Jack Dorsey cited AI as the driving force behind his company cutting 40% of its workforce, but other factors like the weak crypto market, overstaffing, and falling stock price may have also prompted the move.
Last week, financial technology company Block announced it would lay off 4,000 of its 10,000 employees. Block CEO Dorsey said in a letter to shareholders that advances in AI have “transformed what it means to build and run a company”.
“We’re already seeing this internally. A fairly small team, using the tools we’re building, can do more and do it better. And intelligence tool capabilities are growing exponentially every week,” he wrote. He also said the block’s business remains strong and the cuts are not an austerity measure.
Can AI run 40% of a business? Perhaps, but other ghosts haunt Dorsey’s company.
The CEO, and by extension Block, has gone full-on crypto for the better part of a decade, rebranding from Square to Block in 2021, coining the term “blockchain.” At that time, Dorsey redirected the business toward blockchain and Bitcoin as well as the successful Cash App. company Announced in 2024 That it will invest 10% of its gross profits from Bitcoin products in Bitcoin itself.
A company that has focused its business on cryptocurrencies may have reasons other than the wonders of AI for downsizing its staff. Estimate Its Bitcoin holdings are estimated at around 8,500 BTC based on the block’s public financial filings. Bitcoin has lost nearly a quarter of its value since the beginning of the year, and the broader cryptocurrency market has shown a similar underperformance. Before Dorsey’s announcement, Block’s stock had fallen about 35% since its peak in October.
The combination of crypto winter and weak stock prices provides a less futuristic and more solid argument for Dorsey’s cut. With the announcement of radical layoffs, he achieved immediate results: Block’s stock increased by 20%, continuing to rise in the coming days.
In recent months, markets have reacted unexpectedly to layoff announcements in the tech world.
Just before two recent quarterly earnings calls, Amazon announced plans to lay off 14,000 and 16,000 workers in October 2025 and January 2026, respectively. Following the 2025 call, the e-commerce giant’s share price rose sharply. Its share price declined after the January 2026 announcement that Amazon’s costs had increased significantly due to datacenter spending, something the block had no issues with.
Salesforce cut 4,000 customer support staff last year because “I need less heads with AI,” said Marc Benioff, the company’s CEO. Months ago, he said that AI handles about 30%-50% of the work at Salesforce. The company has only seen its share price fall in response, as investors view the software sector, of which the bloc is also a member, as particularly sensitive to disruption. Goldman Sachs established in November 2025 Analysis Companies that announced layoffs underperformed in the market. Businesses that specifically referenced restructuring in response to automation and technological advances lagged even further.
A former business leader from the block wrote a long article blog post Regarding overloaded teams outside the “Bitcoin Hardware team” and the company’s “bloated headcount era”, which began in 2020, due to almost non-existent interest rates in the US.
Dorsey had more employees than necessary in companies before also. The CEO argued on X that while the block had overhired in the past, that issue was resolved in 2024, and the recent cuts were unrelated.
How Block operates after such a drastic reduction in staff will provide insight into what AI is capable of doing in the absence of human employees. Bosses across America are raising their expectations for productivity based on the promise of AI. The pressure is particularly high on software engineers, whose work can be performed, at least partially, by AI coding models. Startup founders are putting the work in on the ground themselves out of fear that their competitors are doing more work.
However, so far, AI is adding more work to most workers than it can automate. A harvard study A report by the 200-person technology company published last month found: “AI tools didn’t reduce work, they continually increased it.” The rest of the block’s employees may now find themselves in the same situation.
