a way to cut out the financial institutions and give power back to the people. Similar fury is now mounting at cryptocurrency bosses.
Brian Armstrong, the boss of Coinbase, last week responded to a petition from unhappy staff, who wanted to get rid of top executives, by publicly telling them to “quit and find a company you believe in”. As idealism about the sector dwindles and those who have lost jobs or money on the market turn against it, rival sectors are beginning to circle.
Some within the crypto world are also benefiting. Earlier this week Binance took a dig at its rivals by proclaiming that while it has not been easy “saying no to Super Bowl ads, stadium naming rights and large sponsor deals”, it is now hiring for 2,000 new jobs.
For outside sectors, filling jobs that have at times proved impossible to recruit for in recent years is not the only potential benefit.
Susannah Streeter, an investment analyst at Hargreaves Lansdown, says more traditional players will also benefit from the redundancies in terms of retention. Those who were wondering whether the grass is greener in the crypto space will now “think twice before heading for the exit”. The bumpy Bitcoin, and tech sector, party may not look as fun as it once did.
“The crypto crash has coincided with the flood of layoffs from tech startups which have been running out of cash, as raising new funding has proved increasingly problematic with investors shying away from risky assets. It means more traditional digital platforms may have a greater talent pool to pick from, helping ease labour shortages,” she predicts.
“Concerns are increasing about the precariousness of some parts of the tech industry and there will be a worry that a dream new job could end up just being a fast track to a P45.”