Poor Performing Blockchain and Crypto Businesses Lay Off Staff to Cut Costs as Economy Feels the Pressure
Cryptocurrency and blockchain businesses are feeling the pinch that’s affected the entire market this year. This has seen some of them laying off employees. While this has been happening, the good news is that the turnover rate in the blockchain industry is still lower than that of many other industries.
More companies have sacked workers, simply because the market didn’t perform as expected. This happened particularly in companies where they “grew too quickly” and hired employees, because they thought the 2017 bullish run would continue in 2018
With Bitcoin, the largest currency in terms of volume of transaction and market cap, taking the heat from all sides, it’s unlikely that blockchain companies will stop firing people.
Since hitting its all-time high of $20,000 in the last quarter (Q4) of 2017, Bitcoin, which is the dominant virtual asset has significantly declined in value, losing over 80 percent of its value in January.
Also, Ethereum has seen its price drop drastically from lower four digits ($1400+) in the last quarter of 2017 to its ridiculous current trading price of $94.
Bitcoin’s sudden growth in value as well as that of other cryptos saw the market explode last year, with many exchanges popping up on the scene. Therefore, it appears that many blockchain and crypto companies were founded on bitcoin’s runaway success last year.
Ethereum, Ripple, and many others have also established themselves as excellent crypto projects with Ethereum becoming the second largest cryptocurrency on the market, and the world’s leader in smart contracts and distributed ledger technology.
The innovations provided by both Bitcoin and other popular cryptocurrencies were partly responsible for the high growth rate in the industry last year, and the incredible number of blockchain developers that were hired by many blockchain startup companies.
However, the decline in Bitcoin’s value coupled with the lack of massive adoption of the crypto business led to the near collapse of a number of digital assets, with many considering exiting the stage at the end of the last (Q4) quarter of 2018.
A report published in mid-2018 suggested that more than 1000+ initial coin offerings (ICOs) were no longer active and many major and active players in the market were streamlining their operations or downright abandoning them.
With a view to tightening the belt and keeping realistic profit margins, many blockchain companies are taking stringent measures, especially as the year winds down and the bearish market persists.
At the beginning of this month, Joseph Lubin, Ethereum’s cofounder and CEO of blockchain software startup and incubator ConsenSys declared the company’s intention to restructure its operations to bring about increasing revenue.
Of course, to do that, they will have to “shed some of the dead weight” –fire nonperforming or unnecessary staff. As to cutting down on expenses, ConsenSys’ management specifically intends to reduce its workforce by 13 percent. Other implications will include more rigorous projects, new strategies, increased target, expanded profit margins, and extra work hours (if necessary).
“We must retain, and in some cases regain, the lean and gritty startup mindset that made us who we are. We now find ourselves occupying a very competitive universe […] to ‘succeed wildly’ […] we must recognize that what got us here will probably not get us there, wherever ‘there’ is.”
Other crypto businesses toeing the path of ConsenSys include social network Steemit, which announced a 70 percent downsize in its workforce at the end of November.