Jack Dorsey cited AI as the driving force behind cutting 40% of his company’s employees, but other factors such as a weak crypto market, overstaffing and a declining stock price may also have motivated the move.

Last week, the financial technology company Block announced that it would lay off 4,000 of its 10,000 workers. Dorsey, Block’s CEO, said in a letter to shareholders that advances in AI “have changed what it means to build and run a company”.

“We’re already seeing it internally. A significantly smaller team, using the tools we’re building, can do more and do it better. And intelligence tool capabilities are compounding faster every week,” he wrote. He also said that Block’s business remained strong and that these cuts weren’t an austerity measure.

Can AI operate 40% of a business? Perhaps, but other specters haunt Dorsey’s company.

The CEO, and by extension Block, has gone all-in on crypto for the better part of a decade, rebranding in 2021 from Square to Block to evoke “blockchain”. At the time, Dorsey redirected the business towards blockchain and Bitcoin as well as the successful Cash App. The company announced in 2024 that it would invest 10% of its gross profit from bitcoin products into bitcoin itself.

A company that has focused its business on cryptocurrency may have other reasons than the miracle of AI to trim its staff. Estimates based on Block’s public financial filings peg its bitcoin holdings around 8,500 BTC. Bitcoin has lost nearly a quarter of its value since the beginning of the year, and the broader cryptocurrency market has shown similar lackluster performance. Before Dorsey’s announcement, Block’s stock had declined by some 35% since a peak in October.

The combination of a crypto winter and a weak stock price provides a less futuristic, more tangible, rationale for Dorsey’s cuts. With the radical layoff announcement, he did achieve an immediate result: Block’s stock popped by 20%, growth it sustained in the ensuing days.

Markets have responded unpredictably to layoff announcements in the tech world in recent months.

Just before two recent quarterly earnings calls, October 2025 and January 2026, Amazon announced the layoffs of 14,000 and 16,000 workers, respectively. After the 2025 call, the ecommerce giant’s share price rose sharply. Its stock price sank after its January 2026 announcement because Amazon’s costs had risen astronomically due to spending on datacenters, a problem Block does not have.

Salesforce cut 4,000 customer support workers last year because CEO Marc Benioff said that AI could handle some 50% of customer interactions. The company has only seen its stock price drop in response, as investors see the software sector, of which Block is also a member, as especially vulnerable to disruption. Goldman Sachs found in a November 2025 analysis that companies announcing layoffs underperformed the market. Businesses that specifically referenced restructuring, often in response to automation and technological advances, lagged even further.

A former business lead at Block wrote a lengthy blog post about the overstuffed teams outside of the “bitcoin hardware team” and the company’s “bloated headcount era”, which began in 2020, fueled by nearly nonexistent interest rates in the US.

Dorsey has overstaffed companies before. The CEO argued on X that while Block did overhire in the past, that issue was resolved in 2024, and the recent cuts were unrelated.

How Block functions after these deep staff cuts will offer insight into what AI is capable of in the absence of human employees. Bosses across the US are raising their expectations of productivity based on AI’s promise. The pressure is especially high on software engineers, whose work can be done, at least in part, by AI coding models. Startup founders are working themselves into the ground for fear that their rivals are getting more done.

So far, though, AI seems to be adding more work than it automates for the majority of workers. A Harvard study of a 200-person technology company published last month found: “AI tools didn’t reduce work, they consistently intensified it.” Block’s remaining employees may now find themselves in the same situation.