The global downturn in cryptocurrency is starting to squeeze domestic hiring in the sector – companies are either pressing pause on hiring or shelving growth plans altogether, according to industry executives and recruiters.
Coinbase Global Inc. COIN-Q, one of the world’s largest crypto exchanges, announced Tuesday it will cut its work force by 18 per cent, or 1,100 full-time jobs, to manage costs after growing “too quickly” during a bull market. The crypto giant had rescinded hundreds of job offers last week and announced a freeze on hiring for the “foreseeable future.”
Some of the people affected, according to a public list on Coinbase’s website, were employees of Canadian companies such as Sun Life Financial SLF-T and Telus International T-T, who had left to join the San Francisco-based crypto giant.
“There are certainly a number of companies that have paused hiring, and others that have retracted offers for incoming employees. There are also employees declining job offers from crypto companies,” said Ross Campbell, a headhunter with the recruitment firm IQ Partners Inc., who deals primarily with hiring for fintechs and digital asset companies.
Last week, Wealthsimple Technologies Inc. told employees it plans to temporarily freeze hiring. The Toronto-based fintech company currently manages more than $15-billion in assets and had heavily expanded its crypto business over the past 18 months by launching the crypto trading platform Wealthsimple Crypto.
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“We did all our expansion last year, but as we look forward and endure lacklustre bitcoin prices, we have to be careful,” said Geoffrey Morphy, president and chief operating officer of the Quebec-based bitcoin BT*1 mining company Bitfarms Ltd. BITF-Q
Many Canadian crypto companies went through a massive hiring spree over the past year and a half, as institutional capital and retail dollars flooded into the sector, buoyed by high prices of various digital assets.
Bitfarms BITF-T, for example, went from 86 employees in May, 2021, just in Quebec, to 122 employees across four countries, according to Mr. Morphy. Another bitcoin miner, Hut 8 Mining Corp., quadrupled its workforce from January, 2021, to this June through acquisitions and by hiring more technicians to run its growing square footage of bitcoin mining farms.
Then in late May, the crypto bust began, triggered at first by the collapse of two crypto coins, terraUSD and luna, which effectively vaporized roughly US$500-billion in the broader crypto market. Since then, turbulent markets have prompted a series of layoffs in prominent companies. The New York-based crypto exchange Gemini GMNI announced in early June it would lay off 10 per cent of its staff and warned of a coming “crypto winter.” Robinhood HOOD-Q, the popular stock and ETF trading app that also offers crypto trading, cut 9 per cent of its staff. Mexican exchange Bitso and Bahrain-based Rain Financial (backed in part by Coinbase) also announced cuts.
“At the height of the boom, crypto companies were offering huge salaries and equity play. They easily attracted talent from the large banks who could not move up as quickly as they wanted to. Fintechs opened the door for them,” said Shouvik Datta, a Toronto-based recruiter at Squalus Group, a boutique firm that focuses on hiring in compliance and risk management.
Mr. Datta has seen a decline in interest in crypto from potential recruits, who now prefer to take on individual contracts from crypto or fintech companies rather than full-time jobs. “The industry feels really volatile right now, and talent is more apprehensive,” he said.
There is some evidence of the decline in hiring in Canada. Data from the job site Indeed.ca shows that the number of job listings with the word “crypto” in the posting increased exponentially from May, 2020, to February, 2022, but has since dipped slightly. Overall, however, the sector remains a niche – still a tiny part of the Canadian economy – and experts, including economists at Indeed, caution against overinterpreting the impact of the crypto crash on the labour market.
“We don’t have any plans to lay employees off. It’s the status quo for us, because we’ve done all our hiring,” said Justin Hartzman, co-founder and chief executive officer of the Toronto-based crypto exchange CoinSmart SMRT-NE, which employs roughly 60 people.
Bitfarms had planned to hire 50 people to expand its bitcoin mining capacity in Quebec, but is still waiting on a decision from Hydro-Québec on how the utility will allocate a block of 270 megawatts of electricity. “The award of the block of capacity was supposed to happen in the first quarter of this year. Now, they have, for whatever reason, delayed the award of those megawatts,” said Mr. Morphy.
He added that Bitfarms was excited about creating jobs in small towns in Quebec (technicians at bitcoin mining sites are usually hired locally), but he is disappointed the “gears of progress seem to have stopped” when it comes to anything crypto-related.
Hydro-Québec told The Globe and Mail it will issue a public update regarding “any developments” in allocating the 270 megawatts.
The biggest costs for cryptocurrency miners are electricity and then labour. But even though miners might feel the squeeze from lower crypto prices, they do not have a lot of flexibility in staffing, explained Jaime Leverton, chief executive of Hut 8. “As far as the number of staff you need to run your business, it is pretty fixed, because you will always need technicians to run your farms. Unless you shut down farms altogether.”
Mr. Datta, who has observed boom-bust cycles in hyper-growth sectors and their impact on jobs, believes that the crypto downturn, and the bad media coverage it is getting, will make it hard for companies in the sector to recruit full-time, permanent employees. “It affects employer branding,” he said. “Fewer people are going to leave a stable, secure job right now for the crypto sector. It was a very different situation a couple of years ago.”
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